By Assemblymember Jim Cooper (D-Elk Grove) and Senator Cathleen Galgiani (D-Stockton)
The Bee’s recent editorial on Aerojet Rocketdyne’s decision to eliminate 1,100 jobs in Sacramento and create 800 jobs in Alabama reminds us that manufacturers have choices where to invest and create good jobs and poses an important question: what is the state’s plan for attracting and retaining middle-class jobs in California?
One important part of the plan is to pass our twin bills, AB 600 and SB 600, which we authored to make California more attractive to manufacturers and producers – from big firms like Aerojet to small businesses that are often overlooked.
AB 600 and SB 600 would improve an existing partial sales tax exemption for manufacturing and research and development companies that was created by the Legislature and the Governor four years ago.
The good news is; since taking effect, employers have invested $9.4 billion in equipment and infrastructure in California, and for every $1 of incentive claimed, there has been $23 in new investments – a solid return for the state, with a meaningful impact on job creation.
The bad news is; vagueness in the 2013 legislation makes it problematic for a number of companies to utilize the exemption, resulting in a considerable amount of the intended benefits being left on the table. In fact, utilization is 50 percent below the target set by the Legislature.
Aerojet’s departure illustrates the importance of our bills and the need to move quickly to fix problems with the existing program to ensure better utilization efficiency.
In addition to clarifying definitions to help reduce the ambiguity on what equipment qualifies for the partial sales tax exemption, our legislation expands the incentive to agricultural manufacturing and processing equipment, and to equipment used in production or distribution of electricity.
The expansion to agriculture is a no-brainer in a state that prides itself on feeding the world, but still faces stiff competition from all sides. As The Bee pointed out, the scarcity of jobs in the Central Valley is a problem that requires real solutions. Our bills and the jobs supported by an improved program will benefit many of our constituents and areas of California that are in dire need of economic expansion.
Both AB 600 and SB 600 are sponsored by the California Taxpayers Association and the California Manufacturers & Technology Association, and are supported by small business groups, construction companies, farmers, life sciences firms, and countless other companies and associations that do business in California.
Manufacturing jobs are high-paying and working-class professions that are important not just to the families bringing home the paychecks, but to our economy. The average California manufacturing job pays $83,000 a year, and for every manufacturing job created, 2.5 additional jobs are created due to a multiplier effect. It’s not acceptable that California has attracted less than two percent of the country’s manufacturing investments since 2010. The Bee is 100 percent correct when it says the state should fight hard to keep these jobs.
The time to act is now; the world’s sixth largest economy must be a landing pad for employers rather than a launching site to other states.
Our legislation alone will not solve all of the state’s employment problems, but is a concrete step in competing and retaining manufacturing and production jobs in California.
Assemblymember Jim Cooper represents the Cities of Sacramento, Elk Grove, Galt, and Lodi.
Senator Cathleen Galgiani represents the cities of Stockton, Lodi, and Galt.