Debra Gruszecki published a lengthy article in The Desert Sun yesterday describing Coachella Valley area responses to Governor Jerry Brown’s proposal to dismantle California’s Enterprise Zones program. While there is much in her article worth reading, one statement in particular captured my attention.
State Assemblyman V. Manuel Pérez, the Coachella Democrat who chairs the committee on Jobs, Economic Development and the Economy, has been working on a reform legislation to ensure enterprise zones . . . are protected.
Assemblyman Pérez has been a strong supporter of the state’s enterprise zone program. Last year, the California Association of Enterprise Zones recognized Perez with the organization’s Legislator of the Year Award because of his highly visible support of the program.
My review of recent news reveals no additional details of the Assemblyman’s anticipated reform legislation. Recalling anti-EZ bills that were pushed by enterprise-zone opponents last year, however, I would not be surprised if Pérez offers them something they wanted. Reasonable options would include elimination or modification of the Targeted Employment Area (TEA) eligibility category, which has been heavily criticized by opponents.
Another probable reform would be to limit the amount of time employers have to apply for hiring vouchers. Hiring vouchers are certificates of employee eligibility. A business can not claim a hiring tax credit without first obtaining an employee-certification voucher from the zone’s vouchering agent. By placing a limit on the amount of time available for obtaining a voucher, the state would be eliminating the practice of retroactive vouchering — a process that currently enables businesses to amend their tax returns and claim refunds based on tax credits they had missed during the past 3 to 5 years.
There are reasonable reforms that friends of the enterprise zone program should be willing to accept — especially if the alternative is the complete dismantling of the program.
You eliminate the TEA target group and this program becomes obsolete! Why would you eliminate this catagorey! Many of the companies that are located in an EZ do not hire employees that fit into the other catagories. Stupid! Are you letting them kn ow this Vaughn?
John, unfortunately, the only option currently being openly discussed is elimination of the entire program. I am afraid that elimination of the Targeted Employment Area (TEA) would be one of the more lenient changes the legislature will propose for the EZ program here in CA.
I’m not saying I applaud it, but it seems like one of a number of likely outcomes.
Elimination of the TEA would not make the program obsolete, although it would definitely decrease the level of tax credit for many employers.
Targeted Employment Areas are designated based on the location’s level of economic distress. So, TEA Residency as an eligibility category is a surrogate for other qualifications associated with economic distress. In other words, TEA residents are more likely than others to qualify under Category C (WOTC certified), D (low income) , E (Disconnected Worker), or I (recipients of public assistance) and maybe others.
The convenience of the TEA category itself is that it eliminates the need to discover and document these other forms of eligibility. What makes it a target for the opponents of the EZ program, however, is that it also tends to qualify people who are not economically distressed or otherwise qualified.
There are CA enterprise zones that do not have a TEA associated with them and they still work. Sacramento, for example, has no TEA and yet I have clients who do very well as enterprise zone businesses in Sacramento county.
[…] to my previously expressed concerns, the proposals do not place a limitation on the amount of time allowed for companies to apply for […]