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Government Businesses United States

California Reject's SpaceX's Request for Subsidies, Citing Musk's Tweet About Relocating (reuters.com) 163

An anonymous reader quotes Reuters: A California state panel on Friday rejected a request from Elon Musk's SpaceX for $655,500 in state job and training funds, citing the chief executive's recent threats to move Tesla, the electric carmaker that he also runs, out of the state...

Five members of California's Employment Training Panel voted to reject the proposal and two voted for it, with one member absent, after discussing Musk's tweets on Tesla's reopening and media reports of layoffs at SpaceX's Hawthorne, California headquarters in recent years. "In my opinion, given the recent threats of the CEO to leave the state of California, and everything else we've discussed today, this proposal does not rise to the level for me to feel secure in supporting it," said Gretchen Newsom, a panel member and the political director of an IBEW electrical workers union local... Though a small amount of money, the funding was opposed by organized labor groups. Tesla and SpaceX are both nonunion shops...

SpaceX did not immediately respond to a request for comment.

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California Reject's SpaceX's Request for Subsidies, Citing Musk's Tweet About Relocating

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  • by _u07 ( 6868684 ) on Saturday May 16, 2020 @10:06AM (#60067240)
    Eeeeee!! Broke a nail!
  • Who did this hurt? (Score:4, Insightful)

    by jonsmirl ( 114798 ) on Saturday May 16, 2020 @10:10AM (#60067252) Homepage

    Did this hurt Musk? no. Did this hurt the workers who were going to be retrained? Heck yes.

    • by dirk ( 87083 ) <dirk@one.net> on Saturday May 16, 2020 @10:23AM (#60067268) Homepage

      But did this help the state? Yes, because they didn't give subsidies to a company that may likely move out of the state. More governments should look at these subsidies and do similar things. To me, all subsidies given to businesses should have strings attached and penalties. For example, it a company says they are going to employ X amount of workers, if they do not meet that then they should have to pay back the subsidy as they didn't hold up their end of the bargain.

      • You are assuming the worker would relocate to follow Tesla. I don't think that is likely for these jobs. The worker would more likely switch to another job in the Bay area. The skills are the property of the worker, not the company.

        • by dfghjk ( 711126 )

          and what are you assuming, hypocrite?

          "Did this hurt the workers who were going to be retrained? Heck yes."

      • by JaredOfEuropa ( 526365 ) on Saturday May 16, 2020 @10:38AM (#60067296) Journal

        But did this help the state? Yes, because they didn't give subsidies to a company that may likely move out of the state.

        Nope. Tesla threatened to move out. This subsidy is for SpaceX. It's a bit strange to punish company Y for the actions of company X, even if they have the same owner. They are two separate legal entities. Though by the same token, it's not very clever of Musk to ask for a handout on one side, and angrily threaten to pack up and leave on the other.

        But what surprises me most is that this subsidy is subject to a board vote, rather than being granted or rejected on written criteria. The criteria are likely to be a bit vague, especially since a lot of them were drawn up in a hurry, but the discussion (and perhaps subsequent vote) of the board should be on whether or not the SpaceX application meets the criteria, regardless of what is going on at Tesla.

        • This subsidy is for SpaceX. It's a bit strange to punish company Y for the actions of company X, even if they have the same owner

          SpaceX is a privately-held company, so the whims of its owner can have far more effect than Tesla.

          He can make SpaceX do anything on a whim. With Tesla, he'd have to justify the move to the board and shareholders (admittedly, with today's boardrooms that isn't very hard).

        • For what it's worth, his beef really was with Alameda County.

          SpaceX is headquartered in Hawthorne, CA which is in Los Angeles County and has made no noise whatsoever about moving.

          If you're going to move to get away from a particular county and absorb all the costs of doing so, you may as well look for the best deal you can, and that won't be in California. Everyone knows this.

        • by phayes ( 202222 )

          Timeline:
          Space-X requests educational subsidies from CA
          COVID-19
          Tesla publishes 69 page report on how they can start back up safely
          Musk has gets pissed off by county officials blocking Freemont's re-opening and says that he's moving Tesla Headquarters out of CA
          Committee denies credits to Space-X workers

          How, exactly is it "not very clever" of Musk to be unable to read into the future?

      • Subsidies are fine, but there should be consequences if the company doesn’t live up to its end. For example if a company moves out of the area before a certain stated period, then there should be legal penalties equal or more than the subsidy value.

        This may already be the case in the subsidies provided by the state, but I am not aware of the details.

        • by HiThere ( 15173 )

          It certainly often isn't the case. We shouldn't just assume that it would be. OTOH, I agree that it definitely *should* be.

