I attended Monday’s JEDE hearing only to hear more of the same arguments from the AB1139 opposition.  The primary opposition was once again from Labor and once again they just curtly referred to a scattering of old reports claiming that the EZ program doesn’t work.  On the contrary, the audience was filled with people from the private and public sectors beaming about the benefits of the EZ.  Several highlights were Lydia Moreno’s testimony about the effectiveness of the program and the companies who decided to stay in California because of the program.  Individual company representatives waited in line to tell their story and urge continued support and expansion of the EZ program.

Professor Samuel Bornstein, from Kean University School of Business, offered a keen remodel of the net interest deduction that he claimed could save the mortgage meltdown and cause the capital markets to function again.  The proposal was to allow lenders to claim the net interest deduction for residential loans made to small business owners who pulled money from their equity and invested it into their business.  Professor Bornstein cited statistics that many small business owners mortgaged their homes with toxic loans to fund their businesses.  Giving the lender a tax break will allow the lenders to renegotiate with the borrowers for lower monthly payments or lower principal to allow them to stay in business and keep their homes.  Several business owners testified that they could not have made it through the tough economic times without the Enterprise Zone program.

A revised 1139 should be ready by December and then open for discussion or vote in the JEDE committee by January 5, 2010.  Stay tuned.