SACRAMENTO, Calif. /California Newswire/ — The Senate Governance and Finance committee today approved Senate Bill 1128 (Padilla) on a 7 to 0 vote. The bill would encourage investment, job creation and economic growth in California by allowing sales and use tax exemptions on the purchase of manufacturing equipment in the advanced manufacturing sector. The bill will next be heard in the Senate Appropriations Committee.
“California is one of only three states that taxes the purchase of manufacturing equipment, which undermines California’s efforts to attract and retain manufacturing companies. SB 1128 changes that,” said Senator Alex Padilla.
Specifically, SB 1128 would build upon a sales tax exemption program administered by the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) to include advanced manufacturing companies in industries such as biotechnology, computers, appliances, machinery, furniture, fabricated metals and transportation goods.
“I authored this bill because California is uniquely positioned to benefit from high tech jobs coming back to the United States. We are a leader in innovation, evidenced by the fact that in 2010 nearly half of all research and development venture capital invested in the U.S. was invested in California. Being a leader in R&D is great, but not enough. We need to make California more attractive to the manufacturing sector as well,” said Senator Alex Padilla.
Last year Congress approved and the President signed, the Reshoring Initiative, which focuses on bringing jobs back to America and launched the Advanced Manufacturing Program to promote investment in emerging technologies in order to create high quality manufacturing jobs. Recent studies have shown that the cost advantage of manufacturing overseas is rapidly decreasing due to rising wages and transportation costs. By expanding the CAEATFA program to advanced manufacturing, California has an opportunity to attract new investment and compete for these jobs.
In 2010, Senator Padilla authored SB 71 which allowed CAEATFA to approve sales and use tax exemptions on tangible personal property utilized for the design, manufacture, production, or assembly of advanced transportation technologies or alternative energy products, components or systems. For every million dollars the program allocates, it generates $10 million dollars in private investment in the state. So far the program has spurred close to a billion dollars in private investment and is projected to create 7,352 jobs.
Senator Alex Padilla, 39, graduated from MIT with a degree in Mechanical Engineering. He currently serves on the Board of MIT. He is Chair of the Senate Energy, Utilities and Communications Committee and represents the more than 900,000 residents of the 20th State Senate District which includes most of the San Fernando Valley in Los Angeles.