In exciting news for businesses located in West Berkeley, the Oakland City Council has announced that they have approved the expansion of the region’s enterprise zone to cover West Berkely, and the over 1,000 businesses that operate out of the city.

The Berkeley Daily Planet reports, “Berkeley’s primary motivation to pass the proposal was to keep Bayer Healthcare, the city’s largest private-sector employer, from leaving town. The company had threatened to outsource some of its manufacturing, a move city officials feared would lead to the pharmaceutical giant eventually shutting down its Aquatic Park campus entirely. As a result, Berkeley agreed to give Bayer $10 million in tax breaks for over two years, including a reduction in PG&E bills, as part of the enterprise zone, in return for which the company will remain in Berkeley and invest $100 million in the facility.”

This is exciting since it could help to bring new businesses into the area, and will help to offset the high cost of living in the area.

Here’s an article from the San Diego Union-Tribune:

Don’t pare enterprise zones
BY DAN DUFRESNE
THURSDAY, DECEMBER 17, 2009 AT MIDNIGHT

The state’s nonpartisan Legislative Analysts’ Office (LAO) just released some staggering figures: our state must address a deficit of $20.7 billion between now and the time the Legislature enacts a 2010‑11 budget. What is perhaps even more frightening is the LAO prediction that California will have a deficit of around $20 billion each year for the next several years.

In the same report, the LAO also states that unemployment is expected to fall slowly as the unemployment rate usually peaks several quarters after a recession ends. “By 2015, unemployment is projected to be down to 7.3 percent – well above the pre-recession level,” the report says.

In the face of this ongoing fiscal crisis, the LAO recommends that lawmakers look for new sources of revenue and consider ending certain tax breaks for businesses.

Most unwisely, this includes the suggestion to reduce or eliminate the Enterprise Zone Program.

The mere suggestion of cutting back California’s only economic development tool when unemployment is not expected to drop for several years does not make any sense. The reality is that California’s economy will not recover on its own. Enterprise zones were created to revitalize distressed communities, entice business development in California and create jobs. The LAO’s own predictions about the state’s continued economic woes only highlight the need for the Enterprise Zone Program now more than ever.

In fact, the program is ultimately revenue generating as it creates more taxpayers – corporate and individual – paying more money back to the state. This is the type of program that will help get our state back on track and has already proven to reduce unemployment and poverty levels.

Other states such as New Jersey, Massachusetts and Oklahoma have embraced economic development in the midst of the recession. For example, the New Jersey Legislature enacted legislation creating a new $3,000 grant for each job created in that state during 2009, as well as another grant to offset 7 percent of new investment in plant and equipment costs. Massachusetts created a package of new programs intended to attract new investment from life sciences companies and Oklahoma is encouraging new higher wage jobs by offering a 6 percent incentive payment on payroll for new jobs that pay 150 percent of a company’s current average wage.

California needs to be able to compete with these and other states. Now is time to bolster our economic development initiatives and encourage participation in the Enterprise Zone Program so we can turn our state’s economy around.

Epsilon Systems Solutions Inc., which is headquartered in San Diego, has two locations in the San Diego Regional Enterprise Zone. Epsilon Systems’ National City location employs approximately 90 people and the Otay Mesa facility has 10 employees. Most of Epsilon Systems’ work is focused on offering technical support for government agencies such as the Department of Defense, Department of Energy and the Department of Homeland Security. More than 90 percent of the work performed at Epsilon Systems’ National City and Otay Mesa locations is performed by those in good-paying blue collar jobs, ranging from pipe fitting to welding to general laborer duties.

With a population of just over 60,000 people, National City has been especially impacted by this recession, with a 19.4 percent unemployment rate as of September 2009. Epsilon Systems – a growing company – just hired several people in the last month and a significant portion of them work at the company’s National City facility. Over the past few years, the company has hired a number of Vietnam veterans and recently discharged veterans, providing opportunities for those who often face barriers to employment.

