CalChamber-Supported Manufacturing Tax Credit, Public Contracting Bills Head to Governor

SupportA California Chamber of Commerce-supported bill that will expand manufacturing tax credits and another that will promote equity in public contracting passed the Legislature last week and have been sent to the Governor for his consideration.

Governor Gavin Newsom has until September 30 to sign or veto any bills sent to him.

Manufacturing Tax Credit Expansion

AB 1951 (Grayson; D-Concord) expands investment and production in California by expanding the sales and use tax exemption for the purchase of manufacturing and research and development (R&D) equipment.

Thirty-eight states already fully exempt manufacturing equipment purchases from sales and use tax, and another five states do not have a state sales tax. California’s manufacturing industry remains at the forefront of global leadership and innovation, but the industry hasn’t kept pace with the rest of the country in job growth and investments.

AB 1951 will make California competitive with the states that already exempt manufacturing equipment from sales and use tax, and through this exemption, California can provide more opportunities for growth, innovation, and high-quality jobs that come from increased investments in California manufacturing.

With tremendous ripple effects throughout the economy, each manufacturing job supports at least 2.5 other jobs in the workforce. AB 1951 will provide manufacturers the opportunity to continue to lead and compete in a domestic and global economy that operates on razor-thin margins. This bill will facilitate further innovation, production of wide-ranging goods, and provide high-quality jobs throughout California’s regionally diverse economies.

Equity in State Procurement

AB 2019 (Petrie-Norris; D-Laguna Beach) promotes equity and inclusion in the state’s public contracting process by ensuring consideration for disadvantaged business enterprises.

The bill establishes economic equity in state contracting by doing three primary things:

  • Codifying the goal of 25% of state procurement to be directed toward small businesses.
  • Fast-tracking small business certification for “Disadvantaged Business Enterprises” (DBEs).
  • Establishing accountability within the administration and throughout the bureaucracy, to enforce the intent of meeting that goal, while directing all state agencies to develop and enact an education and outreach plan, which will inform their communication strategy to minority and hard-to-reach businesses.

Considering the vast purchasing power and influence of the State of California, enacting AB 2019 is a critical next step to raising the tide for all small businesses in the state.