“This morning, AB 1139 was heard but no vote was taken, and the author Assembly Member John Pérez indicated that it was a “work in progress” and would be a two-year bill, meaning that it remains alive but is on hold legislative-process-wise until next January, the second year of the two-year legislative session.

For our opposition coalition, this is a positive development because that means it is no longer advancing towards passage at least for this legislative year. However, we must remain vigilant, as threats have in the past and can in the future resurface in other vehicles and forms and any time.
There was a strong showing at this morning’s hearing by the labor unions who testified in support of the bill. The bill presentation and support testimony was unfortunately filled with numerous, significant inaccuracies and outdated information about the EZ program. The information was extremely negative, portraying the program as one filled with problems, ineffectiveness, and abuse and only helping wealthy areas.

On behalf of the opposition coalition, CAEZ, City of San Diego, and a small business from Lodi testified and provided compelling success stories about the EZ program. We also had a very strong showing of opposition – numerous individuals lined up to express opposition. If you have not already done so, you should see the impressive list of opponents listed on pages 12 & 13 of the analysis!  Assembly Members Salas, Beall and Block spoke up and said positive and helpful things about the EZ programs within their districts.

The chair of Jobs Committee, Manuel Pérez said at the end of the hearing that he wants to address problems with the EZ program and asked the opposition to work with the author on AB 1139.”

The City of Long Beach Enterprise Zone Marketing Program captured the grand prize from the California Association for Local Economic Development, an organization that provides research, training and education for economic development professionals.

The Long Beach Enterprise Zone was redesignated in 2007 for another 15 years. The marketing campaign has increased the number of hiring vouchers by 37 percent, and the increase represents a potential tax credit value of more than $78 million to Long Beach businesses.

The California Franchise Tax Board released a summary of its April 13, 2009 Interested Parties Meeting relating to the assignment of Enterprise Zone tax credits among members of a combined reporting group.  Members of the public attended the meeting and lodged questions and comments regarding the effect and manner in which the assignments will take place.   The meeting’s framework was the draft frequently asked questions (FAQs) released in late March 2009 for public comment.   The FTB still intends to issue further clarification of the statute in response to the meeting. Summary.

California fares poorly in an evaluation of each state’s economic competitiveness by the conservative, Washington-based American Legislative Exchange Council.

The state is 43rd in the rankings and is singled out for special scorn in the report, including one chapter that compares California directly with Texas.
“The decline of California is probably the best evidence that we can present as to the impact of poor state policy making on the economic pulse of a state,” the report says. “California continues to increase regulations, raise taxes and spend profligately. Texas, on the other hand, has a pro-growth economic environment with a competitive tax system, sound regulations and spending discipline that will help Texas maintain its superior performance well into the future.”

Conservative economist Arthur Laffer is a co-author of the study and one chapter recounts his version of how Proposition 13, the landmark 1978 property tax limit measure, was passed and implemented and how California fared thereafter.  The full report is available here.

Senator Cedillo has amended SB 767 to suspend a corporation’s use of Enterprise Zone tax credits if the corporation accepted government funds via the Troubled Assets Relief Program (TARP).  The text of the bill introduction is as follows:

“The Corporation Tax Law authorizes various credits and deductions in computing income subject to taxation.

This bill would suspend specified credits and deductions for a
taxpayer that is a participant, as specified, in the federal Troubled
Assets Relief Program, as provided.…This bill would take effect immediately as a tax levy.”

With the slumping national and local economies doing businesses to constantly cut costs, it amazes me that so few local businesses are taking advantage of the massive amounts of potential tax credits available to companies working in a California Enterprise Zone.

A great illustration of this phenomenon is the county of San Bernadino.  Even thought it has been hit by the current recession as hard as any area of the state, only 68 businesses are taking advantage of the tax credit program.  Matt Wrye, a staff writer for the SBSun estimates the following:

Based on the zone’s hiring-credit incentive alone, an astonishing $175 million might be going unclaimed by businesses in the zone, assuming just one employee at each company qualifies for the credit.  That’s $175 million – it could be much more or less – the local economy is hungry for.

The question is, can your business afford not to take advantage of this tax program?  If you have a company in the San Bernadino area, or any of the state’s enterprise zones, contact us for a free consultation to see how much you could be saving in tax credits this year.

The City of Barstow is located in the Inland Empire North region of San Bernardino County, midway between Los Angeles and Las Vegas.  With Interstates 15 and 40, and highways 58 and 247 all converging in Barstow, the city is a major transportation corridor with more than 60 million people in 19 million vehicles traveling through Barstow each year. The city is home to an Amtrak depot at its Historic Harvey House.

Catering to the tourists is Barstow Outlet and Tanger Outlet Center which together boasts more than 100 outlet stores. Barstow offers all the major conveniences of small town living with the resources of major metropolitan areas only a short drive away.

If you have a company in Barstow, click here for a free consultation and tips on how to take advantage of the Enterprise Zone tax credits available to you.

Effective April 1, California’s sales tax increased by 1%.  The increase is set to expire on either July 1, 2011 or July 1, 2012 depending on the outcome of the May 19 special election.  Some counties voted to increase their local taxes even more.

Pico Rivera and South Gate take the dubious honor of having the highest sales tax in the state with a rate of 10.25%.  The only bright side is that the Enterprise Zone tax credit program allows companies to recover the sales tax paid on qualified machinery used in the Enterprise Zone.  Here is the link to the FTB’s Special Notice listing the new tax increases by city and county.

The final version of a landmark study has just been released by several professors at the USC  Marshall School of Business.  The report concludes that Enterprise Zones have “positive, statistically significant, impacts on local labor markets in terms of the unemployment rate, the poverty rate, the fraction with wage and salary income, and employment.”  The news couldn’t come at a better time when the sagging economy has forced every local and national government to explore new ways to stimulate economic activity.  Importantly, the report counters are previous report that Enterprise Zones did not positively impact the economy.  The USC report, however, relied on sounder assumptions, considered many different programs in tandem and also looked nationally, not just at California as the previous study had.  The full report can be viewed here.

The city of Compton has been known as one of the most dangerous neighborhoods in the country, however ever since the area was designated as a California Enterprise Zone in 2006, the city has been in the midst of a rapid economic expansion.  With national chains moving into the area on a regular basis, many visitors would not even recognize this once feared region.  And one of the key factors in this growth has been the tax benefits given through the California EZ.

Newsweek recently featured this fantastic growth, here is a quote from the article, “And that vacant lot off the freeway? Thanks in part to Compton’s designation as an enterprise zone in 2006, it’s been replaced by a $65 million suburban strip mall, whose palm trees and flower beds give it a look more reminiscent of Orange County than South Central. “Compton is a fundamentally different place,” says Stanford University historian Albert Camarillo, a Compton native who is working on an oral history of his hometown. “It’s one of these communities that’s really in the throes of change.”

Compton’s economic growth appears to only be starting.  With new businesses moving into the area with regularity, it seems only a matter of time until this neighborhood begins to lose its stigma as an area filled with crime and violence, and become a city attractive to businesses and citizens alike.