Governor’s May Budget Revise Proposes Substantial Changes to California Enterprise Zone Program


California Governor Jerry Brown released his May budget revise today, revealing additional intentions for the State’s enterprise-zone program.
From page 68:

“The [enterprise zone] hiring credit will be refocused to specific areas with high unemployment and poverty rates. This credit will be available for the hiring of long-term unemployed workers, unemployed veterans, and people receiving public assistance. The Enterprise Zone sales tax program will be expanded to a statewide, upfront sales tax exemption for manufacturing or biotech research and development equipment purchases.”

This budget document does not specify how these changes might be accomplished. It is clear to me, however, that new legislation would be required because this vision of the program varies substantially from that outlined in current law.
In his 2011-2012 budget proposals, Governor Brown proposed the outright elimination of the enterprise zone program.  He was unsuccessful, however, at overcoming legislators’ opposition to  the program’s death.  Since that time, the California’s legislature has experience a significant change in its membership. Perhaps this time, Governor Brown will be more successful at effectuating these serious although less drastic changes.
Not mentioned in the budget revise are the other enterprise zone tax benefits such as the net operating loss carryover, net-interest deduction for lenders, the business expense deduction and preference points for bidders on certain kinds of state procurement contracts.
UPDATE:  After listening to the California State Assembly Budget Subcommittee  May 22nd hearing on the Governor’s Enterprise Zone proposal, it is crystal clear to all that the Governor intends to replace the Enterprise Zone hiring credit program.  See my May 23 Post.

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