Less than 24 hours before the JEDE committee was set to vote on Steinberg’s SB 974, Steinberg pulled the bill from the committee.  According to the JEDE committee, because the bill is a lax levy, it is not subject to July 2, 2010 deadline.  The bill may resurface later, but we can only assume that Steinberg had a good reason to pull the bill just before the vote.

Walters, typically very hostile towards Enterprise Zones, issued a short article this morning in which he urges a review of what he considers “all tax loopholes.”  The article notes that LA City Mayor Antonio  Villaraigosa recently took a shot at Senate President Pro Tem Steinberg for authoring SB 974 which seeks to shift EZ funds to a new high school training program.  The article also notes that Gov. Schwarzenegger recently issued his support for expanded EZs.  In conclusion, Walters merely seeks a wholesale review of all tax “loopholes” rather than the usually vociferous and targeted cry to eliminate specifically the Enterprise Zone program.  This could be seen as recognition that the EZs have strong support from upper levels of government and more importantly, that being able to tout the EZ program has immediate and positive tangible and intangible effects on the business climate and job creation.

In today’s Daily News, Austin Beutner, LA’s first deputy mayor and CEO of the Office of Economic and Business Policy, issued a strong statement in favor of the expanded LA Enterprise Zone. More importantly, he backed the general tax policy underlying the EZ Program, i.e. tax credits bring in business and thus more than pay for themselves with other tax revenue and job creation. This is directly contrary to the unions and others who currently oppose the EZ Program.  Beutner had this to say:

Indeed, proof of sincerity on the part of City Hall once was a hurdle in bringing Los Angeles’ economy back to life. But no more. Ronald Reagan used to joke that the scariest words in the English language are: “I’m from the government, and I’m here to help.” Well, the lesson of this “L.A. Story” is that the city government can and will continue to help businesses, including those already here, that want to be a part of our comeback.

In collaboration with the Latino Business Chamber of Greater Los Angeles, State Controller John Chiang will host a free small business tax seminar.  On the agenda is a discussion about the benefits of the California Enterprise Zone tax credit program.  The event will be held June 28, 2010 from 5-8 pm at the MALDEF Building downtown LA.

Los Angeles, California – Governor Arnold Schwarzenegger today issued the following statement after joining Los Angeles Mayor Antonio Villaraigosa to announce the city’s proposal of a Business Tax Holiday and that Baxter’s BioScience business, a biotechnology company, has decided to continue its investment in California, a decision based largely on the recent expansion of the East Los Angeles Enterprise Zone:

“I applaud Mayor Villaraigosa and the city of Los Angeles on their continuing efforts to bring companies and jobs to the Los Angeles area. For our economy to recover we need the private sector to add jobs, and the proposed Business Tax Holiday and recent expansion of the East Los Angeles Enterprise Zone are two surefire ways to do exactly that. It’s great news that Baxter’s BioScience business has decided to continue its investment and preserve jobs right here in California as a direct result of the East Los Angeles Enterprise Zone expansion, and I look forward to celebrating the passage of the Business Tax Holiday and the new businesses it will bring to California.”

Villaraigosa issued this statement:

Today, I joined Governor Schwarzenegger to visit the site of a company that chose to stay in our great City and preserve 600 jobs for hard-working Angelenos.I want to thank Baxter BioScience for turning to our Office of Economic and Business Policy when they began to have doubts about Los Angeles being the best city for them to call home. I’m glad we made our case, and I think we proved that our jobs and economic development team — helmed by First Deputy Austin Beutner — is willing to go above and beyond the call of duty.

Since last February, my office has been meeting with Baxter to figure out we could do to keep their company and the vital jobs it has created here in Los Angeles.We listened to the employees of Baxter and learned how to develop and implement policies that will attract and retain businesses as well as create good-paying jobs right here in Los Angeles. And then we worked hard to actually make that vision a reality!

In fact, one particularly smart, business-savvy policy – the approval of Los Angeles’ State Enterprise Zone – directly contributed to Baxter’s decision to stay. When the East Side Enterprise Zone was expanded to include Baxter BioScience, the company was able to lower their operating costs with their newfound eligibility for special tax credits.

And this is happening to companies throughout the entire City, as we have aggressively expanded our enterprise zones, Los Angeles has gained the remarkable distinction of having the most acreage with enterprise zone designation – out of every city in California!

The bottom line here is that Baxter is just one example, since it is impossible to know how many other companies have decided to stay in LA and hire more people, because of the tax credits and deductions they gained from being in a Special Economic Zone.

Baxter’s represents the results-driven approach to our newly refocused Office of Economic and Business Policy.
And today, we have an exciting announcement that will give Los Angeles businesses another tool to help them thrive and grow: the Business Tax Holiday will attract new enterprise to Los Angeles by exempting them from any gross receipts tax for three years.

