SACRAMENTO, Calif. /California Newswire/ — Today, Calif. Governor Edmund G. Brown Jr. joined the region’s business leaders and workers to call for action on his plan to revamp the state’s economic development program and help put Californians back to work. “California’s thirty-year-old Enterprise Zone program is not enterprising, it’s wasteful. It’s inefficient and not giving taxpayers the biggest bang for their buck,” said Governor Brown.
“There’s a better way and it will help encourage manufacturing in California,” he added.
“The Silicon Valley Leadership Group is pleased to support the Governor’s proposal, which targets critical economic development funds to areas where California can lead – the manufacturing, R&D and biotechnology sectors,” said Silicon Valley Leadership Group President and CEO Carl Guardino. “This is smart economic development done right.”
“The Governor’s plan wisely targets our tax dollars to good jobs that build the middle class and strengthen communities,” said California Labor Federation Executive Secretary-Treasurer Art Pulaski. “California workers stand with the Governor in his efforts to create good jobs that will spur our state’s economic growth.”
The Governor’s plan, proposed in the May Revision, builds on the framework of existing, targeted programs by redirecting approximately $750 million annually from the current flawed Enterprise Zone program to three new economic development programs:
Sales tax exemption: A statewide sales tax exemption on manufacturing equipment or research and development equipment purchases by firms engaged in manufacturing or biotechnology research and development. The proposal is estimated to provide sales tax exemptions worth over $400 million annually.
Hiring credit: A hiring credit targeted to businesses located in areas with the highest unemployment rate and poverty. This credit will be available for the hiring of long-term unemployed workers, unemployed veterans and people receiving the federal earned income tax credit. The credit will only be allowed to taxpayers who have a net increase in jobs. The proposal is expected to provide approximately $100 million annually in hiring credits.
Investment incentive: The California Competes Credit based on specified criteria including the number of jobs to be created or retained and a set job retention period. This component of the proposal is expected to provide between $100 million and $200 million per year in tax credits.
Studies on enterprise zones show that the current program, established nearly three decades ago, is ineffective, wasteful and expensive. Research from the Public Policy Institute of California indicates the program has no overall effect on job growth, while a recent California Budget Project report showed the program has cost California $4.8 billion since its inception and has primarily benefited less than half of 1 percent of the state’s corporations.
The Governor’s economic development proposal enjoys broad support from businesses and workers alike, including: Northrop Grumman Corporation; IBM; Advanced Micro Devices Inc.; Bay Area Council; Bay Bio; Biocom; Bloom Energy; California Healthcare Institute; California Labor Federation; California Teamsters Public Affairs Council; Clorox; Genentech; Gordon Biersch Brewing Company; Intel; International Association of Machinists and Aerospace Workers; International Longshore and Warehouse Union; International Union of Operating Engineers; PhRMA; Silicon Valley Leadership Group; State Building & Construction Trades Council of California; Unite Here!; United Food and Commercial Workers; Utility Workers Union of America; Webcor Builders and the Wine Institute. For a complete list of the dozens of supporters, click here (PDF): http://gov.ca.gov/docs/ED_Support.pdf .
For an overview of the plan, click here (PDF): http://gov.ca.gov/docs/ED_Plan.pdf .