After three very intense hearings, the JEDE committee has issued a list of all the recommendations for revision to the Enterprise Zone program. Final comments are due by November 6. The new draft of AB1139 should be out by November 10. At that time, we’ll know what are the next steps for the anti-business, anti-employee bill AB1139.

It appears that the city of Salinas is going to get a boost from Green Vehicles, a San Jose electric car manufacturer. Despite being known up until this point primarily for its agricultural development, Salinas is now starting to branch out into additional industries.

The plant is scheduled to open in Salinas sometime at the beginning of 2010. Green Vehicles will take fill the 80,000 square foot facility previously occupied by Firestone Tire and Rubber Co.

I have not yet heard directly from Green Vehicles on the company’s reasons for creating operations in Salinas, however the Salinas Valley’s Enterprise Zone designation most likely played a strong role in the decision making process. With numerous tax benefits supplied by the EZ program, Green Vehicles is sure to be rewarded with state tax savings for their location decision.

News coming out of Stockton this week reveals the perspective of the SBA Chief, Jim O’Neal. At the Stockton Summit, O’Neal discussed the opportunities and challenges that the economy offers small businesses in California. Despite the fact that there are quite a few difficult obstacles such as: lower consumer spending and hesitant banks; there are also a number of opportunites that businesses can take advantage of. Some of the keys that O’Neal discussed were:

• A rich workforce to pull employees from
• Lowered prices for inventory
• Lower real estate costs

In addition to these helpful benefits, companies can also take advantage of their local enterprise zone program, which could be saving your company a considerable portion of the your tax expenditures. Contact us today if you are interested in seeing what the state has allocated to you.

Gov. Arnold Schwarzenegger has vetoed all six bills designated by the California Chamber of Commerce as “job killers,” the chamber announced Monday.

Schwarzenegger also signed into law a chamber-designated “job creator” bill that will reinstate air quality permits for hundreds of construction projects in the Los Angeles region.

The six vetoes uphold Schwarzenegger’s tradition of rejecting job killer bills reaching his desk; since he took office, he has vetoed 53 out of 57 bills bearing the job-killer label.

“Governor Schwarzenegger understands that California business cannot withstand additional regulation at a time when we are struggling with economic recovery,” said Allan Zaremberg, chief executive of the state chamber. “Allowing these ‘job killer’ bills to become law would have further hampered hiring and hurt our state’s competitiveness.”

Among the bills vetoed were two that the chamber feared would increase business’ exposure to lawsuits: AB 793, which would have broadened the ability of employees to sue for discrimination; and SB 242, which would have imposed penalties on employers who failed to post signs or otherwise communicate with customers in additional languages.

Schwarzenegger also vetoed AB 943, which would have restricted the ability of employers to use credit reports in hiring decisions; as well as SB 789, which would have made it easier for farmworkers to gain union representation.

Also on the veto list were: AB 2, which would have allowed lawsuits over health insurers’ decisions to rescind coverage; and AB 1404, which would have limited the amount of pollution offsets businesses could use to meet their greenhouse gas emission reduction goals.

On the other side of the ledger, Schwarzenegger signed into law SB 827, which as of Jan. 1 reinstates permits that had been granted for hundreds of construction projects in Los Angeles, Orange, Riverside and San Bernardino counties. The South Coast Air Quality Management District permits were frozen by a judge as the result of a lawsuit filed by environmental groups challenging the district’s awarding of emission reduction credits at below-market costs.

Schwarzenegger had signed another “job creator” bill in July: AB 333, which extends the life of subdivision and parcel maps for two years; many of these development maps had been set to expire due to inactivity related to the state’s real estate crash.

The governor did sign A.B. 1383, which establishes a hospital provider fee, proceeds of which would help the state qualify for more Medicaid money from the federal government by being able to offer a larger state match. The bill authored by Assembymember Dave Jones, (D-Sacramento) was co-sponsored by California Hospital Association and two other hospital groups, but was opposed by the state chamber and some hospitals that do not serve many Medicaid patients.

Article from LA Business Journal

Franchise Tax Board (FTB) today announced it has begun contacting more than 35,000 companies that did business in California in 2007, but failed to file a state tax return for that year. FTB annually reviews more than 5 million income records from government agencies and financial institutions, and matches them against tax records filed to determine whether some businesses have yet to file. As part of this annual effort, FTB collected approximately $31 million last year from businesses that failed to file tax returns.

Businesses contacted by FTB will have 30 days to file their delinquent tax return or show why one is not due. If no action is taken, FTB will issue a tax assessment that may include penalties and fees. With the state’s automatic seven-month extension, companies doing business in California are provided up to 10 and one half months to timely file their California state tax return.

Failure to file tax returns is one part of the tax gap that is defined as the difference between taxes owed and taxes paid. California estimates its annual tax gap to be $6.5 billion per year.

For those receiving notices, information is available by calling 866.204.7902. Callers should be prepared to provide the 15 digit notice number.

Today I attended the second of three hearings related to AB1139. The hearing focused on the Enterprise Zones and innovation. Assemblyman Manuel Perez, as head of the JEDE, presided over the hearing. Assemblyman John Perez, AB1139’s author was also present for the first part of the hearing and stated that his two main concerns were getting rid of the TEA criteria and getting rid of retroactive vouchering. His stated reason for wanting to delete the TEA criteria was not persuasive. He did not cite to any concrete numbers or even rough statistics, but in a general baby-out-with-the-bathwater stroke suggested that “some” employees who live in expensive lofts are qualifying for the credit because some nicer areas of Oakland, Long Beach and San Francisco are within the TEA. On that basis, he concluded that the TEA category must go.

