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State of California manufacturing

Posted by Ashley Hong, Policy Intern on Jan. 24, 2014

This week Governor Brown delivered his annual State of the State address. At CMTA we are also taking stock of how manufacturing is faring in the state and what we can look forward to in coming years. 

Let’s start with the broader picture of global and domestic manufacturing. You’ve heard about the “renaissance” of U.S. manufacturing as many firms are choosing to locate and expand manufacturing facilities in the U.S. rather than overseas. The logistical hassles and increasing costs of doing business in remote locations combined with attractively low domestic energy costs are key factors leading to this resurgence. But what about California – Are  we well-positioned to attract our fair share of new manufacturing investment? Will California citizens have a good chance to live a middle class or better lifestyle holding exciting jobs in these growing and innovative manufacturing firms? 

Manufacturers have choices for where to expand or site new facilities. Other industrial states are moving quickly to attract this growth. The recovering economy is generating surpluses in government revenue and these states are proposing to broadly cut taxes or provide targeted tax relief for economic development programs. Florida’s Governor proposes to eliminate the sales tax on manufacturing equipment, reduce business taxes and cut property taxes. New York Governor Cuomo suggests a corporate tax reduction and elimination of taxes on manufacturers in upstate New York. Michigan may provide a broad-based income tax cut for residents. 

Last year California took a positive step in this direction by adopting a statewide partial sales tax exemption on the purchase of manufacturing equipment. But we were disappointed that the Enterprise Zone program was eliminated at the same time some manufacturers were harmed. We’ll need to redouble our efforts to reduce costs wherever we can to keep them competitive in the state.

To keep us from falling behind, CMTA will try to stop bills and regulations that would add costs or burdens to manufacturers. We are fighting proposals that would make it easier to increase local taxes by lowering the two-thirds vote threshold to a simple majority. We also want regulators and lawmakers to stop higher carbon fees in the cap-and-trade program under AB 32, the Global Warming Solutions Act passed in 2006. We will push back on a variety of bills that would impose new fees, higher penalties, impose overly burdensome rules for operations and lead to frivolous litigation.  

But it’s not enough to stop bad ideas. Other states are actively working to improve their business climates. With your help – all the CMTA members up and down the state – we should convince lawmakers to take meaningful positive steps to attract manufacturing investment and employment. Local and state elected officials need to hear, directly from you, what it takes to be competitive in California and the challenges you must overcome every day. Let them know that the future state of California manufacturing will be positive with their active and energetic support.  

Tags: Grow #camnfg

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