Enterprise Zones Are Investments, Not Liabilities
2011-01-13 · By Editor
On Monday, Governor Jerry Brown’s proposed State Budget recommended drastic cuts at all levels. The Long Beach Chamber will be paying close attention to the Governor’s budget proposal as pending discussions and decisions loom in the State Legislature to determine what is best for Long Beach and California.
The Governor proposed deep cuts and in some cases completely eliminating vital programs. One such cut that the Long Beach Chamber opposes is the elimination of our state’s Enterprise Zones. Long Beach depends on Enterprise Zones to assist in protecting the economic vitality of our city.
We agree that budgeting within our means should be priority number one for the new Governor and the Legislature. However, cutting programs—such as Enterprise Zones— that actually provide economic stimulus is the wrong approach. The facts are clear, Enterprise Zones provide the needed investment to spark local economic revitalization, development and job growth.
With record unemployment rates, a prolonged recession and some of the highest income and sales tax rates in the country, Enterprise Zones are needed more today than ever to offset these and other current issues facing California business owners, employees and communities throughout the state.
The large pool of unemployed has encouraged many Enterprise Zonecommunities, such as Long Beach, to develop specialized training andEnterprise Zone pre-qualification screening, and placement services using the benefits as an effective outreach to the business community.
Specifically, Enterprise Zones provide businesses with tax incentives for such things as equipment, hiring, worker credits and tax deductions. In other words, tools that attract businesses and promote economic development. The utility of tools, like the ones mentioned, is real and significant and weigh on the mind of business owners as they make practical decisions about where to create or cut jobs, open or close plants, invest or deleverage themselves.
Enterprise Zones were designed to move economically challenged residents from the public rolls to private payrolls. California’s Enterprise Zone program is limited to the 42 most economically challenged regions in the state, which have higher than average unemployment rates and poverty levels. Therefore, these programs encourage hiring of inner-city residents. Elimination of this impactful program in the middle of the worst job market in decades will negatively impact these inner-city businesses, residents and the community as a whole – and further encourage business owners to find greener pastures in other more business-friendly states.
In fact, even before the downturn, states that didn’t have Enterprise Zones routinely lost high-paying manufacturing jobs to states with Enterprise Zones. If you think incentives matter in normal times of economic growth, imagine how much they matter in the aftermath of a severe recession, which is what we are faced with now.
Since 41 other states have their own version of Enterprise Zone programs, and lower tax rates and looser regulatory structures, we need, for the sake of our competitive advantage and the well-being of our community, to protect and strengthen our own Enterprise Zone program in order to continue to move Long Beach in a direction of prosperity and retaining businesses located throughout the Enterprise Zone program areas.
The Governor, Legislature and especially the State Legislators who represent Long Beach must not look to end local benefits – such as Enterprise Zones – that provide returns greater than their investments. Instead, the Governor and the Legislature must instead look more closely at programs that drain valuable resources…
…and that’s Strictly Business.