Bucking Gov. Jerry Brown’s plan to scrap the state’s much
criticized enterprise zone program, Assemblyman Luis Alejo is
pushing for reform.
Donna Jones, Santa Cruz Sentinel
Bucking Gov. Jerry Brown’s plan to scrap the state’s much criticized enterprise zone program, Assemblyman Luis Alejo is pushing for reform.
Flanked by Salinas Mayor Dennis Donohue and economic development officials from across the region at a press conference Friday, Alejo, D-Watsonville, said the state can’t afford to lose a program that has brought tens of thousands of jobs to disadvantaged communities.
Alejo has joined Assemblyman Manuel Perez, D-Coachella, in authoring three bills aimed at strengthening oversight, tightening eligibility rules and more closely linking the program to other state employment efforts.
“I propose to discuss meaningful reforms, to shift the conversation away from elimination of enterprise zones to reforms that will strengthen it for future use,” Alejo said.
California’s 53 enterprise zones provide tax incentives for companies that locate in and hire workers from distressed areas.
But studies recently released by the state Legislative Analyst’s Office and the California Budget Project question the effectiveness and cost of the program.
They say there’s more job shuffling around the state than creation of new work, and that the majority of tax breaks have gone to multimillion-dollar corporations.
Alejo countered with a 2009 University of Southern California study that found employment rose 2.2 percent in enterprise zones. The same researchers in 2006 found poverty rates dropped 7.6 percent in enterprise zones.
The tax credits – up to $37,500 for each worker over five years – have cost the state more than $3 billion in revenue since the program established in 1984, according to the California Budget Project.
California is trying to close a $25.4 billion budget gap, and according to the state Department of Finance, eliminating enterprise zones would save the $900 million over two years.
The governor, announcing his plan to cut the program in January, acknowledged as Oakland’s mayor he found it a useful tool, but he said the state can no longer afford to subsidize local economic development.
Backers say the state can’t afford not to, especially in places like the Salinas Valley and Watsonville, where a quarter or more of the work force has been unemployed in the past year.
“It’s impossible to have a healthy community when one in four people can’t find jobs,” said Andrew Myrick, manager of the Salinas Valley Enterprise Zone.
Santa Cruz County’s only enterprise zone is in Watsonville. Friday, Kurt Overmeyer, the city’s economic development manager, said during the past 14 years, the program helped the city attract or retain more than 10,000 jobs.
Beyond the numbers are the people finding work, Overmeyer said. The credits provide an incentive for employers to take risks and hire people on welfare, the chronic unemployed and those with criminal histories.
The press conference was held at the 80,000-square-foot Green Vehicles plant in south Salinas.
Mike Ryan, president of the electric car company that relocated from Gilroy two months ago, said he considered producing vehicles in China, but wanted to make them closer to his market.
The company is still in set-up stage, but plans to produce about 2,000 cars in 2012 and more than 11,000 by 2015. Ryan expects his work force to grow from 15 to 100.
Ryan said when scouting for sites he only considered enterprise zones. Absent the tax break, he couldn’t afford to do business in the state.
“If California wants to have a manufacturing base, this is a critical program,” Ryan said.
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