    • Comment removed (Score:5, Interesting)

      by account_deleted ( 4530225 ) on Saturday May 16, 2020 @10:43AM (#60067308)
      Comment removed based on user account deletion
      • SpaceX asked for the money, not Tesla. Those are TWO DIFFERENT entities!

        Why shouldn't Musk move Tesla and SpaceX to Texas?

        He would save billions in taxes and expenses. He can pay workers 25% less money and it would be equivalent to a 25% raise. In the Austin area, Right now gas in Austin is about $1.25/gallon. A 3BR/2.5BA, 1400 sq. house on a .2 acre lot is $294k (https://www.realtor.com/realestateandhomes-detail/8832-Francia-Trl_Austin_TX_78748_M75404-35626). In San Francisco something close would be $

        • by HiThere ( 15173 )

          If they've got the same guy in charge, then it's plausible that they will adopt similar policies.

          OTOH, you point is somewhat valid, as I feel that any subsidies granted should come with strings attached that will ensure value is returned to the extent possible. Including "If you need to return the money and you don't have it to give back, then ownership of your assets (to a measured extent) goes to the issuer of the subsidy. IOW, just like a mortgage, but with terms designed to benefit the state. The sta

        • You might ask yourself then why Tesla and SpaceX exist at all, instead of being eliminated by lower-cost competitors coming from Texas. Plenty of cheap land, that's the main thing, right?
        • All of it was true when Musk set up SpaceX in California. Why didn't he set it up in Texas in the first place ?

          So he knows some advantage of California, that you don't know, or are neglecting to mention here. Possibly that advantage has ceased to be, but again, since you don't mention it, we don't know so far.

    • It hurt all of the tax payers that were expected to foot the bill for someone else to be retrained. The government shouldn't be subsidizing businesses period. If those companies can't support training their own workers, they need to find a new business to be in.
      • And it is cheaper to keep these people on unemployment and welfare because they have no marketable skills?

        BTW, companies deal with a lack of trained workers all of the time. They ship their production offshore and bring the finished parts back to the US. So you'd rather have Musk offshore these jobs?

        • You really seriously think SpaceX hires people who have no marketable skills? But if so, California can pay to train them for something else. There's no reason to think that there exists an untrained person who's only capable of working on Starship and Starlink but can't be trained for any other job. And we've got plenty of other space companies and communications companies.

      • by Kohath ( 38547 )

        It hurt all of the tax payers that were expected to foot the bill for someone else to be retrained.

        Because the money won't be spent and now taxpayers will be getting a tax cut? Is that the story you want to stick with?

        • If you want to put forward Space-X as the least wasteful corporate handout I suppose you can frame it that way. But if someone is going to stab you anyway would you prefer the liver or the intestines? I’m sure one of them is less painful or less deadly, but I wonder if you might stop to question why it is that you need to be stabbed at all.

          I suppose people will keep voting for the lizards though. Wouldn’t want the wrong one to win after all.
    • by hey! ( 33014 )

      Well, if you work for someone like Musk you have to take the good with the bad.

      From the state's point of view, the money will simply be spent with a company that's more likely to stay in-state; Musk's workers' loss is other workers' gain.

    • Did this hurt Musk? no. Did this hurt the workers who were going to be retrained? Heck yes.

      The word in the summary was training, not retraining.

      And in the article it says:
      "The funding from the state employment development fund was supposed to help SpaceX train 900 employees for its Starlink satellite project and hire 300 to work on its Starship program."

      So training. That benefits SpaceX directly, who save the training money for their workers. It doesn't benefit the workers; you don't normally pay for your training at a new job.

      When it is "retraining" that is money for people who don't have a job,

  • by Anonymous Coward on Saturday May 16, 2020 @10:20AM (#60067266)
    I'm giving apostrophe lessons at a discount during these challenging times. Hit me up.
  • Comment removed (Score:5, Insightful)

    by account_deleted ( 4530225 ) on Saturday May 16, 2020 @10:25AM (#60067272)
    Comment removed based on user account deletion
    • Re: (Score:2, Interesting)

      by alvinrod ( 889928 )
      California is 11.9% of the U.S. population so it's hardly surprising that they have about an equal percentage of the GDP. The agricultural sector no doubt accounts for a lot of that, but I wonder if you took away Hollywood and Silicon Valley if they'd still be punching above their weight.