There was some very persuasive commentary by proponents of the EZ, and particularly some truly amazing real life stories from businesses who said that but for the EZ, they would not be in business today. Interestingly, those employers are hiring the types of employees and providing the types of benefits that the EZ program was designed to accomplish. More on today’s hearing next week.

The next AB 1139 hearing is October 19 in San Diego.

Here is the FTB’s October 2009 Tax News. Enjoy.

Click to Read

Click to Download PDF

California Enterprise Zone Program: A Review and Analysis

Thursday, October 8, 2009 from 10:30 a.m. to 2:00 p.m.

Roosevelt Community Center
901 East Santa Clara Street
San Jose, California 95116

DRAFT AGENDA

This is the second in a series of hearings being held by the Assembly Committee on Jobs, Economic Development, and the Economy on the California Enterprise Zone Program and other geographically- targeted economic development area (G-TEDA) programs. Collectively, the G-TEDA programs represent one of the state’s primary economic and workforce development initiatives.

This hearing will focus on California as a world leader in industries that rely on innovation to remain competitive. Presentations will discuss the changing global economic landscape and the potential and current role of the G-TEDA programs in advancing the state’s competitiveness in the areas of innovation and manufacturing.

Welcome, Introductions and Opening Statements

Chairman Pérez and Members of the Assembly Committee on Jobs, Economic Development, and the Economy will give opening statements and frame the key issues to be examined during the hearing. Mr. Chuck Reed Mayor of San Jose will give a few welcoming remarks.

II. California’s Global Competitiveness: Re-establishing the State’s Innovation Edge

Sean Randolph, Bay Area Council Economic Institute (invited)
Louise Auerhahn, Working Partnerships USA
Representative from Lockheed Martin (invited)
Alissa Anderson, Deputy Director, California Budget Project (invited)

The G-TEDA programs operate within a larger economic and workforce development network. Presentations during this panel will give information on how these programs are used or could be used as part of the state’s larger economic development strategy to re-establish itself within a global marketplace.

III. Economic Development: Focus on Manufacturing
John Weis, Deputy Executive Director San Jose Redevelopment Agency
Neil Struthers, Santa Clara Building Trades Association (invited)
Representative from the Silicon Valley Leadership Group (invited)
Jeff Farano, Owner, SA Recycling (invited)
Representative from Siesman, a global manufacturing company located in an enterprise zone (invited)
Representative from the International Brotherhood of Electrical Workers (invited)

Statute provides legislative intent that clearly states that the purpose of the enterprise zone program is to “stimulate business and industrial growth in depressed areas of the State.” Presentations during this panel will discuss how the G-TEDA programs in conjunction with other programs are used or could be better used to meet this statutory intent and advance competitive manufacturing opportunities.

IV. Public Comment

Anyone interested in addressing the Committee may sign up to speak during the public comment period. A sign-up sheet is located at the back of the hearing room.

V. Summation of Key Concepts and Closing Remarks

Assembly Members will highlight key issues and provide recommendations on further actions by the Assembly Committee on Jobs, Economic Development, and the Economy.

After missing out on this year’s Enterprise Zone program, the city of Needles continues to push for tax breaks in order to attract businesses away from nearby Arizona. With Assembly Bill X3 82, the city has put together enterprise zone legistlation that would establish several key benefits for the region.

Marj Dario, from the Needles Deser Star, had this to say about the development: “The group effort started when those enterprise zone applicants not selected this year came together to form a coalition. Those applicants, plus an auto plant in Fremont, have proposed an initiative titled “100,000 New Jobs for Californians (11 New Enterprise Zones) which requests special one-time enterprise zone designations be granted.”

Along with Needles, other cities that joining the coalition are: Anaheim, El Monte, Escondido, Fremont, Gardena, Los Angeles County, Madera County, Monrovia, Needles, Oxnard and Wasco.

Although payroll job losses slowed significantly, the state unemployment rate continued to climb in August, rising three-tenths to 12.2 percent, its highest level since 1940’s record 14.7 percent. From a survey of 5500 households, the state Employment Development Dept reported that 14 California counties now have jobless rates of 15 percent or more, and nearly 30 percent of the state’s unemployed workers have been jobless for over six months. However, EDD’s employer payroll survey showed substantial improvement, with 12,300 jobs lost in August, compared to 38,900 in July and an average of 73,700 for the previous six months. California’s trade, transportation & utilities sector and the construction industry suffered the biggest declines last month, down 7100 and 7000 jobs respectively, followed by manufacturing (-2800). Educational and health services added 6000 positions, along with information (3400) and government (2000).

The Business Forecasting Center at the University of the Pacific predicts that California’s unemployment rate will remain above 12 percent for all of 2010, peaking at 12.6 percent next spring. A return to the state’s pre-recession unemployment levels (under 6 percent) may not happen before 2013. UCLA’s Anderson Forecast is slightly more optimistic, projecting a peak of 12.2 percent and double-digit unemployment until sometime in 2011.

The Recession’s Uncounted Casualties

They’re not a factor in the unemployment rate, but they are either out of work or stymied by the recession into working fewer hours than they’d like, often at reduced wages. The Bureau of Labor Statistics reports that California’s underemployment rate – a broader index which includes unemployed people as well as people forced to take part-time or odd jobs, and those who have quit job hunting out of discouragement – is currently at 18.5 percent, up from 11.7 percent one year ago. An estimated 1.7 million Californians are working part time because full-time positions aren’t available, and about 34,000 would-be workers have grown too discouraged to continue job hunting.

California’s Enterprise Zones need to be expanded to create job incentives.