The California Competes Committee as part of the Governor’s Office of Business and Economic Development awarded 28.9 million in tax credits to 29 companies strengthening the job market in California. Eleven out of the 31 companies were small businesses and 29 out of the total of 396 companies that applied were selected on June 19. The companies awarded this tax credit are exempt from paying state income taxes according to the amount awarded. The selected companies were evaluated based upon certain business factors required by the initiative including but not limited to total jobs created, total investment, average wage, economic impact strategic importance. This initiative extends sales and tax exemption to companies for the purchase of manufacturing, biotech and R & D equipment effective July 1.
The companies selected are expected to create 6,000 jobs and generate over $2 billion in investments across California. The companies also benefit from legislation (in effect since Jan 1) by receiving hiring credits for the unemployed and those living in poverty. The remaining $150 million in tax credits will be extended towards the 2015 fiscal year for companies not selected. A state economic stimulus in job gains is welcome due to slow decreases in unemployment since the 2007-2009 recession. The current unemployment rate shows a modest decline for the cities of Los Angeles and Glendale at 8.8 percent and 6.9 percent respectfully (percentages are seasonally adjusted). The leading industries for job creation in Southern California continue in sectors such as health services, leisure and hospitality, construction, professional, scientific and technical services.
The companies selected comprised of a large variety of industry sectors: six in research & development (semiconductor, electronic device, pharmaceutical, stem cell), five in retail, eleven in manufacturing (bakery goods, food and beverage, pharmaceutical, sheet metal, health supplement, biofuel, fiber design, transdermal patch, vehicle wheel components, metal forging, concrete treatment), financial (automobile), clothing design, refrigeration and distribution, hazardous materials removal, industrial gas, information technology, (device software, data center management),and Navy ship repairs. Amazon Fulfillment Services Warehouse Division, Petco, iHerb, Animal Memorial Services, and Macy’s were the five retail companies benefitting from this tax credit initiative. Tax credits and incentives awarded singularly to several large aerospace companies were not included in this list.
The California Competes tax credit is a part of Governor Jerry Brown’s Economic Development Initiative as part of AB 93 and SB 90 bill legislation from last year.