      Musk certainly runs his mouth more than he needs to and gets more praise than he deserves, but trying to pretend that California is "good guy" is equally as laughable. Did you consider the possibility that they're both b
      • by dgatwood ( 11270 )

        California is 11.9% of the U.S. population so it's hardly surprising that they have about an equal percentage of the GDP. The agricultural sector no doubt accounts for a lot of that, but I wonder if you took away Hollywood and Silicon Valley if they'd still be punching above their weight.

        California's GDP in 2019 was 14.9% of the U.S. versus 11.9% of the population, so it's a good 25% higher percentage of the GDP than you'd expect based on population. Hollywood is almost revenue-neutral. It provided only $

      • Agriculture does not contribute nearly so much as you might think. It's only about 2% of our economy. That becomes a major point of contention every time we go into a drought cycle. Thanks to the seriously fucked-up and convoluted way water rights work in the western states in general, and California in particular; that 2% of our economy has a stranglehold on 80% of our water supply:

        https://www.washingtonpost.com... [washingtonpost.com]

        • Agriculture is more important than its percentage of the economy. One could argue that there should be a lot more cost in food, but that has obvious negative repercussions. It has some positive ones too, but we would have to make numerous other changes for it to work.

    • Musk is setting up shop in Tx. The playing of games by CA has already cost them billions in future revenue.

      CA taxes and regs, real estate, cost of living, much higher than elsewhere. Much less difficult to move a software company, IMHO, than a manufacturer. Others are watching and IMHO will follow suit.

      Just natural. Make it tough to live there, add the incredible pension burden of an out of control bureaucracy, and just across the state line: Nevada.

      CA personal tax rate 7.75 - 12.3% Corporat
      • CA taxes and regs, real estate, cost of living, much higher than elsewhere

        You realize when you try and make this argument, you're calling Musk an absolute moron, right?

        All those factors were in place when Musk originally decided to set up shop in CA. You claiming they are a huge driver now would indicate Musk really, really fucked up when he started these ventures.

        Alternatively, this line has been something folks like you have pushed for decades, insisting that you'll totally move all of Silicon Valley to Texas any day now. Any day now. Any day. Right around the corner.

      • by DRJlaw ( 946416 )

        Texas: 0% for both.

        Texas taxes personal and corporate property instead [ttara.org].

        Texas has among the highest property taxes of any state in the nation -- 5th highest on manufacturers. For a $500 million industrial project, Texasâ(TM) effective annual property tax burden would be $25.2 million, 60 percent higher than the national average of $15.6 million.

        So go move that capital-intensive manufacturing plant to Texas, Elon. Yet more CEO brilliance.

        • Texas also has a franchise tax when revenues exceed around a mil. I am exempt, so not sure how burdensome it is. But you are absolutely correct, prop tax is steep. It runs a little over 2% of assessed value in Austin. And unlike California, there is no prop 13. So tax can go up as much as 10% per year, and it often does. Now I've no doubt that Austin in particular would climax over the idea of granting Musk an exemption, but for us plebs prop taxes are stiff. Sales taxes are also pretty high, Austin is 8.25
      • Because income tax doesn't grow arbitrarily, unlike property taxes, where because other people moved near you, your taxes will go up. California has non existent property taxes (thanks Prop 13!)

        I think people REALLY need to understand why California even has income taxes. We did a tax revolt and nuked our property taxes into the floor, and thus cities/state can not use them for funding much of anything (one part of prop 13 makes it so property taxes will continually lose cities money, because the amount you

    • by Kohath ( 38547 )

      Musk called Californias bluff and lost.

      Starting Tesla production a week earlier is worth many multiples of that $0.5 M worker retraining fund.

      • Especially since that $600k is what, 40 cars worth of margin? And they're making hundreds per week?

        Yeah, I'm sure he's real hurt over not getting that pittance from the power drunk spiteful bureaucrats.

    • by PPH ( 736903 )

      Musk has a really nasty habit of trump-style shitposts about what he likes, dislikes, and wants.

      We fought WWII against a system that insisted companies toe the political line. Please don't tell me they're back.

      • Re: (Score:2, Interesting)

        by Ly4 ( 2353328 )

        Trump is trying:

        "The Radical Left is in total command & control of Facebook, Instagram, Twitter and Google. The Administration is working to remedy this illegal situation."

        https://twitter.com/realDonald... [twitter.com]

      • We fought WWII against a system that insisted companies toe the political line.

        So.....not handing out corporate welfare is fascism? If you really want your tax dollars to go to Tesla, you don't have to wait for the state government to make it happen. Start a kickstarter campaign so all the other Musk Fart Sniffers here can send him your money.

        • by PPH ( 736903 )

          So.....not handing out corporate welfare is fascism?

          It is if adopting a particular political position is a prerequisite.

