OPPOSE SB 974 (Steinberg): Eliminates Key Enterprise Zone Incentives

The Chamber respectfully requests your opposition of SB 974 (Steinberg), as amended May 3, 2010, which would effectively gut the California Enterprise Zone (EZ) program hiring tax credit. SB 974 proposes to create a “career pathways” tax credit in an effort to bolster career technical education efforts in this state. However, this new tax credit is “paid for” by eliminating key provisions of California’s successful Enterprise Zone Program. Two specific provisions of the EZ Program would be decimated if SB 974 were enacted. The EZ Program provides important benefits to businesses that invest in some of California’s most economically distressed areas, including Hollywood, and has gone a long way to help provide jobs to disadvantaged individuals throughout the State.

• SB 974 would eliminate the Targeted Employment Area (TEA) from the list of eligibility criteria for the EZ hiring tax credit. As such, the incentive to hire individuals from certain low-income neighborhoods with historically high levels of unemployment and poverty would be eliminated. Because a large number of hiring credit vouchers are issued under the TEA criterion, the practical effect of this provision will be to eliminate the mostly widely used benefit of the EZ Program. The TEA criterion is appropriate because it focuses on hiring individuals who reside in the most economically distressed areas with and surrounding an enterprise zone in this state.
• SB 974 would additionally require all hiring tax credit certifications (vouchers) to be completed within 21 days of an individual being hired. There are detailed statutes and regulations promulgated by HCD which provide specific documentation standards and other requirements for obtaining vouchers under the fourteen eligibility criteria. This provision is an arbitrary and impractical deadline that will preclude most employers, particularly small businesses, from claiming the EZ hiring tax credits to which they are otherwise lawfully entitled. The practical effect of this provision is to eliminate “retroactive vouchering” and instead impose an unreasonable burden upon businesses to obtain vouchers in an unrealistic timeframe.

California’s EZ program is vital to California’s economy and economic recovery. For these and other reasons, we strongly OPPOSE SB 974 and urge your “NO” vote.