April 30, 2014 / 4:02 AM / 6 years ago

New California law gives tax break to for-profit space explorers

SACRAMENTO, California (Reuters) - For-profit space explorers who make California their headquarters will not have to pay property taxes on their rockets and space stations under a bill signed Tuesday by Governor Jerry Brown.

A SpaceX upgraded Falcon 9 rocket undergoes launch preparations at Vandenberg Air Force Base in California September 27, 2013. REUTERS/Gene Blevins

The move is part of a broader effort by lawmakers to revitalize California’s flagging aerospace sector, once among the largest in the United States and key to the state’s economy.

It is also aimed at stopping an effort by Los Angeles County to collect levies on equipment owned by the privately-held Space Exploration Technologies, or SpaceX, in Hawthorne, California.

“Companies like SpaceX are not only creating the most advanced space vehicles, but are also significantly contributing to the state’s economy and our local communities,” said Democratic Assemblyman Al Muratsuchi, the bill’s author.

Muratsuchi said he submitted his measure after Los Angeles County presented SpaceX with a property tax bill on rockets and other equipment.

SpaceX, founded by PayPal entrepreneur Elon Musk, has already won tax credits at the local level, resulting in a commitment to stay in Hawthorne, a Los Angeles suburb.

The company, along with Virginia-based Orbital Sciences Corp, has NASA contracts worth a combined $3.5 billion for 20 cargo flights to the International Space Station, a $100 billion research complex owned by the U.S., Russia, Europe, Japan and Canada.

Last week, a SpaceX cargo ship arrived at the International Space Station with supplies and science experiments for the crew and a pair of legs for the experimental humanoid robot aboard that one day may be used in a spacewalk.

Other private space exploration companies have also set up shop in California, including Virgin Galactic.

Assemblyman Jeff Gorell, a Republican whose district north of Los Angeles is near Virgin Galactic headquarters, said lawmakers were working hard to restore California’s glory as a hub for aerospace.

“The golden days of aerospace were in California,” Gorell said when the bill passed the Assembly earlier this year. “It’s not that case anymore. We have to really focus and fight to keep those jobs here in California.”

The state’s huge population growth after World War Two was due in part to plentiful aerospace jobs. But the industry shrank dramatically in the early 1990s, contributing to a crash in the state’s economy from which some areas have never recovered.

The law, effective immediately, will cost the state about $1 million in annual tax revenue.

Editing by Richard Borsuk

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