The Sacramento Bee reports that despite a heavy Democratic majority, only 5 bills labeled by the California Chamber of Commerce as “job killers” made it through the legislative session.  Only one of them deals with tax credits, Senate Bill 365 by Sen. Lois Wolk, D-Davis, to sunset business tax breaks.

I guess it could be worse.  Forbes ranked California as the 41st worst state to do business in.  An unfavorable tax structure tops the list of why California ranks so low. Here is the study.

This posted yesterday in the San Francisco Sentinel.

Allows San Francisco Businesses to Access Valuable Hiring Tax Credits Through Simple Web-Based Tool; Advances Mayor’s Jobs Plan Goal of Using Technology to Make the City Easier Navigate for Business

Mayor Edwin M. Lee today announced the launch of the San Francisco Enterprise Zone Web App, a web-based tool that allows San Francisco businesses to apply online for the City’s popular Enterprise Zone hiring tax credit program. The Enterprise Zone Web App will replace a completely paper-based process with a web based tool which increases government efficiency and makes it easier for businesses to utilize the program.

“I am committed to making it easier for local businesses to operate and grow jobs in San Francisco,” said Mayor Lee. “The Enterprise Zone Web App takes a powerful tax incentive program and brings it online so small businesses, manufacturers and other firms can save time while they save money.”

“At SFMade we make sure that all of our manufacturers are aware of the Enterprise Zone hiring tax credits and the potential savings it offers,” said SFMade Executive Director Kate Sofis. “My staff works closely with small business owners with limited resources. Having the Enterprise Zone Web App instead of a paper process will make a big difference in terms of administrative costs, time and use of this important tax credit.”

“The Enterprise Zone hiring tax credit is really important to our company,” said Marissa Andres, Controller at Mackenzie Warehouse, an auto parts distributor located in Potrero Hill. “The savings we earn in tax credits are used for hiring and retaining employees. The online tool is simple and straight-forward and saves me valuable time.”

The Enterprise Zone is a State of California program which provides tax credits and other incentives to encourage business investment and promote the creation of new jobs. In place since 1997, the San Francisco Enterprise Zone is one of 42 Enterprise Zones in the state and is administered locally by the Office of Economic and Workforce Development (OEWD). The San Francisco Enterprise Zone areas include the following areas: Bay View Hunters Point/ South Bayshore; Chinatown; the Mission; Mission Bay Project Area; Potrero Hill; south of Market; the Tenderloin; and the Western Addition and some portions of North Beach and Financial District.

The tool was developed using Firmstep’s AchieveForms software. The switch to an on-line app will not only decrease costs in paper and postage, but will also speed up the processing time getting businesses approved for tax credits more quickly and efficiently.

The San Francisco Enterprise Zone Web App can be found at http://sfezapp.oewd.org For more information on the San Francisco Enterprise Zone Program, go to: http://www.oewd.org/Enterprise-Zone.aspx For more information from the State on the Enterprise Zones Program, go to: www.hcd.ca.gov/fa/ez/ <http://www.hcd.ca.gov/fa/ez/>

In an unanimous opinion today, the California Supreme Court ruled  that the FTB can in fact audit behind the EZ voucher.  The voucher certificate is no longer considered “prima facie” evidence that the worker is qualified for the EZ program.  The opinion states:

We reverse the Court of Appeal’s holding that a certification issued by a governmental agency for purposes of the hiring tax credit under Revenue and Taxation Code section 23622.7 constitutes “prima facie proof of a worker is a ‘qualified employee,’ ” which shifts to the Franchise Tax board the “burden of demonstrating an employee is not a qualified worker for which no voucher should have issued. ” In all other respects, the Franchise Tax Board does not challenge the Court of Appeal’s judgment, and it is affirmed. Majority Opinion by Liu, J. — joined by Cantil-Sakauye, C.J., Kennard, Baxter, Werdegar, Chin, and Corrigan, JJ.

The Second District Court of Appeals today ruled that the enterprise zone sales and use tax credit of Revenue and Taxation Code Sec. 23612.2 is not available in connection with the purchase of current expense assets, but rather only with the purchase of capital assets.  Read the full opinion.

The California Supreme Court has scheduled oral argument in the Dicon case for Tuesday, March 6, 2012 at 9:00 a.m. in San Francisco.

Brown’s budget released today only hints at future reform measures to the Enterprise Zone program.  Perhaps after getting rid of RDAs, the unions are a bit gunshy about outwardly attempting getting rid of another vehicle that has anything to do with jobs while the economy struggles.  Here is what the budget said about Enterprise Zones:

“The resulting stability from a balanced budget will give businesses the certainty and the reassurance they need to invest in California. In addition, the Administration will propose legislation to reform the enterprise zone program and move to a mandatory single sales factor for apportioning multistate business income. Such changes will allow the state to afford investments in manufacturing, business incentives, and other tax relief.”

Let the games begin.  Speaker Perez spoke out about the redevelopment case and what it means to Enterprise Zones.

“A second look will also no doubt be taken at the issue of local economic development in the wake of the California Supreme Court ruling that abolishes more than 400 local redevelopment agencies next month. Speaker Perez dismissed any notion that actual RDAs will be recreated by the Legislature; instead, he emphasized the need for ways to promote job creation and economic stimulus that doesn’t favor one region over another. And he suggested that the scrapping of RDAs could reignite his the effort of many Democrats to revise the state’s enterprise zone program.”

Read the full article.

Here is the FTB’s Tax News for January.

Today the HCD issued this press release regarding implementation of new policies, including a moratorium on new zones.  The stated aim of the new policy memorandum is to make the EZ more accountable, efficient and consistent with the Governor’s May budget revise, i.e. a push by the unions to undercut the EZ program from within.  The legal analysis is beginning on the HCD’s claim that the law allows for “up to” 42 zones which if read in the correct light, means phasing out the program.   Read the memo here.