Brown Budget Proposes to Eliminate the Enterprise Zones

By Mario Conde

Brown budget proposes to eliminate the Enterprise Zones which give incentives to business to stay in a designated area and create jobs.

The Imperial Valley has an enterprise zone in Brawley and another one in Calexico that have worked to expand and retain business in their areas. Companies that locate in one of the state’s 42 designated Enterprise Zones can get a state income tax credit worth up to $37,400 over five years for each qualified employee. Businesses can also get a credit on their income tax return for sales tax paid on up to $20 million a year in qualified equipment purchases. The Governor’s proposal is to eliminate these enterprise zones and recoup $1 billion over the next two years.

In 2010, there was a talk of merging the Calexico-County Enterprise Zone and the Imperial Valley Enterprise Zone  and have a single zones for the entire Imperial Valley. The proposal to merge the two zones came directly from the State Chairman of the County Enterprise Zones, James Nunn that came to the Valley and suggested to the County Board of Supervisor to explore this possibility and submit an application to the State Housing and Community Development to have the state give the designation to the Imperial Valley.

The County of Imperial and the City of Calexico started their Enterprise Zone partnership in 2006. The County and IID both currently pay $60,000 per Zone for an aggregate of $120,000 per year.

However, the Council in Brawley and Calexico decided to keep their enterprise zones as it is since the merger would take away the competitiveness from the City in attracting new industry.

The City of Imperial was hoping for this merger to happen since it will benefit the expansion of the Imperial Airport.

The CCEZ has been successful in attracting a new skilled nursing facility to Calexico’s Towncenter that will built very soon and bring many jobs to Calexico. Daniel Fitzgerald, CCEZ Manager, said that he and other EZ representative were in Sacramento and there is nothing set in stone right now or any legislation has been prepared against the elimination of the enterprise zones. However, all EZ managers will strategize and developing talking point in a response strategy for lawmakers in Sacramento who will begin discussing Brown’s budget shortly.

In a statement prepared by Craig Johnson, president of the California Association of Enterprise Zones, said that the only way to make California’s economy stronger is by creating jobs.

Johnson said that research has shown that Enterprise Zones help reduce poverty rates, lower unemployment, provide higher wages, increase household income levels and foster greater community investment through private-sector businesses.

“Tax increases and the elimination of these important economic development programs will only worsen Californias unemployment rate and cause more businesses to flee to states with healthier economies and friendlier business policies,” stressed Johnson in a press release.