The money that our company has saved by participating in the Enterprise Zone Program has allowed us to offer additional training for employees, hire more people, provide top-notch benefits and expand the National City facility.

While other companies are laying off workers or closing their doors, Epsilon Systems has remained competitive and continues to succeed in California’s depressed economy – and this is due, in part, to the Enterprise Zone Program’s valuable tools for business growth. The Enterprise Zone Program is crucial for businesses and residents not just in the San Diego area, but throughout California. It’s a program that California cannot afford to be without.

Dufresne is director of government relations for Epsilon Systems Solutions Inc.

Spidell’s Flash Email has reported the following news from the Franchise Tax Board for 2010:

The FTB will not assess the mandatory e-pay penalty for individuals in 2010. The FTB will continue to focus efforts on education and outreach so that taxpayers and their representatives can implement processes and procedures to comply with the mandatory e-pay requirement. The law requires taxpayers who make a payment of more than $20,000, or who have a tax liability of more than $80,000 in a year beginning on or after January 1, 2009, to make all future payments electronically. The FTB will continue to monitor compliance levels to determine the appropriate time to begin imposing the penalty provision of the statute.

This past week, for the first time ever, state legistlators received a pay cut. Overall the pay cut removed 18% from the elected officials annual salaries, starting at the end of December.

In addition to the salary cuts, state officials also had 18% of their health and benefits removed as well. Legistlators have received $116,208 to $95,291. Torey Van Oot from the SacBee had this to say about the events, “State records covering more than four decades – from 1967 to present – show that Monday’s pay cut marked the first for elected officials during that span. Legislative pay had climbed from $16,000 in 1967 to $116,208 in December 2007.”

This past week was exciting for the cities of Long Beach and Santa Fe Springs, which both were honored as being the two most business friendly cities. The award was given by the Los Angeles County Economic Development Coporation (LAEDC) at the 14th annual Eddy awards ceremony.

Long Beach took the honors for the most business friendly city with over 60,000 citizens while Santa Fe Springs won the award for the most business friendly city with less than 60,000 citizens.

The California Business Blog had this to say about Long Beach’s win, “Long Beach believes that a city must invest in modern infrastructure as a foundation for the development of long term economic prosperity for its businesses and residents and that is why they are committing more than $1.1 billion to infrastructure investments. They are also demonstrating their commitment to retaining jobs in their region through an investment in the local business community by offering Enterprise Zone benefits, expedited permit processing, and a transparent, proactive government comprised of civic leaders who understand the necessity of planned growth.”

Many different financial programs make big promises but fail to deliver, however the Enterprise Zone offers local businesses with true incentives to help offset expenses. The Salinas Valley enterprise zone is proving this concept with its latest announcement that Salinas Valley businesses have received approximately $1 million dollars in tax credits.

The TV station, KION, reported the announcement and gave the following report on the program, “The main purpose of an enterprise zone is job creation; businesses can get more than $37,000 in tax credits for every person hired. Also, lenders may be able to receive a deduction on their net interest and companies can also increase their ability to gain state contracts.”

Below is a letter from CAEZ President Craig Johnson regarding Assemblyman Perez and AB1139:

Dear CAEZ Members and Friends of CAEZ,

As you can see from the article below, Assemblyman John Perez, the author of AB 1139, will become the new Speaker of the State Assembly. Assemblyman Perez also recently removed AB 1139 from the January 5th agenda of the Assembly Jobs & Economic Development Committee. Both of these developments should give us pause, as his intentions toward the Enterprise Zone program are at best, unclear at this point.

We will still have a fight on our hands to preserve and advance the Enterprise Zone program in 2010, as the Legislative Analysts Office has once again called for the abolition of the program.

I will keep you apprised as things develop and ask that you continue to provide CAEZ with your success stories. This effort is vital if we are to combat the onslaught of negative press that continues to appear in newspapers and Journals across the state. Legislators read! It is incumbnet upon us to share our successes with our Legislators in every part of the State. If we don’t do it, no one will.

Thank you for your continued support of the Enterprise Zone program.

