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SacBee Capitol Alert: Legality of Enterprise Zone Elimination Proposal Questioned

The Sacramento Bee’s Capitol Alert reports this morning that at a budget subcommittee hearing today, lawyers will argue that the Governor’s proposal to eliminate Enterprise Zones violates taxpayers’ Constitutional rights:

A legal fight is brewing in the debate over Gov. Jerry Brown’s budget proposal to eliminate enterprise zones.

Brown has proposed repealing tax benefits for businesses in designated “enterprise zone” areas across the state, arguing that research shows they have little impact on employment rates or economic growth. The proposal would raise an estimated more than $900 million in additional revenues in the current and next fiscal year.

But opponents of Brown’s plan are preparing to argue that the move would be unconstitutional.

An attorney for an effort to maintain enterprise zones will testify to legislators today that the state cannot constitutionally take away tax credits earned but not yet claimed for actions businesses have already taken in the zones, according to a copy of the testimony. The attorney will also argue that eliminating the zones “constitutes a massive breach of the state’s contractual obligations to localities and taxpayers” that relocated or expanded in the areas under the understanding that the credits would continue.

The issue is on the agenda at a 1 p.m. meeting of the Assembly Budget Subcommittee on State Administration and Taxation.

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