The effectiveness of tax holidays has been proven: my office commissioned a study at USC Business School that suggested the Business Tax Holiday would yield no loss in tax revenue. In fact, it would spur enough job growth to create more tax revenue. This tax holiday will create an estimated 55,000 new jobs with 12% unemployment, that is exactly the kind of jumpstart our economy needs.

I am proud of the fact that our office is leveraging every resource at our disposal to put Angelenos back to work, and I am thrilled that Baxter reached out to us and ultimately chose to stay in LA.

So on that note, I would like to thank Baxter again for believing in our City and for inviting us here today to celebrate a major milestone in their evolution as a company.

In a recent article, The League of California Cities discussed the possibility of the state removing the Enterprise Zone program, along with the negative effects that it would have.

Cities with enterprise zones will be interested to know that LAO has proposed to eliminate tax benefits granted to businesses in enterprise zones as a cost savings measure. While this proposal has not been adopted in any pending budget proposal, its existence -along with SB 974 (Steinberg), which would shift enterprise zone tax credits to other purposes, is of concern. SB 974 is opposed by the League and many business organizations.

For a copy of the LAO’s analysis of the Governor’s May Revise visit their Web site.

There is constant debate on both sides of the aisle concerning the fate of the California Enterprise Zone. In a state with double digit unemployment numbers, you would think that the state politicians wouldn’t even consider getting rid of the last true vestige of state funded job creation, however some lawmakers still see the lost revenues from the EZ program as more valuable than the jobs they have helped to create. Jay Prag, from Capitol Weekly, had some interesting points on both sides of the argument:

Several recent economic studies have attempted to measure the true impact of California’s Enterprise Zone program. The results are, as they say, mixed. This has led some to call for elimination of the program in order to recapture the “lost tax revenues.” Though these studies provide a thorough hindsight view, it is important to include a forward looking perspective of the business climate that California faces before considering any changes to California’s enterprise zones.

There’s an old cliché about not seeing the forest for the trees. You can extend that perspective a bit like this: If you use a magnifying glass to carefully analyze a single oak tree in the forest for several days at a time, you won’t see it grow. Your conclusion would then be that the tree isn’t growing and by extrapolation, there is no hope for the tree or the forest. Sometimes you need to back up a bit.

Looking forward and not back, California has double-digit unemployment now and likely will for many years to come. States all around the country are competing for employers. The tax advantages of our enterprise zones are one of our very best and most effective tools for bringing employers to the state. As the biggest state in the union, we need the most jobs. Anything that worsens the business climate and job picture in California – and that includes even talking about eliminating the enterprise zones – is, to be blunt, insane.

The city of Oroville was dealt a blow last month when state democrats halted the passing of a bill that would have allowed businesses located in the Oroville Enterprise Zone to sell employee tax credits they don’t use.  This bill could have helped the cash flow position of many of this small town’s local businesses and their stressed cash-flow balance sheets.

The bill, SB 939, started by Senator Sam Aanestad (R-Grass Valley), was placed on ‘Suspense File’ by state democrats last month, stopping the bill in its tracks.

“The Democrats have once again proven that they are the Party of No when it comes to new job and new business creation,” said Senator Aanestad. “With the California unemployment rate at an all time high of nearly 13% — I cannot even begin to understand or fathom why my colleagues across the aisle continue to reject measures that will bring new jobs and new opportunity to California.”

After a year-long battle, the Century Boulevard corridor in Los Angeles has been approved to be included in the California Enterprise Zone program.  SCPR reported on the development,

State officials have approved the Century Boulevard corridor that leads to and from Los Angeles International Airport as a new part of the “State Enterprise Zone” program. The City of Los Angeles’ bid to add the corridor to the program had stalled in Sacramento for almost a year. But recently appointed Deputy Mayor Austin Beutner stepped in to give it a push.

In exciting news for the Santa Clarita Enterprise Zone, The Signal has just reported that local businesses have issued 248 vouchers for Enterprise Zone-eligible hires in April. This hits a new record for the Enterprise Zone and should help to reveal to other cities in the state how important this program is to increase employment.

This is the largest number of vouchers issued in a single month since the Santa Clarita Enterprise Zone began in 2007.

Each voucher represents an individual eligible for a voucher, and who has been hired by a local company.

The city has issued more than 1,700 vouchers for the program since its designation, helping nearly 200 local businesses by providing tens of millions of dollars in potential tax saving benefits.

“Since its inception, the Santa Clarita Enterprise Zone program has resulted in more than 1,700 employees hired by local businesses and has the potential to save participating businesses a collaborative $60 million dollars,” Mayor Laurene Weste said. “With 97 percent of commercial-zoned land within the city of Santa Clarita included in the boundaries of the Santa Clarita Enterprise Zone, thousands of city of Santa Clarita businesses are eligible for these amazing tax savings.”