Governor’s Proposal to Eliminate California’s Enterprise Zones Missing from Budget Bill

California Governor Jerry Brown’s proposals to eliminate and replace the state’s enterprise zone program did not make it into the budget bill, which is scheduled for a vote on Friday, June 14th.  Legislative leaders made it clear earlier this week that they did not have the number of votes required to pass the enterprise zone legislation.

The Governor’s efforts will continue, however, as the changes he desires can be passed through legislation independent of the state’s annual budget. The Brown Administration  is determined to continue pushing for these changes to the state’s tax code.

Finalized! CA Sequoia Valley Enterprise Zone Designation Completed

The California Department of Housing and Community Development (HCD) announced Tuesday the final designation of the Sequoia Valley Enterprise Zone (EZ). This designation is effective retroactively to October 6, 2010 and will expire in 15 years. Read about it at The Recorder Online.

In September of last year, I reported on some controversy affecting this and eight other “conditionally” designated zones.  California Governor Jerry Brown’s office had instructed HCD to delay the final designation of these zones.  That order has since been retracted and the remaining designations are being processed.

According to the zone’s website, the Sequoia Valley EZ affects the California communities of Cutler/Orosi Dinuba, Ducor, Earlimart, Exeter, Farmersville, Goshen, Ivanhoe, Lindsay, North Delano, Pixley, Poplar, Porterville, Richgrove, Strathmore, Terra Bella, Tipton, Traver, Tulare, Visalia, Woodlake.  However, if your business is located within any other part of Tulare County, don’t rule out eligibility until you have confirmed it with a phone call.

Businesses located within the EZ are eligible for a number of valuable tax incentives including:

EZ Hiring Credit
Firms can earn $37,440 or more in state tax credits for each qualified employee hired

EZ Sales & Use Tax Credit
Sales tax credits on purchases of qualified machinery and parts

Net Operating Loss Carry-forward
Up to 100% Net Operating Loss (NOL) carry-forward (which can be carried forward for 15 years)

EZ Business Expense Deduction
Up-front expensing of certain depreciable property

Net Interest Deduction
Lenders earn tax-free interest on qualifying loans to EZ businesses.

Bid Preferences
EZ vendors can earn preference points on state contracts.

Please feel welcome to contact me with your questions about the State of California’s EZ program, or about this or any other particular CA zone.  I am Vaughn Hromiko,


Bull Moose Energy of San Diego, LLC – In the ZONE!

A press release issued today by Bull Moose Energy of San Diego, LLC tells us that the company has recently executed a “large generator connection agreement” (sounds complicated) with the California Independent System Operator (CAISO).  I found the press release in the Wall Street Journal’s Market Watch online.

Bull Moose is an alternative energy generator – converting biomass from tree trimmings and other sources into electricity.  While that’s great, what caught my attention is that apparently the plant is expected to create about 240 jobs within the local California enterprise zone.  That includes 200 construction related jobs and about 40 permanent jobs on the site once construction has been completed.


Grumpy Governor Obstructing CA Enterprise Zone Designations

Denise Madrid of The Porterville Recorder summarized a provocative situation faced by up to nine “conditionally” designated California enterprise zones. Govern Jerry Brown’s office had directed California’s Department of Housing and Community Development (HCD), the bureaucracy that oversees the state’s EZ program, to drive with its brakes on.

Conditional-designation status is a normal phase in the lifespan of every new enterprise zone. Nine of the state’s 42 legally designated enterprise zones remain in limbo, however, as HCD delays action required to finalize their status.

The Sequoia Valley EZ, which includes Porterville, Lindsay, Exeter, Visalia, Tulare, Farmersville, Woodlake, and Dinuba and other parts of Tulare County, received its conditional designation status in 2009.

According to The Porterville Recorder,

“Linda Wammack, Porterville development associate, said that the city has learned the HCD is not issuing any final designations at the direction of the governor’s office.”

Wammack said there are nine jurisdictions in a conditionally designated status, two of which have been conditionally designated since 2007, four since 2009, and three since 2010.

“We’re all in limbo,” she said. “We’re all trying to come together for the governor to allow HCD to authorize our documents.”

Now, I don’t really know if Governor Brown is feeling grumpy about all this or not.  It was just this past January that he proposed eliminating the state’s enterprise zone program completely.  He lost that political battle . . .  maybe he just needs more time to get over it.


New Jersey WOTC Going Electronic

Only a few states have electronic filing systems for businesses to certify employees under the federal Work Opportunity Tax Credit. Good news for employers in New Jersey — your state has now joined the ranks!

