The Legislative Analyst’s Office has just released a new report on revenue in the 2009-2010 budget.  They basically repeat verbatim what we have seen from them in the past regarding the Enterprise Zone program:

Background. State law provides targeted hiring credits, wage credits, credits for sales taxes paid on certain machinery, and other tax benefits to businesses operating in designated “enterprise zones.” Currently, 42 zones are authorized by state law to promote economic growth in depressed areas of the state. Some zones have been in existence for more than 20 years.

Proposal. Cancel zones authorized by the state in 2006 and eliminate the remaining zones as their current designations expire. Revenue gain of about $100 million in 2009–10 and $120 million in 2010–11.

Rationale. Most studies conclude that enterprise zones typically have little impact overall on new investment and do relatively little to improve the job prospects of the residents of these zones. Additionally, it is not evident what additional benefits would be gained by extending the same benefits in zones that have been in place for two decades. (Please see our 2008–09 P&I and our 2003 report An Overview of California’s Enterprise Zone Hiring Credit for more on this issue.)