CRAIG JOHNSON
President
California Association of Enterprise Zones

Perez emerges from speakership battle
jsanders@sacbee.com
Published Thursday, Dec. 10, 2009
Assemblyman John A. Perez’s final opponent has bowed out, setting the stage for the first-term Democrat to be selected Assembly speaker today — the first openly gay man to hold the post.
After behind-closed-door talks this week with Perez and other political leaders, Assemblyman Kevin de Leon agreed to bow out and is expected to nominate Perez in an Assembly Democratic Caucus today, Capitol sources said.
It is not clear when a formal floor vote will be taken, but by uniting behind a candidate, Democrats need not rely on GOP votes.
De Leon’s decision ends one of the nastiest battles over the Assembly’s top job in recent history, with allegations of backstabbing, double crossing and political deceit.
Perez, cousin of Los Angeles Mayor Antonio Villaraigosa, will replace current Speaker Karen Bass, who will be forced out of the Legislature by term limits next year.
Democratic colleagues praised Perez, who has served this year as caucus chairman, helping steer the 51-member group through often bitter disagreement as California’s reeling economy forced billions in cuts to education and other public services.
“He’s fair, he’s inclusive, he’s articulate, he’s focused, he’s a team player, and he’s friends with everybody,” said Assemblywoman Bonnie Lowenthal, D-Los Angeles.
Lowenthal said that Perez’s status as a first-year legislator was an asset because he can serve five years as Assembly leader before being termed out.
“I trust him,” Assemblywoman Fiona Ma, D-San Francisco, said of Perez. “If he says that he’s going to do something, I believe that he will.”
Republicans said that they differ markedly in political ideology from either Perez or de Leon, both labor-backed Democrats, so the selection of one over the other makes no substantive difference in prospects for GOP legislation.
Assemblyman Anthony Adams, R-Hesperia, said Perez has demonstrated a “great deal of integrity and steady handedness” and that Republicans must find a way to work with whomever Democrats choose because they hold 51 of the 80 seats.
“Candidly, what choice do we have?” Adams said.
Perez, who is chairman of the Assembly Democratic Caucus and was regarded much of the year as a potential candidate for speaker, entered the fray as a late-comer after being pushed by colleagues.
The final days marked a political whirlwind that apparently pulled the rug from under de Leon, who was regarded as the clear frontrunner but never won commitments from a majority of the 51-member Democratic Caucus.
Behind the scenes, the race appeared over shortly before Thanksgiving, when Villaraigosa hosted a private meeting of Perez, de Leon and former Assembly Speaker Fabian Nunez, de Leon’s childhood buddy and lifelong friend, Capitol officials said.
The session ended over a bottle of wine, officials said, with de Leon expected to become speaker and Perez targeted to run with no major Democratic opposition for the Senate seat of Cedillo, who has long coveted a move to the Assembly once he is termed out next year.
Despite the apparent understanding, de Leon was not able to quickly muster the caucus majority necessary to secure the post.
Torrico said many Democratic colleagues simply felt that de Leon, chairman of the powerful Assembly Appropriations Committee, had not led committees focused on major policy issues and was not “up to the job” of speaker.
“Too many people believe that he didn’t earn his stripes, that Fabian Nunez did all the heavy lifting for him,” Torrico said.
Days after the late November meeting with Villaraigosa, Perez switched gears and opted to fight de Leon for the speaker’s job after being lobbied heavily to run by Assembly Democrats Jared Huffman and Fiona Ma, among others.
With Bass’ support, commitments quickly began swinging Perez’s way.
Torrico said he felt a turning point came with commitments by Ma and Los Angeles Assemblyman Felipe Fuentes to Perez.
“Once they came on board with Mr. Perez, basically the three most operational people in the Assembly were on the same team,” he said. “That was a force that could overcome a four-year head start that Kevin de Leon had over John Perez.”
Last week, Bass held a press conference to throw her support behind Perez, declare that a majority of the Democratic Caucus supported him, and to announce that she would begin working with Perez to set a timetable for transition.
Neither Perez nor de Leon commented publicly about the turn of events, but privately, de Leon’s camp continued to press the fight.
The same day that Bass told the media that Perez’s victory was imminent, 10 members of the Assembly’s 17-member Latino Caucus met at the Sheraton Hotel, after which seven declared their support for de Leon as speaker.
At the time, Assemblyman Pedro Nava, a Santa Barbara Democrat who supported de Leon, said the contest was far from over.
“I think that we have a large number of very independent-thinking people who are not going to be stampeded into making a decision,” Nava said.
Since then, Perez and de Leon, along with others, have been ironing out differences in private talks, leading to today’s conciliation.
Doug Herman, Perez’s political consultant, said he does not expect tension to linger between the two finalists for the top job.
“John would never double-cross Kevin,” Herman said. “I think they both want to be able to, and will be able to, work together.”

