California Lawmakers Approve Tax Credit for Stealth Bomber Developer, According to Reuters

By Sharon Bernstein

SACRAMENTO, Calif. (Reuters) – On Thursday, California lawmakers approved a tax credit aimed at attracting aerospace companies that are in the running for a new stealth bomber contract. However, this measure will only benefit one of the two teams competing for the contract.

The proposal to provide $420 million in tax incentives to an unnamed aerospace firm, widely believed to be Lockheed Martin Corp, highlighted significant divisions among Democrats, leading many in the party’s progressive wing to oppose it.

"This is just more corporate welfare," remarked Democratic state Senator Ben Hueso. "This is money we don’t need to allocate, and it’s going to those who don’t require additional assistance."

The tax credit initiative, championed by the economic development office under Democratic Governor Jerry Brown, drew criticism from Northrop Grumman Corp, the other competitor for the $55 billion stealth bomber contract. Northrop Grumman’s aerospace division is located in Southern California and has already pledged to manufacture the aircraft in the state if it secures the federal contract.

"Clearly, we see this as an unfair advantage," stated Northrop Grumman spokesman Tim Paynter. "We are simply seeking a level playing field."

Lockheed representatives were not immediately available for comment.

The rationale behind lawmakers and the governor’s choice to extend credits to one company and not the other remains unclear. Campaign finance records up to July 3 did not reveal any recent contributions from Lockheed or Boeing Co, the primary contractor collaborating with Lockheed.

Amidst efforts to gather votes, Senate Democratic leader Darrell Steinberg assured that the legislature would also consider a tax credit for Northrop upon returning from summer recess in August. Brown’s representatives indicated the governor would back such a proposal.

Steinberg, alongside other lawmakers, noted that specific language in the bill limiting the tax breaks to "subcontractors" was intended for Lockheed, asserting that the tax credits would lead to job creation.

"I don’t appreciate how businesses sometimes pit states against one another," Steinberg commented. "However, we cannot afford to be passive and neglect our economic future."

Mike Rossi, Brown’s Senior Advisor for Jobs and Business Development, stated that the tax credit aligns with the governor’s efforts to incentivize business expansion in California.

"The state is actively pursuing opportunities to boost job creation in manufacturing and aerospace," Rossi conveyed through a spokesperson.