Dan Walters writes in today’s Sacramento Bee about a new coalition trying to repeal SBX 28.  While Walters focuses on the potentially problematic hidden agenda of the movement’s backers, it is interesting to note the unintended consequences for the Enterprise Zone program.

SBX 28 included a number of more significant provisions which the coaltion is concerned with (and Walters is sympatheic to) as described in this edition of FTB Tax News.  Perhaps the most minor component of the legislation was that it “Clarifies legislative intent on business tax credit assignment language in AB 1452 for purposes of proper implementation of that section.”  This, however, was the part that effected Enterprise Zone credits.

I described the tax credit limitations set by AB 1452 and the modifications made by SBX 28 in several blog posts such as this one.

The repeal of SBX 28 could have the side effect of allowing taxpayers with Enterprise Zone credits to transfer those credits to other entities that do not have operations in a zone.  While there may be a good argument that the apportionment limitations built into the EZ credit are counter-productive, this change would likely confuse the issue without providing much benefit for the majority of taxpayers.