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Speculation That Governor Brown Will Seek Enterprise Zone Savings Through Regulation

A pair of articles today in the Sacramento Bee suggest that when Governor Brown reveals his proposed budget on Thursday, he will propose some cost savings to be achieved through new regulations of the Enterprise Zone program. Dan Morain, in an opinion essay says:

Unable to win support to end the program, Brown is preparing to release regulations to shave $50 million a year in costs by ending the practice of retroactively giving incentives to companies for past hires.

And Kevin Yamamura, in an article about what to expect from the new budget proposal, says:

Brown still hopes to save money by restricting state tax credits in high-unemployment areas designated as enterprise zones. Two years ago, the governor wanted to eliminate the zones, the same way he targeted redevelopment agencies. The program is designed to spur employers to hire workers from distressed areas, but Brown has said it is subject to abuse.

The state spends an estimated $700 million annually on enterprise zone tax credits, according to the state Department of Housing and Community Development.

Brown’s administration is drafting new regulations that would limit an employer’s ability to claim tax credits for workers hired long ago, according to HCD spokesman Colin Parent. The rules could take effect by the next fiscal year.

While that would presumably reduce the $700 million spent on enterprise zones – and help the state’s bottom line – Parent would not say Tuesday exactly how much the budget stands to benefit from curtailing “retroactive” tax credits.

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