SACRAMENTO — With as many as 20,000 jobs — as well as the health of a number of local economies across the state — on the line, Democratic lawmakers are saying the state needs to step in with tax relief to help the NUMMI auto plant in Fremont stay open.

The cost in revenues could be $20 million or more, but that would be far cheaper than allowing the New United Motor Manufacturing Inc. plant to close, which would be followed by the ripple effect of lost jobs throughout the state, lawmakers said Thursday at a Capitol news conference.

"We can no longer afford to lose even a single job here," said Assemblyman Alberto Torrico, D-Fremont, who introduced ABX431, a bill that would establish a sales and use tax exemption for machinery and equipment. "Particularly those that pay well, provide health care benefits and whose workers, when they are working, pay income tax, buy things and we collect sales tax. Most troubling is when people lose jobs, they lose their homes."

General Motors recently announced it is pulling out of its joint venture with Toyota as part of GM’s restructuring plan with the federal government. And last week, Toyota said it was considering closing down the plant, which employs 4,700 workers and makes Toyota Corollas, Toyota Tundras and Pontiac Vibes.

Another 15,000 jobs are indirectly tied to the plant — through suppliers, vendors and small-parts manufacturers throughout the sate, representing $523 million in annual payroll and benefits, lawmakers said.

 

"The plant is a major force in California and countless thousands of jobs can be hurt if the plant does close," said Sen. Ellen Corbett, D-Fremont. "It would not only impact the suppliers and vendors but the local economy — the grocery stores, the local health care providers."

California is one of three states that charges sales taxes on the purchase of manufacturing equipment. With NUMMI as the last auto manufacturing plant in California — and the only one in the West — lawmakers need to "look at the right way to regulate and tax them so they can thrive, and we can get that entrepreneurship and growth occurring in California," said Assemblyman Ted Gaines, D-Roseville, who chairs a select committee on the auto industry. "We gotta stop the bleeding. NUMMI is the No. 1 priority."

NUMMI opened in 1984 as a joint venture by General Motors and Toyota to resurrect the old GM plant, which had closed in the early 1980s.

"I grew up in Fremont when the original GM plant closed and saw firsthand the devastation the impact had on working class families all over this district," Torrico said. "So, now we’re facing that possibility again."

The legislation, under ABX31 and SB830, introduced by Sen. Rod Wright, D-Los Angeles, would give the governor authority to, as part of his negotiations with Toyota: eliminate the sales tax on manufacturing equipment, declare the plant an enterprise zone, give the plant a 70 percent reduction in the Public Goods Charge through the Public Utilities Commission for two years; and require that the state give priority to the plant in purchasing cars and trucks built by the plant.

Gov. Arnold Schwarzenegger does not typically comment on pending legislation, but a spokeswoman, Camille Anderson, said the governor is "actively engaged with Toyota, NUMMI partners and relevant stakeholders and looks forward to working with them to ensure the facility’s future."

In the low-revenue climate the state is in, lawmakers should offer to close some corporate tax loopholes to make the deal revenue neutral, said Lenny Goldberg, executive director for the California Tax Reform Association.

"And is there an agreement they can make that would be clear that they’re not just throwing money at a problem," Goldberg asked.

Legislators called the situation urgent, saying they’d like to approve the tax exemptions by the end of the summer session in August.

Reach Steven Harmon at 916-441-2101 or sharmon@bayareanewsgroup.com