There is a bill being pushed through the California State Assembly that is taking aim at one of the State’s largest enterprise zones.  In it’s current state, the bill would alter the current enterprise zones while eliminating several key regions.  Considering the ramifications of this bill passing, it has met with heavy conflict, especially with the current job market and nationwide recession.

“Let’s be very clear, this isn’t a reform bill. It’s an enterprise zone killer, and would cost California thousands of jobs,” said Craig Johnson, president of the California Association of Enterprise Zones and manager of the Long Beach enterprise zone. He testified against the measure at a recent hearing in Sacramento.

California Assemblyman Bob Dutton of Rancho Cucamonga is proposing a new bill for personal income and corporate tax credits (SB 508) for hiring CalWORKS recipients, parolees, veterans or persons receiving unemployment benefits.  The provisions of this bill track the Federal Work Opportunity Tax Credit (WOTC) and would supplement the current California Enterprise Zone Tax Credit Program.

Here’s a letter from CAEZ President Craig Johnson regarding how Enterprise Zones can help the soaring unemployment rates.

Dear CAEZ Board and Members,

I found the article linked below to be fascinating and frightening at the same time.  With such high unemployment rates among some of our Enterprise Zones, advocating and marketing the benefits of the Enterprise Zone program are more important than ever.  Our program may be the answer to some of the problems our businesses are facing during such difficult economic times.  Click for more information.

CRAIG JOHNSON
President
California Association of Enterprise Zones

Delano is a culturally diverse community and has long been regarded as an international community. Though the population is drawn from multiple origins, the citizens still have many things in common, including a strong sense of community and work ethic. Delano is strategically located along Highway 99, one of California’s primary north/south arteries.

Delano has been a California Enterprise Zone and has become a great destination for business owners looking to take advantage of the California EZ program.  If you have a company operating in this city, please contact us today to see what tax credits you are eligible for.

During the economic downturn, cities are beginning to utilize the tax credits available to them in order to attract new businesses to their region.  The latest was Santa Clarita, which has announced a 21 point plan for economic development.  Topping off the list was the promotion of the city’s Enterprise Zone.  Details are below:

The Enterprise Zone is a critical state-initiated tax savings program designed to stimulate the economy and return valuable dollars to local Santa Clarita business. As of March 23, 2009, this program has generated a potential $14,689,000 in savings to local business. This campaign will include increased marketing and direct outreach to local businesses as a way to help thousands of companies understand the potential tax savings available just by doing business in the City of Santa Clarita. To date less than 5% of eligible businesses have taken advantage of the hiring credits available through the Enterprise Zone, but with increased funding for outreach and marketing to generate awareness of the program and its benefits, this number should increase substantially. $50,000 (General Fund)

Craig Johnson wrote this letter of praise for the efforts in opposing AB 1139 which apparently pushed the bill off track.  It won’t be reheard until January 2010.  Johnson also encouraged businesses to keep working to oppose this terrible bill.  Here is the text of his letter:

Dear CAEZ Members and Friends of CAEZ:
Yesterday, AB 1139 was heard in the Assembly C ommittee on Jobs, Economic Development and the Economy (JEDE).  GOOD NEWS!—–the bill was held in Committee and won’t be back until 2011, which was a huge victory for us.  Although the bill now becomes a two-year bill, we will continue to be on alert, as the onerous provisions in this bill could still be incorporated into another bill this year.

CAEZ was the lead in providing testimony in opposition of the bill, as Lydia Moreno, CAEZ Board member and Community Development Coordinator for the City of San Diego and I provided testimony.  Cindy Schock, who owns a business in Lodi, provided compelling testimony describing how the Enterprise Zone program is providing her company with the opportunity to expand, grow and hire new employees.  Thanks to Fran Aguilera of the San Joaquin Enterprise Zone for connecting us with her.  The hearing room was packed with opponents of the bill and numerous individuals lined up to express opposition to the bill.  My thanks to all those who took time out of their very busy schedules to be there in support of the Enterprise Zone program.

The testimony in support of the bill was filled with significant inaccuracies and outdated information about the program.  The program was portrayed as one overrun with problems, ineffectiveness and abuse and consultants who assist companies claim the tax credits were described by the labor union lobbyist as “poverty pimps”.  So much for civil discourse.

