The California Senate voted last night to approve Democrat Governor Jerry Brown’s legislation that will eliminate the state’s 29-year old enterprise zone program. While only 27 votes were required, Assembly Bill 93 passed 30 to 9 in favor, with 3 of 11 Republicans joining with Democrats. (There are 40 seats in the California Senate, one of which is currently vacant.)
The bill now must go to the Assembly where 54 votes are needed for passage. A quick glance at the Assembly’s roster suggests the probability of passage is high but not certain. The state Assembly is composed of 54 Democrats to 25 Republicans, with one seat currently vacant.
While ending the enterprise zone program, this bill would not immediately eliminate the benefits already accrued to enterprise zone businesses throughout California.
- The enterprise zone sales and use tax credit, hiring credit, and net interest deduction would remain in effect for qualifying purchases, new hires, and interest received through December 31, 2013.
- Wages paid to employees certified under the existing hiring credit program would continue to generate the hiring tax credit for up to 60 months of employment.
- Taxpayers who have generated excess tax credit would be able carryover and continue using the hiring credit and sales tax credit for up to 10 years.