Governor Brown is scrambling for votes ahead of tomorrow’s vote on AB93 which eliminates EZs in lieu of….nothing really.  Click here to indicate opposition to the bill.

From today’s Sacramento Bee regarding whether the budget includes any changes to the Enterprise Zone program:

The budget agreement did not resolve Brown’s proposal to eliminate the state enterprise zone program and to use the money instead for sales tax exemptions for manufacturing and biotech research companies.

Today, the Governor’s Go “Away” Biz think tank offered up a version of its new and improved tax credit.  The Governor proposes to eliminate the current Enterprise Zone program and replace it with a program so chock full of limitations and strings attached that surely the only person smiling today is Rick Perry.  Here is a link to the proposed new credit.  Here is a link to the short version of what the Go-”Away” Biz credit actually provides.

Go Biz is touting the benefits of the Governor’s proposed new tax breaks.  Here is a bit of detail about how the new credit will affect the current EZ:

“The Governor’s Office of Business and Economic Development today issued an informational briefing today “NEW TOOLS FOR A NEW ECONOMY” on the Governor’s newly proposed business incentives. The incentives, part of Governor Brown’s revised May Budget, include a sales and use tax exemption for manufacturing equipment and biotech R&D, a long-term unemployed tax credit for areas of high unemployment and poverty, and a recruitment and retention incentive to attract new companies to California and expand existing companies.  Also included is a side by side comparison of the proposed program compared to current enterprise zone incentives. GO-Biz Deputy Director for Business Investment Services Leslie McBride pointed to the wider application of the proposed incentives as an overall benefit.

“Two of the three incentives are statewide,” said McBride, “meaning all of California gets to be an Enterprise Zone.”

The new programs would redirect roughly $750 million annually from the inefficient Enterprise Zone program to statewide business incentive programs. While exact details are still being developed and are subject to legislative approval, all three programs are proposed to start in the first quarter of 2014. Current earned Enterprise Zone credits would stay in place for 5 years. Additional state economic incentives such as the Employment Training Panel, the Research and Development tax credit will continue to be available to businesses – even in combination with the new incentives.

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.

From today’s LA Business Journal:

Los Angeles Mayor Antonio Villaraigosa on Monday released his final budget as mayor. The $7.7 billion spending plan would close a previously estimated $216 million deficit and proposes creation of an economic development department.

He also proposed creating an economic development department that would focus on small business support, workforce development and job creation. He also proposed combining the planning functions of the existing Building and Safety, Planning and other departments into a new Department of Planning and Development.

The Tax Foundation found that California ranked the fourth worst state when it comes to taxes.  And that was before it added more taxes with Prop 30.  Jerry Brown is gunning for number 1 if he continues his attempts to minimize the Enterprise Zone tax credits.

Governor Brown released his 2013-2014 budget today which seeks to make it more difficult for businesses to utilize the Enterprise Zone credits.  At least a step up from last year when Brown proposed to eliminate the EZ program altogether, this year’s approach is more subtle.  Brown seeks to limit retroactive vouchering to one year, despite significant evidence and testimony that most of the businesses for which the credit is intended cannot process all their employee paperwork so quickly, i.e. the small businesses.  It seems that everyone but Brown recognizes that small businesses are the engine that runs California’s job market.  By making it more difficult for them, Brown is doing a disservice to the job market and to a large part of his constituency.

Brown also wants to require “third party” verification of employee residence in a TEA.  Assuming he means driver’s licenses instead of I-9s, again many of the lower income workers have no such third party verification and would thus be excluded from the credit.  The immediate result would be reduced hiring of those without California issued identification a result that I suspect Brown’s backers haven’t fully thought through yet.  Under Brown’s budget, there is a higher level of identification required for a tax credit than the law currently requires to allow someone to vote.  Perhaps an intended distinction….

Below is the full text of the Budget section discussing the Enterprise Zone:

Enterprise Zone Regulatory Reform

The Budget includes savings relating to new regulations for the Enterprise Zone program.  The proposed regulations will accomplish the following reforms:

Limit retrovouchering by requiring all voucher applications to be made within one year of the date of hire.

Require third party verification of employee residence within a Targeted Employment Area.

Streamline the vouchering process for hiring veterans and recipients of public assistance.

Create stricter zone audit procedures and audit failure procedures.

These regulatory reforms will primarily affect Corporation Tax revenue, but will also have an impact on Personal Income Tax revenue. The regulations, in total, are expected to increase General Fund revenue by $10 million in 2012‑13 and $50 million in 2013‑14. The Administration will be pursuing further Enterprise Zone reform through legislation.

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.

From today’s Imperial Valley News:

Sacramento, California – Today, State Assembly Speaker John A. Pérez announced his new leadership team, appointing Assemblyman V. Manuel Pérez (D-Coachella) to the position of Democratic Whip.  The announcement was made during the swearing-in ceremony of the California State Assembly’s 2013-14 session.

“There is a lot of work to be done to keep the economy growing and get our communities back to work,” said Pérez, “and as a senior member of the Legislature entering my third and final term, I am pleased to be bringing my policy skills to bear as a member of the Speaker’s leadership team.”

As a member of Democratic leadership, Pérez will no longer serve as the committee chairman of the Assembly Committee on Jobs, Economic Development, and the Economy.

Also today, Pérez was nominated by his peers to serve as Vice Chair of the California Latino Legislative Caucus.  As Vice Chair, Pérez will work closely with State Senator Ricardo Lara, Chair, to set the direction and priorities of the Caucus.  The Vice Chair serves a one-year term.

Among his first actions of the 2013 session, Pérez introduced AB 28, a bill that adds accountability and transparency measures to the California Enterprise Zone program, a state program designed to attract business investment and support job creation in low-income and underserved communities.  Since his election to the State Assembly in 2008 and throughout his tenure as chair of the Assembly Jobs Committee, Pérez has been a vocal advocate to protect and strengthen this economic development program.

With the newly redrawn Assembly District lines, Pérez now represents the 56^th district, which comprises the cities of Blythe, Brawley, Bermuda Dunes, Calexico, Calipatria, Cathedral City, Coachella, Desert Hot Springs, El Centro, Holtville, Imperial, Indio, Mecca, Oasis, North Shore, Salton Sea, Thermal, Thousand Palms, and Westmorland.