Small businesses in Santa Clarita have a new partner in their success. The Power Media Group, a local advertising agency, is helping companies around the area get through the recession.

Direct Sales News had this to say about the program, “The goal is also to help small businesses, which might be standing on the brink of collapsing, to re-think strategies and revive business through strategic marketing and advertising campaigns. Patricia also plans to fully promote businesses online through the Center’s Web site, and to support the operations through Power Women Business Center memberships of $250, $500 and $750 per month, which will grant women entrepreneurs access to the Center’s facilities and business consulting services.”

So how does the Santa Clarita enterprise zone play into the overall strategy? “Since the center will be located in the city’s Enterprise Zone, many of the small businesses hosted there may potentially qualify for enterprise zone credits, which constitutes a state income tax savings opportunity,” said Laura Biery, administrative analyst with the City of Santa Clarita’s Economic Development Division. Biery welcomed Patricia’s initiative. “The women’s business center will complement our other programs we have in the city very well.”

Legislative wrap-up 2009

Here is our annual summary of tax-related legislation enacted this session. / more+

Free backup withholding webinar

California conforms to federal backup withholding beginning January 1, 2010. / more+

Corporation tax law changes in California

Recently enacted California legislation adopted new statutes and amended existing statutes that result in major changes to how corporations are taxed in California. / more+

Find forms faster and easier with our form locator

On December 15, 2009, we will have a new search tool on our forms webpage; it is called the Form Locator. / more+

Provisional payment plan pilot program begins December 2009

Our collection response and resolution section will begin to offer a provisional payment plan for personal income taxpayers. Taxpayers who qualify for this pilot program will be allowed to make payments towards their tax liability without involuntary collection action taking place, while they prepare and submit their missing valid tax returns to us. / more+

Top 10 personal income tax errors that delay return processing – 2009

Check to see where we found the most common errors on personal income tax returns. / more+

Top 10 business entity errors that delay return processing – 2009

Check to see where we found the most common errors on business entity returns. / more+

Small business

Will your client qualify for the new jobs credit?

Newly enacted state law, ABX3 15 (Assembly Budget Committee, Stats. 2009 Third Extraordinary Session, Ch. 10) allows a potential income tax credit of $3,000 to a qualified taxpayer for each additional full-time employee hired. / more+

Ask the advocate

Communication guidelines

Quite often we receive questions from taxpayers and practitioners on issues relating to the interpretation of provisions of the R&TC as well as policies and procedures of our department. / more+

Inside FTB

Take a look at the changes happening here at FTB. / more+

Criminal corner

Our monthly summary on bringing tax criminals to justice, and closing the tax gap one case at a time.  / more+

Big business

Gross receipts fees discussed at CalCPA

On October 28, we attended the CalCPA Committee on Taxation, our annual liaison meeting. We shared legislative updates affecting us, changes to our auditing and collections, and new communication products available to our taxpayers and tax professionals. / more+

Fresno is offering to pay employers 80% of the wages for the next year. Here is the flyer and a link to the news clip about this new subsidy program for Fresno employers.

Click here for the link.
Click here to download the flyer.