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Local Reactions to Budget Rumors

Even though there are no specific details on any budget proposals, and we have seen many false alarms in the past, local officials are starting to react to hints reported in the media. This article in the Appeal-Democrat discusses the reactions of officials in Yubba and Sutter Counties:

A possible 2011-12 state budget item to cut enterprise zones and redevelopment agencies has Yuba-Sutter officials concerned that doing so would kill local economic growth.

The proposal is rumored to be part of new Gov. Jerry Brown’s initial state budget, which is scheduled to be released Monday. But many local officials working to bring jobs to the area said the notion is poorly considered.

Losing the program would be a huge detriment to our existing businesses as well as potential businesses considering the region for location,” said Brynda Stranix, the Yuba-Sutter Economic Development Corporation’s chief executive officer, in an e-mail.

She referred to the enterprise zone in both counties, offering tax credits and other incentives for businesses who locate and expand. Enterprise zones were originally established to give businesses a reason to locate in more economically downtrodden areas.

Redevelopment areas, too, have been beneficial, said Marysville City Manager Steve Casey. Redevelopment created downtown enhancements such as the archways over intersections, as well as housing for lower income people, he said.

“Most of those projects, they’re bonded to get those things done,” Casey said, explaining redevelopment money, which comes from the state, pays those bonds off.

“If you do away with the debt service that goes with them, you might put some financial institutions in jeopardy,” he said, adding in recent years all redevelopment money his city has received has gone to repaying bonds.

Officials with the governor’s office haven’t offered an estimate of how much eliminating enterprise zones and redevelopment agencies would save the state, which faces a deficit of $28 billion over the next 18 months.

But Stranix said she would argue enterprise zones pay for themselves.

In fiscal 2009-10, she said, the Yuba-Sutter Enterprise Zone created $24.4 million of tax credits for vouchered, full-time employees.

Businesses receiving those credits put the savings back into their operations, she said, both in capital improvements and hiring more employees, resulting in more money going into the local economy.

Both enterprise zones and redevelopment agencies have been criticized by government watchdogs, who suggest they are a form of corporate welfare.

Assemblyman Dan Logue, R-Linda, who opposes eliminating enterprise zones, said the state needs to do more to create jobs, not less.

“The governor has to realize that to create wealth and revenue, you have to give businesses a reason to develop in an area,” said Logue.

He added in the last decade, the majority of new jobs created in California came in areas where there were enterprise zones.

But because the initial budget proposal from the governor often undergoes several revisions before it’s passed and signed, Logue said, Brown may be including the cuts as a negotiating tactic.

“The first thing he’s talked about is asking Californians to raise their taxes,” Logue said. “He might be holding out certain things right now to see how people feel.”

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