Here is the September edition of the FTB’s Tax News.

A strong editorial urging approval of the West Valley enterprise zone appears in today’s Desert Sun.  Read it here.

The Sacramento Business Journal ran the following Op-ed piece last Friday.  The writer is Enita Elphick, business owner of Unity Forest Products.  Again, the business world is speaking out in favor of the EZ programs against the backdrop of dueling statistics about the program’s effectiveness.

This is no time to be ending the state’s enterprise zone program

California’s enterprise zone program is one of the state’s most important economic development tools.  The program was created in 1984 in order to stimulate business and create jobs in depressed areas with low incomes and high unemployment. The goal is to entice businesses to set up shop, hire locally and hire people with barriers to employment — and revive the local economy by providing companies with tax incentives and other benefits.

Surprisingly, there are some legislators in Sacramento looking to end the enterprise zone program, threatening to stop what little job creation is taking place. This makes no sense. Over the past 25 years, enterprise zones have proven to be beneficial to California’s economy and employment rate.

The program is beneficial to California as a whole. The California Association of Enterprise Zones website reports that “zones account for nearly 30,000 jobs generated over a 10-year period, and that growth brought funds to the state through income tax, sales tax and corporate tax.”

Similarly, as individuals are hired, their dependence on social services decreases.

As owner of Unity Forest Products, an organization that has planted its roots within one of California’s 42 enterprise zones, I can say that our organization would not be here today if it weren’t for the program. The current economic hardships so many of us are facing make it extremely difficult to do business, especially in California. If the program did not extend benefits to our company, we would not have been able to continuously expand while increasing our work force and remain viable during these tough economic times.

Unity Forest Products was a startup in 1988, and without the hiring tax credits and other incentives the enterprise zone offers, I would not have been able to obtain the loans necessary to start the business. Additionally, we began with four employees, but because of what the enterprise zone allowed us to accomplish, by 2008 we had over 120 employees.

From a job creation point of view, comparing all of the job programs at the federal or state level, the enterprise zone program is by far the most productive. In addition, it paves the way for business growth in disadvantaged communities.

The enterprise zone program is one of the few remaining programs that make sense. If the legislature comes back from summer recess and votes to end the enterprise zone program, it would be devastating for our business, the employees who rely on us for their livelihood and the economic forecast for the state.

John Shaffery Chairman, SCV Chamber of Commerce wrote this spirited op-ed piece in today’s Santa Clarita Vally Signal:

Your article about enterprise zones (“In the zone: A local look at the effectiveness of enterprise zones,” August 8, 2010) made a number of good points, but I think it is important to understand more about the importance of this economic tool for businesses – especially those in the Santa Clarita Valley.

To try and assess if enterprise zones are good or bad is the same as saying we’re not sure if a patient will react to an antidote – if you don’t give them the antidote then you can be assured of one thing: the patient will get sick and die.  California businesses have been sick and on life support for a number of years now. Businesses that want to be in California are trying to find every reason to stay here, and the enterprise zone tax credit program is a tool they can use to make their businesses more economically viable.

Let’s look for a moment at the California Legislative Analyst’s office estimate that enterprise zones cost the state $400 million. The CLA does not discuss the other side of this economic equation to determine the number of potential lost jobs if some companies didn’t have this tax credit available.

What if 50 California companies moved to another state that offered similar or more aggressive tax incentives? If each of those companies employed 10 people, that would mean 500 jobs lost in this state. Over a one-year period that may not seem like a lot. However, if you multiply that number by 10 years, you end up with 5,000 jobs going elsewhere.

The point to remember is that these types of tax incentives not only increase hiring, but they also are an incentive to keep companies from leaving. California has one of the most highly taxed, legislated and regulated business climates in the nation, and we can’t continue to think companies will just stay here because of our good weather and nice beaches.

Enterprise-zone tax credits are a vital part of the SCV’s economic engine as well as in 41 other areas across California. Every business owner and taxpayer should demand Sacramento leave the enterprise-zone tax credits alone.

Harbor Gateway is seeking EZ status to attract business and help create jobs for the unemployed.  “It would be a significant benefit to businesses,” said Bill Johnson, manager of the Los Angeles County Economic Redevelopment Division.

Given the current EZ debates, it is critical to highlight the requirements to become an EZ.  As the article states, “To qualify, the area must have a high unemployment rate and a high volume of low-income residents.”  Enterprise Zones are built around areas of high unemployment and low income residents.  Only those areas can even apply for one of the limited number of EZs.  The subsequent business build up directly benefits the less fortunate.   Union leaders now characterize the EZ program as a tax loophole, even though the EZ program directly benefits the workers the unions claim to defend.

The full article can be read here.

While the anti EZ academicians spew about the inefficacy of the program, they ignore the plain reality that businesses do rely on the EZ program to expand their businesses.  Empirical evidence alone will never provide the full picture.  This is particularly so here where the empirical data is being questioned.  Couple that with the mounds of strong anecdotal evidence that has come to light recently clearly shows that the EZ program provide a significant benefit to California businesses.  When these businesses grow, or decide not to move out of state, California’s employee win as does the government with increased revenue and better job projections.  An article in this weekend’s Santa Clarita Valley Signal is illustrative.

The enterprise-zone tax credits have played a key role in the business’ growth over the past two years, [DME Direct ]owner Andrew Everett said.
“We started this business from our house,” Everett said. “The purchase of our warehouse was directly related to the fact that it was in the enterprise zone.”
Because of the credits, “we can employ more people and grow our business,” Everett said, adding that the tax savings translated to five new employees over the past two years.

 The full article can be read here.

The Desert Sun reported on Mark Weber move into the Coachella Valley EZ manager.   Mark, who replaces Hal Joseph, seems to have significant expertise that should hopefully give him the tools he needs to lead the zone.  The full article can be read here.

The Monterey County Herald had an article outlining the number of new jobs created through the Salinas Valley EZ.  The full article can be read here.

Three years after Santa Clarita’s enterprise zone went into effect, the business community is pushing to have it expanded to cover more of the valley.

California’s 42 enterprise zones are intended to boost business in disadvantaged areas by providing tax breaks for businesses that hire workers who meet certain criteria, from laid-off workers to veterans, and for specific projects such as business expansions.  Here is the link to the full article.

Here is the link to the July edition of the CAEZ newsletter.