The state Senate approved Gov. Jerry Brown’s AB 93 on Tuesday, which revises the plan for the Enterprise Zone Program and effectively eliminates many of the benefits the program afforded to local businesses.
Local and state officials have expressed concern about what they believe will hinder the state’s economic recovery.
The Enterprise Zone program, established in 1984, provided hiring credits and tax breaks in economically distressed areas of the state to encourage business investment and promote the creation of new jobs.
The City of Santa Clarita was awarded an Enterprise Zone in 2007. Since then, the program has saved the city $280 million in taxes and led to hiring more than 7,000 employees.
“I think that the Enterprise Zone has been wonderful for our community,” said Don Fleming, owner of Valencia Acura on Creekside. “And it saddens me to see it gutted like this.”
According to the bill revised in the Senate on Tuesday, tax credit provisions for Enterprise Zones would be made inoperable by January 1, 2014, though existing tax credits would carry over for 10 years afterward.
Senate Republican Leader Bob Huff, R-Diamond Bar, voted against the bill, but he was thankful for the concessions that allowed tax credits to carry over.
“I am pleased that through negotiations with the Governor as well as my Republican and Democratic colleagues, we were able to improve the bill that’s now passed out of the Senate,” Huff said in a statement.
Jonas Peterson, president of the Santa Clarita Valley Economic Development Corporation said that the Santa Clarita Valley Enterprise Zone is one of the most effective and best managed in the state.
“It’s a shame that the state would even consider taking away an economic development tool from an area where it has been so successful,” he said.
Despite this, Peterson also noted that the economy in the SCV is strong.
“We’re a bright spot in California,” he said, and while the Enterprise Zone was part of that picture, “many factors that make the Santa Clarita Valley an attractive place to locate a business. That’s not going to change.”
Click here for background on the Enterprise Zone program. Click here for a summary of AB 93.
Comment from Assemblyman Scott Wilk, R-Santa Clarita, on Enterprise Zones, June 11:
Assemblyman Scott Wilk
Governor Jerry Brown is proposing once again to eliminate California’s Business Enterprise Zones. These zones have served as tools for growth in the hiring and financial recovery of many California entrepreneurs and business owners as they faced the effects of the economic downturn. One incentive for a business located within an Enterprise Zone is a tax credit of up to $37,000 per hired person.
This incentive not only fosters a business friendly environment but also ignites community-based economic expansion in terms of job growth. Over recent years, the recession, heavy taxation and increased regulations have forced numerous California businesses to reduce operations, close their doors, or relocate to more business friendly states such as Texas and Arizona.
With thousands of jobs lost, many of our fellow Californians have experienced financial distress and our state has lost billions of do llars in tax revenue that is necessary to maintain the state’s fiscal solvency. Enterprise Zones represent a reliable tool of stability and growth for businesses in California. Now is not the time for Governor Brown to eliminate California’s Enterprise Zones as entrepreneurs and business owners continue to navigate through tough economic times.