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MONDAY BUSINESS : CAPITOL BUSINESS BEAT

Sit back and get a tax break

July 01, 2013|Marc Lifsher
  • Gov. Jerry Brown signs the state budget last week in Sacramento.
Gov. Jerry Brown signs the state budget last week in Sacramento. (Rich Pedroncelli, AP )

SACRAMENTO — For the last decade, lobbyists for California manufacturers have tried unsuccessfully to get a sales tax exemption on purchases of new machinery. Such an incentive would spur investment, they argued, and boost the economy.

But when the time came last week to round up the votes to pass its long-sought tax exemption, the 95-year-old California Manufacturers & Technology Assn. in Sacramento found itself on the spot -- thanks to Gov. Jerry Brown.

In an effort to get rid of the state's controversial enterprise zones that provided tax credits for certain hires, the governor dangled the prospect of what he said were more effective economic development tools. The trouble was the association found that its members were on both sides of the issue.

After failing to acquire an influential business ally, the governor's negotiating team accused the association of going AWOL and doing nothing to help him in the tough slog of winning approval for his bill.

Instead, Brown leaned on labor unions, Silicon Valley high-tech companies, big pharmaceutical firms and even winemakers, and narrowly persuaded two-thirds of the Legislature to vote for his proposal to replace the 3-decade-old enterprise zone program.

"As the deal came to a close" Thursday, "CMTA was nowhere to be found, literally," recalled Angie Wei, the chief lobbyist for the California Labor Federation, Brown's principal ally. The manufacturers said they had been holding back in hopes of getting a longer life for the tax break, something the governor agreed to just before the final vote.

Senior Brown administration officials, who brokered the enterprise zone deal, said they were flabbergasted that the manufacturers made no effort to help them pass their dream legislation. "They sat on the sidelines," said one, "and let labor and a Democratic governor deliver their No. 1 priority."

On the day after the bill passed, the manufacturers association came around. "We applaud the governor and state legislators," said President Jack M. Stewart. The tax exemption "will help attract manufacturing investment and new high-wage jobs."

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Guaranteed jobs

Executives at the Honda Center, home of the Anaheim Ducks hockey team, never expected to be part of California's $96.3-billion state budget signed into law last week.

But that's where they wound up, as two paragraphs in a 49-page budget-related bill signed Thursday by Brown, after deciding not to renew a food and beverage concession agreement with a contractor. The legalese guarantees jobs for all former employees with a new food service operator at the Honda Center.

"Worker retention is essentially what this gets," said Leigh Shelton, a spokeswoman for UniteHere Local 11, the union that pushed for the added protection for the old staffers.

The new food service operator insists that the law was not necessary, and many of the former employees were being rehired. The company said the bill, SB 71, is "a misguided attempt to limit Honda Center's options and to favor certain applicants over others."

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marc.lifsher@latimes.com

Twitter: @marclifsher

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