Here’s what Bill Allen had to say today about the Governor’s proposal to eliminate the EZ program:

If anything, the Governor should strengthen his commitment to the Enterprise Zone Program in these difficult economic times as a key mechanism to revitalize economically-challenged areas by providing incentives that create high-wage jobs and investment in these communities. By responsibly doing so, he would not only strengthen local economies, but strengthen the state’s long-term economic foundation as well.

Too many of our state and local residents desperately need jobs. Until such time when this is no longer the case, there will always be a critical role for Enterprise Zones. This is one program our elected officials cannot afford to eliminate.

Read the entire Fox & Hounds editorial here.

This from Steve Sims, Taxpayer Advocate in theFTB’s February Tax News:

The Board of Equalization recently ruled in the Appeal of NASSCO Holdings, Inc 2010-SBE-001, November 17, 2010, that a corporate taxpayer may use Enterprise Zone credits and/or the Manufacturing Investment Credit (MIC) to reduce corporate alternative minimum tax (AMT). Since then, I have received many questions on how the FTB is going to implement this ruling. We will be revising Form 100 Schedule P in February 2011. In addition, the NASSCO decision applies only to corporate taxpayers, and does not apply to personal income taxpayers, due in part to differences in how the corporate and personal income tax statutes are drafted. Consequently, personal income taxpayers may not claim the credits at issue in NASSCO in the manner that a corporation could.

The most frequent questions I have heard on this issue are “Can I file an amended return?” and “How will this affect my credit carryover?” Unfortunately, we have yet to determine answers to these questions. Stay tuned however as we are working to get the answers to these questions and more as soon as possible. We will update you in a future Tax News article and possibly a Tax News Flash as information becomes available. In addition, you can go to ftb.ca.gov and search for nassco for additional information.

Steve Sims, EA

Our Weekly published an article outlining how the Enterprise Zone program has helped provide employment in areas that house high percentages of minorities.  Taking away the EZ program would disproportionately affect African Americans.

Enterprise zones have been instrumental in revitalizing inner city areas, said [Assemblymember Isadore] Hall. To target them strikes at the very heart of many minority areas, he said.

Read the full article.

Trying to beat the Governor to the punch, Assemblyman Perez intends to propose legislation aimed at making the EZ program more accountable and efficient.  Read the entire Tribune Weekly Chronicle article.

George Runner, member of the BOE wrote this today:

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.

When Jerry Brown was Mayor of Oakland, he proudly welcomed Cybergold, an internet start-up company that moved to Oakland in large part because of “the tax incentives of the Enterprise Zone.”   It was September 28, 1999.

“Cybergold’s talented workforce adds to the energy and excitement of downtown Oakland,” said Mayor Brown at an event celebrating Cybergold’s recent arrival. “Cybergold’s presence here is an unmistakable signal to other Internet start-ups that Oakland is wired and ready to go.”
Read it here.

I guess that was then and this is now, but Mayor Brown was able to build a thriving downtown Oakland because of the EZ.  Now he claims they are of no benefit to the state and should be summarily cast aside. Hmmm.

The California Association of Enterprise Zones posted this response to Governor Brown’s proposal to eliminate the Enterprise Zones:

SACRAMENTO, Calif., Jan. 11, 2011 /PRNewswire/ — The California Association of Enterprise Zones (CAEZ) understands California and Governor Brown are looking for ways to close a $28 billion budget deficit.  CAEZ believes the ultimate solution will only be achieved through strengthening California’s economy and creating jobs.  

The proposal outlined by Governor Brown to eliminate Enterprise Zones is inconsistent with policies promoting economic development, job growth and community investment.  Each Enterprise Zone is created for a limited time and represents a commitment from the state and a significant investment from local governments.  Eliminating Enterprise Zones would send the wrong message to businesses that create jobs, in essence that California is an unreliable partner not to be counted on to keep its commitments.  

“We should be doing all we can to promote economic development and create jobs locally,” said Craig Johnson, president of CAEZ.  ”Jobs generate revenue for the state.”

The uncertainty caused by proposals to abruptly change economic policies is already disrupting business decisions to expand job creating investments.  Now is not the time to abandon these partnerships and the infrastructure created at the local level through the Enterprise Zone program with private sector businesses and our local communities.  

Research has shown that Enterprise Zones help reduce poverty rates, lower unemployment, provide higher wages, increase household income levels and foster greater community investment through private-sector businesses.

“Tax increases and the elimination of these important economic development programs will only worsen California‘s unemployment rate and cause more businesses to flee to states with healthier economies and friendlier business policies,” stressed Johnson.

The California Association of Enterprise Zones (CAEZ) represents the 42 Enterprise Zones located throughout California.  CAEZ’s priority is to ensure economic growth and retaining and growing jobs in the most distressed areas of California and in communities of color.

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.