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Enterprise Zone Program Under Attack, Some Say

By Richard Gincel | Special to the Business Journal

April? tax deadline has passed, but a proposed tax bill making its way through the State Assembly still looms large, particularly among its critics.

That? because Assembly Bill 1139 is aimed at reworking the state? Enterprise Zone Program and would eliminate, some say, the program? statewide Targeted Employment Areas ?economically depressed, low-income regions that include parts of Barrio Logan, Chula Vista, Logan Heights, San Ysidro and southeastern communities in San Diego.

?et? be very clear, this isn? a reform bill. It? 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.

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Johnson said the bill would put ?ncredibly onerous?mandates on employers, making the cost of participating in an enterprise zone outweigh the benefits. Under current law, employers get significant tax breaks involving new hires for their first five years on the job, among other incentives.

?liminating the Targeted Employment Area category will undermine the ability of the program to assist the most disadvantaged and vulnerable people there are right now, mostly in minority communities,?he said.

Assemblyman V. Manuel P?ez, D-Coachella, chairman of the Assembly Committee on Jobs, Economic Development, and the Economy, presided over the bill? hearing on April 29 and ruled to keep the bill in committee. He sent it back to the bill? author, Assemblyman John P?ez, D-Los Angeles, for revision.

? don? think it? a bad idea to improve the program, but at the same time we need to make sure it remains because there are still many communities that are under-served,?said Manuel P?ez, whose 80th District includes three such zones. ?here are a lot of hurdles in front of it.?


Revised Bill Under Way

John P?ez, a union advocate, called the bill a work in progress and asserted that its goal is not to eliminate enterprise zones. He said, however, that the zones were outdated and ?ased on decades-old census data.?p>?ost of the tax dollars go to big business, while many smaller businesses don? even realize they are in an enterprise zone, much less realize what the benefits are,?he said. ?hat tilts the advantage to big corporations that can afford tax consultants.?hese corporations collect millions of dollars, yet the employees who are supposed to benefit from the program don? benefit as much as they should.?p>His camp wants to increase the tax credit for employers that provide jobs with health care, a provision that currently doesn? exist.

?his is corporate welfare at its worst,?said Barry Broad, a lobbyist for several labor unions, including the bill? sponsor, the International Longshore and Warehouse Union. ?e?e for enterprise zones, but we?e not for giving away the taxpayers?money without accountability. Businesses that claim the credit are supposed to be lured into lower income areas, but it? full of abuses. Part of what we?e doing is to weed out those who are gaming the system.?p>

Aim For Compromise

For the bill? opponents, Manuel P?ez? decision to stall the bill in committee was a victory, however short-lived, as a revised version is expected to re-emerge no later than January.

Manuel P?ez cautioned that it? important for John P?ez ?o bring the opposition and all the stakeholders to the table to work out some important changes and compromises before this can move forward.?p>Lydia Moreno, community development coordinator for the city of San Diego, said that could take awhile.

?here were 219 letters ?more I think in the final count ?from businesses, organizations and municipalities that were submitted in opposition to the bill. I?e never seen that many in one (instance), ever,?she said. ?his bill operates at different angles to carve away at the Enterprise Zone Program, but the elimination of the Targeted Employment Areas would have a dismantling effect, meaning fewer jobs to individuals that might otherwise have a hard time finding employment.?p>

Richard Gincel is a freelance writer for the Business Journal.

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