SCIENCE TECHNOLOGY : Electronics Group Lobbies Legislators to Keep Tax Breaks

Electronics companies could lose out as a result of state legislators’ concerns about the state’s $7-billion budget deficit, according to the Orange County chapter of the American Electronics Assn.

Because of the state budget crunch, the Legislature may try to raise revenues in the short term by allowing two tax breaks that benefit electronics firms to expire this year, said Frank Singer, a local AEA member and president of Trig II investment group in Huntington Beach.

Timothy Cooley, a local AEA board member and consultant for Ernst & Young in Costa Mesa, said an informal canvass of Orange County legislators showed that they do not expect the 50% net operating loss carry-over provision, which expires at the end of 1991, to be renewed. The lawmakers said they also do not expect the state research and development tax credit, due to expire at the end of next year, to be renewed.

The AEA wants the measures continued so as to promote the formation of new businesses in the state.

Singer, who accompanied representatives from a local chapter of the trade group in a lobbying effort in Sacramento last week, said the carry-over provision benefits young companies by allowing them to carry forward 50% of a loss in one year to balance against a gain in the next year so as to reduce their overall income-tax burden.

The R&D; tax credit benefits electronics companies by rewarding investment in research and development with a reduced tax burden.