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Transcript of John Perez’s Remarks at Fresno Town Hall

The following is a transcript of the comments made by Assembly Speaker John Perez regarding the Enterprise Zone program at a recent town hall meeting in Fresno. The video was posted earlier here:

Kelly Trevino: My name is Kelly Trevino I’m the City of Fresno’s incentive zone manager which includes our state enterprise zone. We actually have two enterprise zones here in Fresno county, one for Fresno County one for the City of Fresno. And as the only tax incentive that we have here in the state to help keep businesses here in California, when states like Arizona and Nevada are doing such a good job of wooing our businesses out of the state, I am just wondering where the two of you stand on keeping the enterprise zone program here?

John Perez: First of all, it’s not the only incentive program. We just did a couple others in the last six weeks. We passed a manufacturing tax credit for any manufacturing that results in the production of green products. Much in the way that the high tech boom helped get us out of the last economic downturn we believe that the green tech boom as well as other areas will help get us out of the current recession. California is leading the world in terms of innovation in high tech and in green tech we’re lagging in the manufacturing jobs that result from that technology. So we passed, for the first time in a long time, a manufacturing tax credit targeted in that area. That’s going to generate tens of thousands if not hundreds of thousands of good quality manufacturing jobs up and down the state of California, a lot of them located in Silicon Valley, but others throughout the state. Huge issue.

We’ve done other incentives, very recently we did a 10% tax credit on purchases of new homes and in order to stabilize the housing market and then we did a 10% tax credit for first time home buyers on any homes which we think will help stabilize the pre-existing housing stock and create jobs there.

The third thing in terms of and this is less connected to incentives but part of the same housing concern. As people up and down that state have struggled with the mortgage meltdown, people have had to engage in short sales, and under the old laws they would be taxed for the difference between the pre-existing value and the short sale. People that were struggling hard to get their heads above water would have been hit with a huge, huge new tax. We passed a bill that eliminates that tax obligation once they engage in a short sale.

Now we have actually billions of dollars of other targeted incentives. Enterprise zones account for about a half a billion dollars a year in credits. Generally very positive, but it needs to be targeted more effectively than it is in some parts of the State. Some of the rules around what qualifies an employer for an enterprise zone probably needs to be restructured. I will give you an example: the majority of people that get a tax credit for an enterprise zone get it based on living in a targeted area of employment. It’s based on old census data. You’ll take an area that was perceived to be challenged in the past give somebody a targeted area of employment credit. In places like Fresno that’s probably a good tool. In my district it’s a horrible tool. I represent downtown Los Angeles where you can have two blocks away from each other a woman living in a battered womens’ shelter trying to come back out and get employment, and somebody who recently graduated from law school in a loft because its hip and urban paying $500 per square foot for their loft. We shouldn’t be giving the tax credit for hiring that second person. It’s not the folks where there is the challenge. We’ve got to make sure that we are as efficient as we can in using the limited credits that we have to leverage for the best quality jobs and to make a difference. We don’t want to give somebody a prize for doing that which they would have done anyway. We want to incentivize new jobs and incentivize to keep jobs that would have otherwise be lost. So I am for keeping enterprise zones but I’m also for refining it and making it a more effective tool.

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