“Employers or tax credit consultants that represent employers may use the WOTC electronic filing system,” said Anthony Ferrera, director of the [New Jersey] Labor Department’s Workforce Portfolio and Contract Management. “The new electronic online system offers more flexibility and control over the application process, which is available 24 hours. The online system not only minimizes errors, but it also moves the process along more quickly so we may promptly validate a business’s tax credit certification.”

My contacts in California tell me The Golden State could be next.   California’s Employment Development Department is working on it and has tentatively set the time table to roll out electronic WOTC filing by the end of 2011.  

This might provide relief to the heavy backlog of WOTC applications currently stuck in the CA WOTC Center.  Employers are only now (in the middle of August 2011) receiving WOTC certifications for CA employees hired in November of last year.

See the article today by Tom Hester, Sr. of

CA San Bernardino Valley Enterprise Zone Having a Wiz-Bang Year!

According to an article published today in the Highland Community News, the San Bernardino Valley Enterprise zones is already at the brink of certifying more qualifying employees to date this year than it did during the entire year of 2010.

CA San Bernardino EZ

This is, of course, in reference to the program’s state hiring credit, which provides state tax reduction for employers that pay eligible employees to work within the boundaries of a CA enterprise zone.

In 2010, the SBVEZ certified 2,300 eligible employees for 182 employers. So far in 2011, the zone has received more than 2,000 employee applications from 145 employers. Easy to see that last year’s record will be easily beaten.

Accountants, payroll service providers, and other professional service firms with clients in the San Bernardino Valley would be wise to investigate the enterprise zone’s benefits. I can help . . . if you have questions please feel welcome to contact me. Vaughn Hromiko,

Expansion of the CA Coachella Enterprise Zone in Indio – 141.5 Acres Worth

From City of Indio Website

KPSP Local 2 News reports today that the California Department of Housing and Community Development (HCD) has approved a 141.5 acre expansion of the Coachella Valley Enterprise Zone.

Good for them!

California’s enterprise zone program offers a hiring credit based on wages paid to qualifying employees.  Businesses investing in manufacturing and other qualifying equipment for use with the zone may also receive an income tax credit equal to the amount of sales or use tax paid in the acquisition.

Other benefits include the net interest deduction for lenders who offer credit to enterprise zone businesses and a relatively small business expense deduction for qualifying asset purchases.


Salinas Valley Enterprise Zone Expanding to Castroville

Central Coast News posted a short TV KION 46 news story yesterday about the expansion of the Salinas Valley Enterprise Zone.

The zone will now include Highway 183 and parts of Castroville. Read the story here.

An interesting  juxtaposition . . .  when you consider that California’s enterprise zone program just recently narrowly escaped being “reformed” out of existence.

The Salinas Valley Enterprise zone now includes parts of Castroville, Salinas, Gonzales, Soledad, Greenfield and King City with the County of Monterey.  Businesses interested in exploring possible tax benefits within the enterprise zones should visit the zone’s website at

Please feel welcome to contact me with your questions.  Vaughn Hromiko,


CA Enterprise Zones Safe – New Positive Reforms In Play

Most Californians are aware, if at least only vaguely, that our politicians finalized the state’s budget for the year and that Governor Jerry Brown has indeed signed off. That’s last week’s news. Many of us, I am sure, would have appreciated the option of being less aware as it was happening.

Now that all of California’s financial and economic problems have been solved, we can merrily focus on other more important things. Or not.

At least one thing of definite positive value emerged from the budget battle this year – the California Enterprise Zone program has been retained fully intact. It survived because as a substantive tax issue, any meaningful change would have required the agreement of at least two-thirds of California’s state legislators.

There is a bill (AB 1411) working its way through the legislature at this time that offers meaningful but non-tax related reform to Enterprise Zone program. Unlike the Governor’s previous proposals, this new bill can be passed by a simple majority vote – but it won’t harm enterprise zone businesses.

AB 1411, offered by Enterprise Zone supporter, Assemblymember V. Manuel Pérez (D-Coachella), seeks to increase the transparency and accountability of the program overall.

“The Enterprise Zone program is an effective tool for local economic development and job creation, and the reforms in this bill will help to better tell that story,” said Pérez. “These reforms have been in the making for quite some time, and I’m pleased to be moving forward with them.”

Read more about it in The Imperial Valley News, online.

Waiting for Governor to Sign – New Budget Does Not Touch CA EZ Program

The budget deal passed by the California legislature yesterday does NOT include measures to modify the state’s enterprise zone program. We’ll report more AFTER the governor signs the legislation approving the budget.  Final passage is expected since the budget deal was worked out between Governor Brown and his fellow Democrats in the legislature, without Republican support.