The state legislature a few weeks ago passed the state budget on time for the first time in five years. Using an unexpected surge of new revenues, the budget makes significant new investments in our schools, health care and local government. Better yet, it chips away at the structural deficit that has accrued over the last several years. We’re not out of the woods yet, but this budget has brought us a long way back.
What’s important to know, however, is that the legislature balanced the budget without raising any taxes or making any significant cuts to programs. Over the last year and a half, California’s businesses have been growing and expanding, bringing in over $7.5 billion in new tax revenue. The whole state benefited from that expansion.
Now that this budget is completed, California has to keep this trend going. This state needs to make a renewed effort to keep businesses here and to find ways to encourage other businesses to relocate here.
One example: the NASA Crew Exploration Vehicle (CEV). In case you’re not familiar, the CEV is the vehicle NASA is going to use once the Space Shuttle program is retired in 2010. NASA and those who wish to build this vehicle are currently considering whether it makes economic sense to perform the work in California. Thousands of jobs and billions of dollars in contracts are at stake. And these are good jobs, too. On average, aerospace manufacturing jobs pay $74,000 per year, well above the average for service or retail jobs.
Even better, the companies that win the CEV competition would subcontract out much of the work, supporting many more jobs in hundreds of smaller companies.
California should be perfectly situated to win this project. We boast the nation’s largest and most highly trained aerospace workforce. We also have the largest infrastructure, with large manufacturing facilities already in place throughout the state that could easily and quickly be converted to handle a project the size of the CEV.
Unfortunately, at this point, other states are simply moving faster than we are to secure the CEV. Florida already has put a package of tax breaks and other incentives on the table that will total more than $200 million over many years, specifically directed at bringing the CEV to that state. Other states, including Texas, New Mexico and Colorado, have launched coordinated efforts, bringing together their congressional delegations, governors and state legislatures to promote their states’ advantages.
So far, California has done basically nothing to woo this business for our workers.
In the legislature, a bipartisan group of legislators, led by Assemblymembers Ted Lieu (D-Torrance), Nicole Parra (D- Bakersfield) and Sharon Runner (R- Palmdale), have introduced a bill, AB 2033, to expand an existing tax credit to include work performed on the CEV. This bill has industry and labor working hand in hand, as it has the support of both the California Chamber of Commerce and the California Federation of Labor. They both understand what’s really at stake here: jobs. More in the legislature need to understand this.
While it won’t equal Florida’s investment, passing AB 2033 would make a serious statement that California is ready to do what it takes to bring jobs here. Combined with our other advantages listed above, it just might be enough.
As the legislature and the governor enjoy their summer break, I urge them to move quickly to pass AB 2033 when they return, or to include this tax break in another bill. There are literally thousands of jobs at stake, and there’s absolutely no time to lose. (Ken Dozier is the executive director of the Western Research Application Center USC Viterbi School of Engineering.)
Originally published in the Santa Monica Daily Press print edition on August 24, 2006. Read the original PDF.