Politics, government and public life for Southern California

CA Legislature approves Governor’s plan to dismantle enterprise zones (Updated)

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The California Assembly voted Thursday to scrap the state’s 40 enterprise zones, including several in Southern California.

AB93 phased out a tax credit for businesses that invest and hire in areas designated as economically depressed, and replaces it with broader tax credits for businesses that hire people who’ve have a tough time finding or keeping a job, including former inmates. There’s also a tax credit for manufacturing and technology purchases.

In a statement, Governor Jerry Brown called the vote "a big, bipartisan win for California businesses and working people."

Brown has been pushing to eliminate the enterprise zones as part of this year’s budget. He says the $750 million dollar annual tax credit the program enjoys has been squandered on beneficiaries that include strip clubs and casinos.  

Others have piled on:  A recent report by the California Budget Project  found that enterprise zone tax breaks “have primarily benefited less than half of 1 percent of the state’s corporations – those with assets of $1 billion or more.”  

In a written statement, Craig Johnson, president of the California Association of Enterprise Zones, responded that the bill “destroyed the state’s only remaining tool for local governments to help stimulate economic growth and attract and retain jobs and replaces it with a half-baked plan full of empty promises.”

Johnson's group contends the tax incentives helped create 25,000 new jobs last year, and sustained 115,000 existing jobs. 

Earlier this month, Democratic legislative leaders said they supported the Governor's plan to reform the program, but lacked the 2/3 super majority vote to enact the changes.

But late in the evening Tuesday, Senate Pro Tem Darrell Steinberg (D-Sacramento) found 30 colleagues — including three Republicans — willing to say “Aye.”  The breakthrough came after an amendment was added to phase out tax breaks for enterprise zones over a decade.

The Assembly was under pressure to pass the measure this week, before Democrats temporarily lose their super majority on July 1, when member Bob Blumenfield of the San Fernando Valley resigns to join the L.A. City Council.


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