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Sacramento Metro Chamber Responds to Morain

Matthew Mahood, president and CEO of the Sacramento Metro Chamber, responds to Dan Morain’s column in the Sacramento Bee:

Re “Big bucks hide behind enterprise zones” (Dan Morain, Feb. 10):

As a member of the economic development community, the Sacramento Metro Chamber believes discussion about productivity of enterprise zones should be balanced and informative, rather than taking the face of political rhetoric.

When Bee columnist Dan Morain’s editorialized regarding the “masked” face of the zones’ supporters, he omitted several key points.

First, a $37,000 hiring tax credit is available to companies for selected applicants from historically disadvantaged groups seeking employment, including those on public assistance programs, located in areas of high poverty, and veterans, to name a few. In most cases, this is only a small portion of the employer’s total work force but provides encouragement to choose employees from these groups. In addition, the $37,000 benefit is spread out over five years of employment and is the maximum allowable.

Second, another missing issue is California’s ability to successfully compete for jobs. Surrounding states have more aggressive tax credits and abatements, forgivable loans, reimbursements, grant programs, and/or a lower tax burden than California has today. Competing with these other states has never been more difficult. Eliminate enterprise zones and it gets worse.

While not validating Morain’s claim that most companies utilizing credits are major corporations, from our viewpoint, this is not necessarily a strike against the zones. Major corporations are often “major” employers and provide “major” tax revenue streams to the state of California and local areas. They choose sites for their next expansion or relocation, substantially based on the ability to mitigate a portion of their new costs through incentives.

Third, economic development professionals throughout the state utilize this incentive to bring employers to the Sacramento region and California at a time when creating jobs is truly the only long-term solution to our current economic dilemma. If the enterprise zones go away, it will be one less tool to attract jobs.

Let’s look at local success of enterprise zones that helped convert former shuttered military bases into thriving industrial and commercial parks, such as the former McClellan, Mather and Sacramento Army military bases. More than 13,000 jobs vanished – a $1.5 billion loss to the region’s economy – when just McClellan closed in 2001. But since then, enterprise zone incentives helped attract 240 companies employing nearly 15,000 employees there.

The last time I checked, our state’s unemployment rate was 12.3 percent. We could use a few more job creators right about now – not more obstacles.

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