Bill Allen Answers False Claims that EZ Program Not Fruitful

Bill Allen, President and Chief Executive of the Los Angeles County Economic Development Corp. has a column in Fox & Hounds Daily today offering sound arguments for preserving California’s Enterprise Zone program.  I recommend reading the entire piece.   The following are illustrative.
In answer to the often repeated claims that the EZ program has not shown measurable results:

Contrary to the Governor’s interpretation, the program’s success rate has been well-documented. A 2006 Department of Housing and Community Development report confirmed that California Enterprise Zones have outperformed the rest of the state in several key economic areas: poverty decreased by 7.35 percent more than in the rest of the state, unemployment rates fell by 1.2 percent more than the rest of the state, household incomes grew 7.1 percent faster, and wages and salary levels increased 3.5 percent more than the rest of the state.

Canceling the program’s tax benefits will not translate in an equal gain in annual state tax revenue:

In addition, the Governor assumes that by eliminating the program the state will automatically generate an additional $924 million dollars. But this is not true when one factors in the lost tax revenue from businesses and jobs that will leave the state – but for the benefits offered in these zones – and not return.

Eliminating enterprise zones will worsen the state’s budget deficit, not improve it:

Terminating the Enterprise Zone Program in the mistaken belief it would help balance the state’s budget would be exactly the wrong prescription for fixing our ailing economy. Eliminating these zones would almost certainly make things worse in already stressed areas, which would suffer further job losses, economic decline and diminished quality of life.

A better choice would be to more effectively engage the enterprise zone program to strengthen California’s economy, making it more competitive with other states.

If anything, the Governor should strengthen his commitment to the Enterprise Zone Program in these difficult economic times as a key mechanism to revitalize economically-challenged areas by providing incentives that create high-wage jobs and investment in these communities. By responsibly doing so, he would not only strengthen local economies, but strengthen the state’s long-term economic foundation as well.

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