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    Switching Gears: Manufacturing Bills to Watch in 2013

    This year there is a significant amount of focus being redirected to the manufacturing industry. Realizing the importance of California-based innovation and development, legislators are attempting to do everything in their power to bring these important industries back to the state.


    Various bills have been introduced this session to serve as incentives for manufacturers to locate, employ, and develop products in California.


    Here are three bills that could alter manufacturing operations in California:



    SB 12 (Corbett) Made In California Program 

    Modeled after the successful “California Grown” program, which highlights agriculture products produced in California, Senate Bill 12 would extend that marketing strategy to all goods produced in the state.


    Senate Bill 12 would create a marketing agreement between the state and companies seeking to use a “Made in California” label by charging an application fee to companies wishing to participate in the label program. The program would be headed by the Office of Business and Economic Development, which would shadow the “Made in California Program” and enforce the program when a company uses the “Made in California” label in an unfair and deceptive manner.



    AB 653 (Pérez) Creation of the California Innovation Hub Program/ Tax Credits –

    The Governor’s Office, through its Office of Business and Economic Development, has created a network of innovation hubs or “iHubs,” to encourage innovation clusters throughout California. Assembly Bill 653 would codify this initiative and give a standardized definition of locations that would qualify as an iHubs.


    In order to further incentivize manufacturers to locate and develop in California, the bill doubles the existing R&D tax credit from 15 percent to 30 percent.


    AB 653 would exempt manufacturing equipment from the state's sales and use tax, allowing companies to purchase the machinery they need to manufacture their products at a reduced operational cost. This exemption is intended to incentivize manufacturers to stay in the state, instead of outsource, which was the only affordable option for businesses.


    Finally, the bill creates a 25 percent tax credit for business investments in post-secondary institutions. This credit would provide these workforce development programs with the resources to develop curricula and training programs that prepare them to compete in the global economy.



    SB 241 (Evans) The California Education and Resources Reinvestment Act –

    Senate Bill 241 would impose a 9.9 percent severance tax on the extraction of oil in California. Revenues would be reinvested, with 93 percent directed to California’s higher education systems (University of California, California State University and California Community Colleges) and the remaining 7 percent to the California Department of Parks and Recreation.


    Opponents of an oil severance tax, including the California Manufacturing & Technology Association, contend that the oil companies will pass tax increases onto consumers, which will directly burden oil-dependent industries. Though the burden will be shifted to certain target industries, the revenues from this bill will be used to fund education and parks – two entities fundamentally unrelated to these revenues.


    For more information about this legislation affecting you, click here to receive notices about VICA’s Manufacturing Committee.

    This year VICA will be attending the 2013 West Coast Manufacturing Conference, if you are interested in joining, please email Adriana@vica.com or go to www.manufacturingconferencewest.com for more information.

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