          • by Jeremi ( 14640 )

            It is if adopting a particular political position is a prerequisite.

            The political position, in this case, being "corporations should follow the law and not just break the law when they they want to because reasons"?

          • by Uberbah ( 647458 )

            Has nothing to do with politics. It has to do with saying no to robber barons and corporate welfare.

    • how easy it is to see a few million wiped off the books because todays musk epiphany is that people have too much money, or tesla is worth too much.

      That sounds almost like the stock market is stupid, then.

    • Nobody in actual power in a state government plays "the long game" - they play the "I want to get re-appointed to my board seat / re-elected when my term expires" game. And that's not just California, that's literally every commissioner, director, chairman, appointee, or elected official in every state / county / city government in the US.

    • Say what you will about the man, Musk has a really nasty habit of trump-style shitposts about what he likes, dislikes, and wants. Anyone whos owned any of his stock know just how easy it is to see a few million wiped off the books because todays musk epiphany is that people have too much money, or tesla is worth too much.

      Yeah, but refusing to follow the law in a public health emergency could end up having a very, very long tail for SpaceX.

      This really could end up requiring his exit from that one. The rest, sure, he and shitpost and it doesn't matter much.

  • Are they allowed to punish one company for something that was about a 2nd company? Even if both are controlled by the same person?
    • This is a lawsuit waiting to happen.

      Normally these things require that only the information presented (and requested) be used to evaluate the decision. Not arbitrary third-party information.

      Tesla isn't SpaceX, it's reasons for staying or leaving are not influential for SpaceX

      • Musk's behavior was evaluated in this decision. Can't say I blame them.

        • by phayes ( 202222 )

          What part of different companies is too hard for you to understand? It doesn't matter that Elon Musk head both of them any more than it matters what race you are when you sit in the front of a bus. The idiots on that committee may have wanted to hurt Elon Musk but all they did is open themselves to a deserved lawsuit.

    • Nothing says they can't. This board is allowed to consider Musk's twitter rants.

      • by phayes ( 202222 )

        Tesla rants are not germane to Space-X and statements to the effect that they denied Space-X funding because of Tesla opens the committee up to a lawsuit the same way that it would have if they had denied funding because Musk is foreign born.

    • by HiThere ( 15173 )

      So you say "choosing not to invest in" as "punishing"?

      Well, ok. I'd call it being slightly prudent in where you invest your money. There's a limited pot available, and it should be invested where it will do the most good for the state. Investing it in a company whose management has indicated that it's likely to move on a whim doesn't, to me, seem a good investment.

      Musk has a lot of potential, but he has significant downsides. That said, I'd have invested in SpaceX, but secured it with shares of ownersh

  • The more California treats businesses this way the more will consider moving out or not consider moving there.

  • But Tesla and SpaceX are two completely separate companies, and the comments were in regard to Tesla, not SpaceX.
    Also if they aprove subsidies to other companies without any real strings, they should have aproven it for SpaceX, now it just sounds like a real political game.

    • Did the CEOs of those other companies you mention also make public statements to the effect that they were going to pack up and leave California before they were approved for these funds?

      Somehow, I suspect not.

      • Even though he might have made a statement like that doesn't mean he's not entitled to the same subsidies as the other companies. They could have aproved it with some strings (like that he had to pay it back if he moved his company to another state within the span of a few years)..
        • by vix86 ( 592763 )

          They could have aproved it with some strings (like that he had to pay it back if he moved his company to another state within the span of a few years)..

          They don't even need to do that because it's extremely unlikely that SpaceX is going to move to another state. SpaceX launches from Vandenberg AFB for polar/sun sync orbits, there are aren't many places you can do that in the US and avoid dropping stuff on other countries. And if Tesla moves, there is no reason why SpaceX should factor into this at all.

    • If the CEO of one company says he's willing to move out of your state in a fit of pique.....maybe....just maybe....he'd move the other company out as well? And why reward an entitled petulant lille prick with taxpayer money who just couldn't wait one more week to reopen?

      Nah, you're right, nothing to see here....

  • by BrendaEM ( 871664 ) on Saturday May 16, 2020 @01:24PM (#60067764) Homepage
    No one ever talks about the welfare program for companies.
  • Someone failed their IQ test, today.

  • He threatened to move Tesla, so now they put the screws to him personally and any company he has any say over. Evidently they don't want any of Musk's companies in California. I'm thinking there are plenty of states which would love to take those companies in, subsidies and all. Once moved, they might find any Musk products for California are 25% more expensive, to recoup the cost of the move out. Want those solar panels and energy storage systems, and those clean air cars, pay up California - you got the G

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