BILL PROPOSED TO AID AEROSPACE FIRMS.

Byline: Jim Skeen Daily News Staff Writer

An Assembly bill to provide tax relief for California's aerospace companies was unveiled Friday by Assemblyman W.J. "Pete" Knight, R-Palmdale.

AB 2361 would provide tax credits ranging from .5 percent to 1.5 percent of each company's sales made to NASA or the Defense Department each year.

Activities and products that would be eligible for credits include research, development, manufacturing, assembly, modification and testing of aircraft, guided missiles, space vehicles, avionics and navigational products and services.

"We are losing middle-class jobs by the thousands in this state," Knight said. "Many . . . employ people with such expertise that if they leave this state, we may never be able to get them or similar talent to return."

Antelope Valley leaders are advocating tax credits for aerospace firms as a way to make the state more competitive in attracting employers. Al Kurki, president of the Antelope Valley Board of Trade, is among those lobbying for passage of the bill.

"There are states - Utah, New Mexico, Arizona, and Oklahoma - that have made all kinds of concessions to attract aerospace firms from California," Kurki said. "We need something like these to enhance our competitive position."

Such tax credits would be a major asset in attempting to secure contracts on the proposed X-33 reusable spacecraft program. Three industry teams are vying to build one or two X-33 prototypes for NASA as a precursor to establishing commercial operations with a reusable spacecraft, Antelope Valley civic leaders say.

The industrial teams are looking at California, New Mexico and Florida as possible sites for production and testing of the X-33, civic leaders say.

AB 2361 is expected to be heard within the next three weeks by the Assembly Revenue and Taxation Committee, according to Knight.

Officials in the state Legislative Analyst's Office said they had not yet studied the bill. They said they don't expect an estimate of its fiscal impact to be available until shortly before the bill's first hearing.

Revenue and Taxation Committee analysts have not yet been assigned the bill for study, officials said.

Whether the bill gets through the Legislature depends on how it's sold, Kurki said.

"They are not getting a subsidy. It only applies if they can attract new business," Kurki said. "If the legislators look at it as reducing the revenue stream, than we're doomed completely."

If approved, the tax credits would cover sales made by prime contractors or subcontractors after Dec. 30, 1996. The law would sunset, or end, in the year 2001.