The Center of the California Enterprise Zone Information Universe “State budget crunch endangers local enterprise zones”


By Eilene Zimmerman

Grappling with a $20 billion deficit isn’t easy. The California Legislature has put just about everything on the chopping block, including Medi-Cal, college and university funding, public education and prisons. So it’s not a huge surprise that the latest suggestion from the California Legislative Analyst’s Office is to cut the California Enterprise Zone program.

An Enterprise Zone is a defined geographic area that is economically disadvantaged, and businesses that locate there qualify for a variety of financial breaks, like tax credits on the wages paid to new employees, a tax credit for sales taxes on purchases of manufacturing equipment, exemption from certain city fees and more.

San Diego’s first Enterprise Zone was established in 1986. It eventually became two different Enterprise Zones—the Metropolitan Enterprise Zone and the South Bay Enterprise Zone. In 2006, the two were merged and enlarged to become the San Diego Regional Enterprise Zone, expanding beyond the city limits to include parts of Chula Vista and National City.

What that’s meant to the region is some 25,000 jobs in economically depressed communities and more than $1 billion in investment, says San Diego city councilmember Todd Gloria.

“In my district, it’s been helpful in attracting and retaining businesses in communities like North Park and City Heights,” says Gloria. “The tax benefits are significant.”
Cutting funding of the Enterprise Zone program wouldn’t mean redrawing boundaries to make the zone smaller but would instead lessen the incentives that get new businesses to locate within these communities in the first place. Gloria says one of the biggest benefits of new business is that they employ locals who live in the neighborhood.

“We want to continue to have those jobs during a period like this, when there is really high unemployment,” he says.

There are benefits even beyond jobs. Putting new businesses in an economically disadvantaged or blighted community helps restore that community, allowing for redevelopment and renewal.

“If they cut incentives for businesses in Enterprise Zones, what is left for people in these communities who want to be working, supporting their families?” asks Gloria. “What happens to urban renewal?”

Ruben Barrales, president and CEO of the San Diego Regional Chamber of Commerce, understands that state legislators are between a rock and a hard place. But Barrales also finds it ironic that in the worst recession in modern history—where unemployment in the state exceeds 12 percent—the government is considering cutting a program that helps create jobs in areas where economic stagnation hits hardest.

“These are businesses that often provide jobs for blue collar workers in San Diego, and we are losing a lot of those jobs generally anyway,” says Barrales. “Anything we can do during this recession to help small businesses and manufacturers stay in business and hire people is a benefit to the region’s economy.”

Barrales hasn’t given up hope. Does he expect Enterprise Zone cuts when a budget fix is finally agreed upon?

“That’s the $1 billion question,” he says. “My expectation is that the process will drag out until the summer. We need a budget fix that the Assembly and Senate can agree on, and one that the governor will also sign. I hope they won’t cut the program; it would be taking a short-sighted view of the future.”
Instead, says Barrales, legislators should take the long view: that the tax incentives that enable businesses to employ people now is better for California’s long-term prospects than any short-term fix.

About the author: Eilene Zimmerman is a journalist based in San Diego who writes about a variety of topics, including business, social and political issues and family life. Her work has been published in national magazines and newspapers including The New York Times, The San Francisco Chronicle, The Christian Science Monitor, FORTUNE Small Business,, CBS, Wired, Harper’s,,, Psychology Today and others. She blogs at

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