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Appeal-Democrat: “Enterprise zones under budget, legislative axes”

Here is an article on SB 974 and the Enterprise Zones in the context of the budget from the Yuba County area Appeal-Democrat:

A popular program is under attack on two fronts in Sacramento, both as a potential place to cut the state’s overdue 2010-11 budget and from legislation to change how it works.

Those involved in enterprise zones, such as the one covering much of Yuba and Sutter counties, said they are at the mercy of policymakers and politicians who don’t understand such programs, and just focus on dollars.

“I’ve got lots of stories about employees that were hired because of enterprise zones, and that doesn’t always end up in the data,” said Craig Johnson, president of the California Association of Enterprise Zones.

Targeted at economically downtrodden areas, enterprise zones give tax credits and other incentives to businesses choosing to locate or expand within them. Since January, businesses in the Yuba-Sutter zone have received 1,500 credits for hiring employees, according to enterprise zone manager Mary Hansen.

But because the state’s 42 enterprise zones cost about $500 million annually, they are also a target when lawmakers are looking for places to cut California’s deficit-ridden budget.

Johnson said that enterprise zones have been in the firing line in recent budget years, and this one is no different. Of even more concern this year, he said, is Senate Bill 974, which would change an aspect of enterprise zones that he and Hansen called critical.

Businesses now receive hiring credits when made in targeted employment areas, ones with higher unemployment and poverty rates compared to the state.

Under SB974, Johnson said, the targeted employment area would be replaced with credits for vocational training. It would also make it more difficult for businesses to submit information in time for retroactive credit vouchers when they hire an employee.

“This takes an absolute meat ax to the program,” he said. “It’s as if they were specifically targeting minority communities.”

The bill by Sen. Darrell Steinberg, D-Sacramento, is held up in a state Senate committee while advocates for enterprise zones work to make it more effective and less damaging, he said.

Targets on enterprise zones focus on the numbers and not the impact, Hansen said. “The problem with the state budget is they have to understand how businesses use the numbers,” she said.

John Fleming, Yuba County’s economic development coordinator, said the enterprise zone is the region’s main attraction to outside businesses.

During the recession, he added, it’s obvious how severe the economic situation is by how many more businesses have applied for credits under the program.

As Wayne Bishop gears up for his peak season, the co-owner of Bishop Pumpkin Farm in Wheatland said the enterprise zone has proved beneficial. Bishop said he has used it in the last two years for hiring, and used the tax credit to re-invest in his business.

“When you run a small business, you hope to make a living, and anything extra goes back into the business,” he said.

Johnson said he acknowledges some reports find fault with enterprise zones for minimal return on big investments, while other reports, including one from 2008, show benefits.

“These are the kinds of metrics that need to be looked at,” he said.

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