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Brown’s economic plan outlined

Posted: June 20, 2013 3:08 p.m.
Updated: June 20, 2013 3:08 p.m.

Keynote speaker Kish Rajan, director of the Governors Office of Business and Economic Development, speaks at the VIA Luncheon held at Valencia Country Club on Tuesday.

 

Kish Rajan with Governor Jerry Brown’s Go-Biz department spoke with a group of business leaders at the Valley Industry Association’s monthly luncheon in Santa Clarita on Tuesday.

Rajan, director of the Governor’s Office of Business and Economic Development, broadly outlined Gov. Brown’s plan for economic development in the state of California.

And, while business leaders generally applauded the effort to grow the state’s economy, not all agreed with the specific plans.

Some business owners said they still felt that state government was too far removed from their pain of operating a daily business in California, burdened by numerous regulations.

California needs to change its culture; and Brown believes it’s urgent that happen in order to move California forward to keep it competitive, attract businesses and create jobs and make it a bigger player in the international market, Rajan said.

Among the goals of the state’s economic development office are to open international trade paths and improve the state’s regulatory climate in a way that maintains the residents’ values by partnering with businesses and not being punitive.

One of the ways Gov. Brown proposes to make this change is through passage of senate bill 617, Rajan said.

The bill would first require an economic analysis of future laws to determine if the proposed regulation would adversely affect businesses in the state.

Citing the California Environmental Quality Act as an example, Rajan said it needs to be reformed so that process is straightforward and not used just to stop development.

“We want to bring a voice for balance,” he said.

Other states have not been shy about their attempts to poach California businesses and lure them away to their own state, Rajan said.

Brown also wants to elevate California businesses to the international marketplace.

To that end, Brown led a delegation to China for two weeks and the group witnessed first-hand the “fastest, largest transformation of any country ever,” Rajan said.

Every sector of society in that country will need to be developed from infrastructure to dealing with severe air pollution. Some 350 million people are migrating from China’s rural areas to major urban centers, he said.

That creates tremendous opportunity for growth, and California businesses are in a position to help transform the global economy, Rajan said.

“California has $230 billion in manufacturing output, making the state a natural leader,” he said. “It exported $27 billion worth of goods and services to China.”

The governor also wants to step up efforts to help grow businesses in the state, but he proposes the elimination of the Enterprise Zone by December 31 of this year as a means of financing his plan.

In the past 30 years, $750 million has been spent in tax credits for the Enterprise Zone programs in the state, and while it has provided benefits to businesses — it does not represent an effective growth strategy, Rajan said.

“It was a good policy but not one that leads to overall, long-term growth,” he said.

Brown’s three-point proposal for eliminating the Enterprise Zone program includes offering a sales-tax exemption on equipment purchased by manufacturers and biotech companies to level the playing field with other states, Rajan said.

Second, he wants to use the money to cut deals with companies on an individual basis to help companies grow. In exchange, he intends to ask for specific commitments to investments in the state and creation of jobs to ensure the state is getting a good return on its investment, he said.

Third, Brown wants to preserve a hiring tax credit but make it available only in poorer communities, hoping to entice companies to locate and create jobs in the areas, Rajan said.

Eliminating the Enterprise Zone is a topic of heated debate across the state, and local business leaders have lobbied the governor to reconsider.

“For the Santa Clarita Valley, they’re changing the rules two years into a 15-year program,” said Jason Crawford, marketing and economic development manager for the city of Santa Clarita.”

Aerospace Dynamics International bought property to expand their business, build a new building and hire more than a 100 people, he said.

“ADI expanded under the assumption that there would be an EZ here until 2026, and now they’re changing the rules,” Crawford said.

jana@signalscv.com

661-287-5599

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