Hacienda businesses may be eligible for a variety of services and incentives offered by the State of California. The best source of information about those services and incentives is the Governor's Office of Business and Economic Development, known as GO-Biz. GO-Biz is an important first stop for learning about economic development and job creation efforts by the state.
Several GO-Biz programs may be of particular interest to qualifying Hacienda companies. One is the California Competes Tax Credit program; two additional programs offer partial or full sales and use tax exemptions for several industries, including advanced manufacturing and biotech/health care manufacturing. In addition, the Employment Training Panel funds training to help companies develop and maintain a skilled workforce.
In 2013, Governor Brown created the California Competes Tax Credit. This income tax credit is available to Hacienda businesses that want to stay and grow in California. Tax credit agreements are negotiated by GO-Biz and approved by the California Competes Tax Credit Committee, which consists of the State Treasurer, the Director of the Department of Finance, the Director of GO-Biz, and one appointee each by the Speaker of the Assembly and Senate Committee on Rules.
GO-Biz evaluates the most competitive applications based on the factors required by law, including total number of jobs projected to be created, total investment amount, average employee wage, expected economic impact, strategic importance, and additional factors. Since 2014, according to the agency, GO-Biz has allocated $829 million to 974 companies that have committed to making $17.9 billion in new investments that are projected to create 95,139 new jobs.
In 2018, Governor Brown signed legislation that extended the program for an additional five years. $180 million has been allocated for each fiscal year from 2018-19 through 2022-23. The two remaining application periods for this fiscal year are January 2 to 21, 2019, with $75 million in tax credits available, and March 4 to March 25, 2019.
There is no fee to apply, and any size business in any industry is eligible for this tax credit. It is a highly competitive program, however, since "the purpose of the California Competes Tax Credit is to attract and retain high-value employers in California in industries with high economic multipliers and that provide their employees good wages and benefits," according to GO-Biz officials. A second program, the Sales and Use Tax Exemption for Manufacturing, offers qualifying California companies a partial exemption of sales and use tax on certain manufacturing and research and development equipment purchases and leases. Eligible industries include including advanced manufacturing and biotech/health care manufacturing.
A third program, called the California Alternative Energy and Advanced Transportation Financing Authority Sales and Use Tax Exclusion Program, offers a full exemption from sales and use taxes on purchases of qualified property under several conditions. The conditions include qualified property whose use is:
Eligible manufacturers planning to construct a new manufacturing facility or expand or upgrade a currently existing manufacturing facility may apply for an award. If approved, the purchases for the project will not be subject to state or local sales and use tax. The California Alternative Energy and Advanced Transportation Financing Authority Sales and Use Tax Exclusion Program has rigorous requirements. To qualify as an advanced manufacturer, for example, the manufacturing process must meet many requirements. One requirement is that the manufacturing process must improve existing or create entirely new materials, products, and processes through the use of science, engineering, or information technologies; high-precision tools and methods; a high-performance workforce; and innovative business or organizational models. Another requirement is that the process results in a substantive advancement beyond the current industry standard in the production of materials and products.
The Employment Training Panel (ETP) provides funding to employers to assist in upgrading the skills of their workers through training that leads to good paying, long-term jobs. The ETP was created in 1982 by the California State Legislature and is funded by California employers through a special payroll tax. The ETP is a funding agency, not a training agency. Businesses determine their own training needs and how to provide training. ETP staff is available to help companies apply for funds.
In October 2018, the ETP announced that it had approved 41 contracts worth more than $13 million to train nearly 9,000 workers. As an example, the panel awarded nearly $895,000 to Applied Materials, Inc. in Santa Clara to train 710 workers in the manufacturing of semiconductor chips for electronics and other technologies.
The programs described above are just a sample of the business benefits offered by the State of California. In addition to financial programs, GO-Biz offers a range of assistance to business owners. The agency's online California Business Portal is a great place to start exploring the services and incentives available if you want to grow an existing business or start a new one. The California Business Portal provides businesses with information on financial assistance, relocation services, international trade and investment guidance, tax incentive information, business registration and permit requirements, information about California regulations, and much more.
The California Business Portal features six primary resource areas: the California Business Navigator, a Business Service Desk, CalGOLD, Financial Assistance, Quick Start Guides, and International Trade and Investment.
The California Business Navigator can help business owners learn about incentives, resources, permits, and registration requirements related to their unique business needs. Business owners must create an account and answer questions about their business needs. With that information, the California Business Navigator creates a customized report designed to help the business grow.
The Business Service Desk offers answers to common questions. The Service Desk encourages users to submit questions if the information they need is not posted and promises to seek the answers.
CalGOLD is a subsite that assists business owners in finding permit information appropriate to their businesses, and provides contact information for the various agencies that administer and issue these permits.
Financial Assistance helps businesses owners and future business owners to explore the financial options that may be available to help you get of the ground or grow.
Quick Start Guides are short documents that provide the essential information needed to start, grow, or expand specific types of businesses in the State of California.
International Trade and Investment includes information about the State of California's trade missions and trade partnerships with foreign nations as well as a variety of resources on export and import issues.
For more information about Office of Business and Economic Development, please visit www.business.ca.gov.
For more information about the California Competes Tax Credit, please visit www.business.ca.gov/Programs/CaliforniaCompetesTaxCredit.
For more information about business incentive programs, please visit the California Business Portal at businessportal.ca.gov.