John Coupal issued a stinging missive today highlighting just how much Brown has caved to the Unions.  While everyone else is “sacrificing”, the Unions and Brown have made minimal cuts.  His rhetoric and his actions have been far from consistent.  And at the Unions, its business as usual.

Sacramento Bee reports that budget talks have broken down.  Governor Brown’s backers have said “no” to the GOP 5′s demands and talks are “done and over.” 

Bill LaMarr, executive director of the California Small Business Alliance, deftly responds to the Bee’s Board about teh EZ:

As reported today by Californians for Jobs and Safe Communities, Assemblyman Cameron Smyth has called the Governor’s proposal to eliminate the Enterprise Zones exactly what it is – a $1b tax increase.   While the Governor has been trying to claim the high road, he’s skirting the real issues, i.e. that he is raising taxes on businesses and not taking it to the voters.

At the February 7, Assembly hearing, someone asked the LAO representatives why the Governor refuses to take his $1 billion tax increase to the voters.  The response was that because the tax increase doesn’t affect all the voters and it therefore doesn’t need to go to the voters.  Without commenting on the wisdom (or legality) of that response, I suggest that the reason why Brown doesn’t want voters to decide on whether the EZ program continues is because of what Max Shenker reported about the public’s opinion on EZs:

Asked if they favored or opposed continuation of this program, 66 percent of survey respondents indicated they favored continuation while only 26 percent opposed, with the remaining eight percent saying “don’t know” or “not sure.” A look at the demographics shows broad support that runs across gender, party and ideology lines, and irrespective of geography and ethnicity.

With less support in the public, perhaps Brown felt he had a better chance by letting the unions try to convince legislators to eliminate the EZ.  So far, his plan is not working with many legislators publicly lining up behind the program.  Brown needs a two third majority to prevail, which from what I’ve heard at the Capital, he isn’t anywhere near.

The attached Fact Sheet highlights how many jobs have been created by the EZ program.  These are numbers that seem to be missing from the debate and certainly from the PPIC analysis.  For example, the EZ program put into the workforce 18,317 Californians who were previously on public assistance.

The Board came out in favor of the Governor’s budget on many fronts, including its stark honesty.  However, the Board is against driving businesses out of California by eliminating the Enterprise Zones.

Another area in which Brown’s spending plan shows ignorance of beneficial municipal-business partnerships is that of enterprise zones.
“Because the primary benefit of these zones is to shift economic activity from one geographic region within California to another geographic region within California, they are not of statewide interest,” Brown states in his budget proposal.
For many companies, the incentives offered through enterprise zones such as Santa Clarita’s are the only thing keeping them in California, and thus generating jobs.
As state Senate candidate Sharon Runner noted in a recent Signal Editorial Board meeting, what California really needs to get out of its fiscal hole is more jobs — jobs to generate tax revenue to keep state and local governments running.
But for the sake of argument, let’s pretend for a moment that Brown’s claim is true, and the “primary” benefits of enterprise zones is to shift jobs from one area to another. What’s the alternative?
In Santa Clarita, 50 percent of our work force travels out of town to jobs in L.A. What are the impacts of this daily migration on the state, and on the work force? Clogged freeways, long commute times, more and more resulting air pollution, frustrated workers.
These problems will only get worse unless we in the Santa Clarita Valley solve our jobs deficit. We simply are not adding enough jobs fast enough to close the gap.
The Enterprise Zone program can help us do that.

Read the full article here.

Los Angeles is “prepared to shoulder its fair share of the responsibility” for balancing the budget, said Mayor Antonio Villaraigosa. But, “any scenario that would completely eliminate the redevelopment zones and state enterprise zones is a non-starter.”

Similarly, George Runner, the newest member of the Board of Equalization, said that raising taxes and making it tough on business isn’t a solution.

“Californians are confronted with a huge budget crisis.  The fact is for too many years we’ve been spending more money than we should.  More money has been going out than revenues coming in.” Runner said. “We can solve our budget problem and the best way to do that is by getting Californians jobs.  I’m going to be looking at this budget through that lens. I applaud the Governor for proposing difficult spending cuts.  But I can’t support proposals to hurt private sector jobs through punitive tax hikes.”

“Californians have already spoken on the issue of taxes by resoundingly rejecting every proposed tax increase on recent ballots.  A special election to hike taxes is a waste of taxpayers’ time and money. Certainly we have to make some hard decision and cuts are necessary. But if we make it harder for the private sector to create employment than this is the wrong way to go,” he said.

Eliminating enterprise zones is a big mistake, according to Runner.

“Enterprise zones are California ‘s only remaining public policy measure aimed at keeping private sector jobs in our state.  Abolishing them would be irresponsible.  Instead we should make the whole state an enterprise zone,” he concluded.

The budget released today completely eliminates all of California’s 42 Enterprise Zones.  It also takes away all prior credit carryover.  However, many see this is a starting point for negotiations.  

Assemblyman Dan Logue, R-Linda, who opposes eliminating enterprise zones, said the state needs to do more to create jobs, not less.“The governor has to realize that to create wealth and revenue, you have to give businesses a reason to develop in an area,” said Logue.

He added in the last decade, the majority of new jobs created in California came in areas where there were enterprise zones.  But because the initial budget proposal from the governor often undergoes several revisions before it’s passed and signed, Logue said, Brown may be including the cuts as a negotiating tactic.

Read the full article here.

Texas is “open for business” and using its Enterprise Zone to lure California businesses looking to relocate.  Is Jerry Brown listening?

With shovel ready sites situated in an enterprise zone the Levelland Economic Development Corporation sees the new Levelland Industrial Rail Park as the key to developing a diversified local economy.  By paring this new rail infrastructure with the local skilled workforce and integrating ourselves into the wind energy logistic supply chain, Levelland can take advantage of the expanding renewable energy industry exploding throughout the region.  Levelland also offers opportunities to California businesses considering relocation or expansion by helping reduce the normal stress related with such capital intensive projects.  Our exceptional economic environment, warm weather, famous hospitality and affordable cost of living make Levelland an ideal choice for businesses looking to make a move. Texas Governor Rick Perry says, “Texas Wide Open for Business” and Levelland is a great place to enter the Lone Star State. 

Read it here.

The Pacific Research Institute poses an interesting question that many business owners across the state have been pondering: should all of California become an Enterprise Zone?

K. Lloyd Billingsley proposes the following ideas below:

An enterprise zone is an economically depressed area targeted for revitalization through tax and regulatory relief. Such relief attracts business, provides jobs, reduces poverty and generally improves conditions. California has 42 enterprise zones, recently criticized as “ineffective” by scholars David Neumark and Jed Kolko. That prompted some business owners to fire back.

“The Enterprise Zones scattered throughout the state are like a business-friendly oasis in the desert of high-cost and regulation that is California,” wrote Daniel Morrow in the February 12, 2009, Capitol Weekly. “The tax breaks for buying equipment and hiring people provide exactly the kind of incentive that is necessary to get business to stay in California in the first place and serve as an attraction for new businesses as well, one of the very few California has to offer.”

California could also use another idea favored by Jack Kemp, an advocate of the flat tax. This means everybody pays the same rate, instead of a more punitive (what “progressive” really means) rate for high-income workers. During an economic downturn, punitive rates make for revenue instability. In Ending the Revenue Rollercoaster (2008), PRI’s Robert P. Murphy made the case for a flat state income tax of 3 percent. Said Steve Forbes, “A 3 percent flat tax would trigger the biggest boom in California since the Gold Rush!” And a flat income tax would help prevent the boom from being followed by a bust, our current condition.