Reporter Jack Dolan wrote a story for Sunday’s Los Angeles Times highlighting perceived problems with the use of Targeted Employment Areas in the Enterprise Zone program. Dolan is the same reporter who broke the story on the use of State issued ATM cards for welfare recipients at casinos.
While the article on Enterprise Zones raises some important points, I found the article deficient in three major areas:
1. Dolan fails to clearly distinguish between the Enterprise Zone and the Targeted Employment Area. Dolan repeatedly infers that wealthy residents of Targeted Employment Areas may themselves be the recipients of State tax credits that would otherwise be going into the pockets of the poor. As in the story’s lede,
Among the advantages for those who live in multimillion dollar houses on the hillside in Los Feliz are celebrity neighbors, sweeping views of the downtown skyline, the Griffith Observatory in their backyard and designation by state tax authorities that they are economically disadvantaged.
Or in this quote from a “man on the street”:
“I’m a big believer in tax breaks for the disadvantaged,” said waitress Kelsey Jessup. “But it’s hard for me to justify them for the people in here.”
Dolan does not connect all of the dots to demonstrate all of the pieces that need to fall into place in order for a tax credit to actually be generated for a wealthy TEA resident. Instead, the implication is that there is a direct State expenditure related to the fact that Charlie Sheen’s house is in a TEA. Proof of this implication can be seen in the Times‘ PolitiCal blog where Dolan’s article is plugged, “Jack Dolan reports that some affluent areas are taking advantage of tax breaks designated specifically for the poor.”
2. Dolan also did not fully explore or report on current efforts in the legislature to enact certain reforms to the Enterprise Zone program especially regarding the TEA. The Assembly Jobs Committee, at the behest of Speaker Perez, has been working for nearly a year with a working group of various stakeholders to come up with a package of Enterprise Zone reforms or fixes. The group has come up with three proposed changes to the TEA which would address all the concerns raised in the article and more. Only two of the recommendations were even hinted at in the article in his quotation from CAEZ President Craig Johnson,
Craig Johnson, president of the California Assn. of Enterprise Zone administrators, who has strongly opposed Steinberg’s bill, acknowledged that using census tracts to identify disadvantaged neighborhoods is too broad and would allow businesses to claim tax breaks for hiring highly paid professionals.
“That’s a valid concern and one we take seriously,” Johnson said, suggesting that the employment areas be smaller and the hiring credit limited to new employees making no more than the median income for the county.
The proposed legislation from the working group would a.) institute a wage cap for the TEA category so that higher income individuals who happen to live in a TEA would not make their Enterprise Zone employers eligible for the credit; b.) change the way the TEAs are drawn from census tracts to census block groups, a smaller division of the census geography; and c.) require that the TEAs be redrawn more frequently to take advantage of more up to date census data.
3. Dolan reports that City officials refused to release information about employees qualified by Enterprise Zone employers under the TEA category, but he does not report on data that zones would have been willing to provide such as the average wage rate of such employees. A sample of nearly 10,000 vouchers statewide shows that the average annual wage of employees living in a TEA was $25,200.
