SB 113 Headed to the Governor’s Desk
SACRAMENTO – Today, Monday, February 07, 2022, the Legislature took early budget action to restore tax credits and Net Operating Loss (NOL) deductions for California companies – including California’s Research & Development tax credit. Budget bill SB 113 (Economic Relief – COVID 19 Pandemic) passed the Assembly 68-0. Immediately following the Assembly Floor vote, members spoke to the public via LIVESTREAM from the Capitol Steps (VIDEO).
Assemblywoman Cottie Petrie-Norris (D-Irvine) said, “This is an important day in California’s COVID-19 response and recovery. Restoring tax credits for California companies and reinstating NOL deductions is one of the most important policy levers we can pull to encourage investment and growth in California’s innovation economy. California’s innovation economy is the stuff of legend. California innovators have driven breakthroughs in technology, advanced manufacturing, farming, aerospace and the life-saving Life Sciences. Today’s vote is a clear sign to entrepreneurs and businesses that we want you innovating in the Golden State.”
Assemblymember Phil Ting, Chair of the Assembly Budget & Fiscal Review Committee (D-San Francisco) said, “Thank you Assemblywoman Cottie Petrie-Norris, Jacqui Irwin, Speaker pro Tem Kevin Mullin & Assemblymember Tom Daly for your work to help reinstate important R&D tax credits that will spur innovation. California is supporting businesses through early action on the Budget today.”
Assemblymember Kevin Mullin (D-South San Francisco) said, “As Chair of the Select Committee on Biotechnology, I have I been a strong advocate for restoring these tax credits and am pleased that we have finally accomplished this task. This industry employs hundreds of thousands of Californians who have collectively developed vital lifesaving treatments for diseases and conditions that were previously without hope. Most recently we have seen first-hand how our biotech industry has helped California and the nation move through this worldwide pandemic by developing vaccines and other treatments for those suffering from COVID-19. While California continues its economic recovery, the restoration of these R&D tax credits will help California maintain its competitive edge while also providing resources for the continued growth of this industry as it continues to be tasked with taking on urgent scientific research and producing results."
Assemblymember Jacqui Irwin (D-Thousand Oaks) said, “California’s fiscal outlook looked grim when we were at the height of the pandemic and the Legislature limited R&D tax credits and NOLs, but with a healthy economy and greater than expected revenues we must build upon our successes in critical industries. This is especially true for ones whose breakthroughs will carry us through this and future pandemics. The Life Sciences industry, for example, provides well-paying jobs to Californians across the state, and the research and development these restored tax credits will spur have the goal of saving and improving the lives of everyone in our state and beyond.”
Assemblymember Tom Daly (D-Anaheim) said, “With a projected surplus of more than $30 billion, California is in a solid position to ease off some of the short-term fixes adopted in 2020 to address budget issues. Ending the limitations on research and development tax credits, and net operating loss options, one year early will spur businesses to invest in new innovations. I’m convinced this will create jobs and drive our economy forward.”
Early on in the pandemic, in the spring of 2020 – as California confronted the prospect of a $34BB budget deficit, difficult decisions were made in order to balance the state budget. The 2020-2021 budget limited the use of business incentive tax credits for research and development (R&D). In addition, it suspended the use of the net operating loss (NOL) deduction for some businesses.
With a brighter fiscal outlook in early 2021, Assemblymembers Cottie Petrie-Norris, Kevin Mullin, Tom Daly, and Jacqui Irwin announced the details of SB 593, the Golden State Innovation Act, along with a coalition of Life Sciences companies and patient advocacy organizations during a virtual press conference (VIDEO). The members have been pushing for tax credit reinstatement to spur economic recovery and increase R&D jobs in California.
By September 1, 2021, forty-one Assemblymembers had joined the effort (LETTER).
After the legislature adjourned in 2021, discussions with the Administration resumed regarding full restoration.
Assemblywoman Cottie Petrie-Norris | Facebook & the latest Op-Ed in the Orange County Register for more.