California Businesses Could Lose Enterprise Tax Credit

OAKLAND (KCBS) – Gov. Jerry Brown’s proposal to eliminate a state tax credit for companies that hire workers within specific neighborhoods would cost the state thousands of jobs, according to business owners who benefit from the credit.

Brown’s budget proposal chops $1 billion off California’s deficit by eliminating a credit when workers are hired in 42 so-called enterprise zones around the state, including downtown San Francisco and downtown Oakland.

KCBS’ Doug Sovern Reports:

A study by the state Department of Finance found the 10,000 new jobs in those areas every month would be created anyways, but business owners insist expanding would be difficult without the credit.

“We have 100 employees. I’m sure we’ve hired at least 40 or 50 of those since we became aware of the enterprise credit,” said Mike Hannigan, owner of an Oakland office supply store called Give Something Back.

Few Californians have even heard of the enterprise tax credit, and its elimination has taken a back seat to Gov. Brown’s proposal to eliminate the redevelopment agencies that cities depend on to fund local services sometimes only tenuously tied to eliminating blight.

Max Shenker with the California Association of Enterprise Zones noted that Arizona is already campaigning to lure companies that would have to pay higher taxes across the border if Brown gets rid of what he considers the most effective job creation incentive California has.

“California, of course, doesn’t exist in a vacuum and we are in competition with our neighboring states,” he said.

“It’s not going to be helpful to the economic health of the state.”

(© 2011 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)


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