Committee members Mary Salas (Chula Vista), Jim Beall (San Jose) and Marty Block (San Diego), provided supportive comments about the Enterprise Zones in their districts, with Assemblymember Salas also expressing specific concerns about the proposed elimination of the TEA and retroactive vouchering.  Committee Chairman, Manuel Perez, who represents the Coachella Valley, Calexico/Imperial County and Imperial Valley Enterprise Zones, encouraged the opponents of the bill to work with the author to effect any needed changes to the EZ program.

Our next steps will include working with our opposition coalition members, (Cal Chamber, CEON, Cal-Tax, Cal Bankers, CMTA, League of Cities, City of San Jose & others), to prepare a letter addressed to the Committee members, correcting numerous inaccuracies stated about the EZ program during the hearing.  I will share this letter with you, which will help prepare all of you to respond to attacks on the program going forward.

The CAEZ Government Affairs Committee will continue to follow this bill and work closely with the Coalition.  Continued education of Members of the Legislature will be the order of the day and I encourage all of you to regularly communicate with your Legislators about your Zones, your businesses and clients and how they make a difference in your communities.

Our letter writing campaign was incredibly successful, contributing to the 200+ letters of opposition received by the Committee Consultant.  To read the consultant’s analysis and see the opposition list, click here.  There was also a supplemental list distributed at the hearing that listed an additional 22 names in opposition!  Your response to this call to action is greatly appreciated and no doubt persuaded the author to describe his bill as “a work in progress”.  Our goal is to eventually describe this bill as DEAD!!

We’re working to get the audio of the hearing posted on the CAEZ website, so please check the site regularly for this and other updates (an updated legislative report will be posted shortly).

Thanks you again for your tremendous response to this outrageous attack on California’s Enterprise Zone program.

CRAIG JOHNSON
President
California Association of Enterprise Zones

“This morning, AB 1139 was heard but no vote was taken, and the author Assembly Member John Pérez indicated that it was a “work in progress” and would be a two-year bill, meaning that it remains alive but is on hold legislative-process-wise until next January, the second year of the two-year legislative session.

For our opposition coalition, this is a positive development because that means it is no longer advancing towards passage at least for this legislative year. However, we must remain vigilant, as threats have in the past and can in the future resurface in other vehicles and forms and any time.
There was a strong showing at this morning’s hearing by the labor unions who testified in support of the bill. The bill presentation and support testimony was unfortunately filled with numerous, significant inaccuracies and outdated information about the EZ program. The information was extremely negative, portraying the program as one filled with problems, ineffectiveness, and abuse and only helping wealthy areas.

On behalf of the opposition coalition, CAEZ, City of San Diego, and a small business from Lodi testified and provided compelling success stories about the EZ program. We also had a very strong showing of opposition – numerous individuals lined up to express opposition. If you have not already done so, you should see the impressive list of opponents listed on pages 12 & 13 of the analysis!  Assembly Members Salas, Beall and Block spoke up and said positive and helpful things about the EZ programs within their districts.

The chair of Jobs Committee, Manuel Pérez said at the end of the hearing that he wants to address problems with the EZ program and asked the opposition to work with the author on AB 1139.”

The City of Long Beach Enterprise Zone Marketing Program captured the grand prize from the California Association for Local Economic Development, an organization that provides research, training and education for economic development professionals.

The Long Beach Enterprise Zone was redesignated in 2007 for another 15 years. The marketing campaign has increased the number of hiring vouchers by 37 percent, and the increase represents a potential tax credit value of more than $78 million to Long Beach businesses.

The California Franchise Tax Board released a summary of its April 13, 2009 Interested Parties Meeting relating to the assignment of Enterprise Zone tax credits among members of a combined reporting group.  Members of the public attended the meeting and lodged questions and comments regarding the effect and manner in which the assignments will take place.   The meeting’s framework was the draft frequently asked questions (FAQs) released in late March 2009 for public comment.   The FTB still intends to issue further clarification of the statute in response to the meeting. Summary.

California fares poorly in an evaluation of each state’s economic competitiveness by the conservative, Washington-based American Legislative Exchange Council.

The state is 43rd in the rankings and is singled out for special scorn in the report, including one chapter that compares California directly with Texas.
“The decline of California is probably the best evidence that we can present as to the impact of poor state policy making on the economic pulse of a state,” the report says. “California continues to increase regulations, raise taxes and spend profligately. Texas, on the other hand, has a pro-growth economic environment with a competitive tax system, sound regulations and spending discipline that will help Texas maintain its superior performance well into the future.”

Conservative economist Arthur Laffer is a co-author of the study and one chapter recounts his version of how Proposition 13, the landmark 1978 property tax limit measure, was passed and implemented and how California fared thereafter.  The full report is available here.