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Our View: Leave enterprise zones alone

Posted: May 22, 2011 1:55 a.m.
Updated: May 22, 2011 1:55 a.m.

Gov. Jerry Brown outlines his revised budget proposal during a recent news conference at the Capitol in Sacramento.

 

We give a golf clap to Gov. Jerry Brown for his proposed “May revise” of a proposed state spending plan, in which he abandoned his call to eliminate enterprise zones in California.

It’s a reach-across-the-aisle gesture, a move in the right direction.

But it doesn’t go far enough.

In his proposed revision for a state budget that’s been doomed from the start, Brown says we should retain enterprise zones, but restructure the way in which tax credits are given by mandating that a business has to increase its total workforce, not just hire a qualified new employee.

This amendment puts the emphasis on business growth, which is the original idea of the state’s Enterprise Zone program.

As the program currently operates, a business within an enterprise zone is eligible for as much as $37,440 total in tax breaks over five years for hiring a qualified new employee.

Employee qualification is generally based on where the employee lives, if he or she has received government aid, is an ex-felon or was unemployed for more than six months before the hire date.

However, Brown’s May revision of his budget would knock the Enterprise Zone incentive down to a one-time break of just $5,000. This just isn’t good enough to attract businesses from outside the state that are looking to relocate and grow their businesses.

Some critics say that the program is expensive and yields inconclusive results.

However, proponents maintain that it’s necessary in this case for the state to spend money through tax breaks to make money through added tax revenue.

But, more importantly, it’s helping to create jobs and business growth, which are especially vital when trying to shake off the malaise of the Great Recession.

More jobs means more revenue for the state through income taxes from employees and sales taxes when purchasing goods in the state.

Brown’s proposed changes to the Enterprise Zone program would stymie its effectiveness.

“A business has a huge incentive with $37,000,” noted Jason Crawford, Santa Clarita’s economic development director. The $5,000 incentive likely just wouldn’t cut it, Crawford said.

“To me, any business that is hiring somebody right now is a boon to the economy and is worth incentivizing,” he said.
We agree.

Our economy needs all the help it can get in climbing out of the massive hole it’s fallen into. This is not the time to cut back programs that help our businesses flourish.

We stand with the local business community in calling on Brown to foster a positive business attitude to help grow local businesses.

That, in turn, would help the people throughout California, as well as the state as a whole.

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