In today’s article on possible changes to the state’s Enterprise Zone tax credits, the City’s Economic development Manager Jason Crawford made it sound as if the bill would severely harm local businesses. Indeed, he said it would “strangle” efforts to hire local employees.
Santa Clarita Marketing and Economic Development Manager Jason Crawford said the amendment would “hamstring” local businesses.
“The intent of the enterprise zone is for business growth and expansion,” Crawford said. “This (amendment) would strangle the potential benefit of the enterprise zone tax credits.”
Crawford said the hiring requirements for businesses that want to get a tax credit are already restrictive. The amendment would make it “exponentially” more difficult for businesses to get tax credits, he said.
First of all, the intent of the Enterprise Zone program isn’t just for “business growth and expansion.” The state says its purpose is to “stimulate business investment in depressed areas of the state and create job opportunities for Californians.”
But beyond that, The Signal reinforced Crawford’s statement in their headline saying that AB 1139 would “hamper” enterprise zone hirings.
Clearly the Signal and Crawford were trying to get across the message that this bill would be bad for local businesses. But is that all there is to the story?
Here’s a summary of the bill from Assemblyman John Perez, speaker of the Assembly:
As amended, this bill would revise the existing enterprise zone program in several ways: First, the bill will increase the tax credit for employers of full time workers who provide health benefits to their employees, and will decrease the tax credit for part time and non-benefited employees. Additionally the bill will eliminate the practice of retro-vouchering (whereby employers retroactively receive the tax benefit for employees they have already hired)
Guess the Signal and Crawford forgot to mention that the bill would actually increase the tax credit to employers if they provided health benefits to new employees! That sounds to me like a benefit a municipality would want if it’s truly concerned with the health and welfare of its residents.
More bang for our buck right?
So why then does the City of Santa Clarita sound like the California Chamber of Commerce when it’s asked to comment on the bill?
What’s more, the amendment would require local businesses to submit more complete reports, which would allow us, the taxpayers, to review how our money is being spent.
Our city government is tasked with creating an environment favorable to business, but that is, at best, a secondary priority. It’s first priority is to represent us, the people, not just the 11,000 odd business owners in Santa Clarita, who we just gave $200,000 to do a job similar to Mr. Crawford’s.
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Those in power today in the City vowed years ago to “run the City like business.” That was the stated goal, not just an unfortunate byproduct.
That is why we have big box stores and car dealers… low paying jobs but big tax revenues.
Thank them for the lack of vision to draw better-paying jobs, and our resultant transportation issues…
Jeff, The point I think you are missing is that the amendment while inspired by no real need will actually succeed in raising the costs that employers encounter when hiring. This debate mirrors that of the government mandate for every America to purchase insurance and heavy taxes on employers and workers that do not cooperate. Democrats are sitting around today sulking over today’s horrible jobs report and are still scratching their heads in disbelief. What you and they are not getting Jeff is that mandating everyone buy insurance and that every employer must supply it is hurting the economy, even before it becomes law.
And our City might sound like the Chamber of Commerce but at the same time Jeff Wilson sounds like Harry Reid.
Employees and families without health insurance is hurting the economy too.
Hey Kevin did you vote to give $100k taxpayer dollars to Newhall businesses so they could buy things like pre-paid cell phones and CDs?
Kevin,
The issue goes beyond the ‘job killer’ rhetoric.
As a society where people have to ‘work’ to survive, everyone knows that low paying jobs prohibit many working Americans to afford health care as the 40 million number without it indicates.
So as a society, do we mandate that working Americans in a ‘free market’ system of capitalism should all have basic preventative health care policies paid through their employers?
If that’s the case, then as you note, resources will be transferred and many small employers may not create as many jobs in ‘their’ industries but indeed we’ll have ‘more jobs’ in the health care industry as well as having ‘all’ Americans insured.
The economy I agree exist to benefit all Americans including businessman like myself but it’s not a ‘either/or’ situation as you et al always point out.
We, as Americans, can make the decision that the lives of Americans are worth more than a few lost jobs due to resource reallocations created by health care reform.
Finally, many low paying jobs are created by a preponderance of low skilled/poorly educated workers that can work 1, 2 or even 3 jobs and never have preventative health care that is causing tens of thousands of Americans do die form lack of preventative care.
Without, ‘we the people’ speaking to his issue, you note correctly that business interest will always favor ‘their interest’ and I don’t blame them. But likewise, do I want to live in a powerful and wealthy nation knowing the children of say a minimum wage worker at McDonalds goes without health care so I can have even more minimum wage jobs with more and more parents without health care and endangering their lives so I can save 10 cents each on the burgers?
And Ken, the ‘job killer’ rhetoric comes from Runner/Smyth who get a lot of their ‘ideas’ from the CA Chamber of Commerce.
The problem I find is that these two simply don’t tell the public the ‘other half’ of the issue as I did in the example above.
And for me personally, I’m tired of only getting ‘half leadership’. I want options . . . I want debate . . . I don’t want endless ideology recitals by conservatives that have created a society where 40 million uninsured Americans and their children are ‘at risk’.
Hmmm, lax bank oversight, massively expensive Bush war, subsidizing overproduction of new housing… you don’t think those have anything to do with the bad economy… it’s Obama/Dems fault on a bill that hasn’t even passed yet? Amazing how it made the economy start to tank two years ago before he/they were even elected!
Did you drink the “Obama Recession” Kool-Aid?
Back to our regularly-scheduled program…
The City encourages business… nothing wrong with that, as long as it is balanced with benefits to the citizens. Many of the City programs do only the first half of this “bargain.”
Just got my SCV Business Journal today. Enterprise Zone businesses earning incentives included 24 Hour Fitness, 99 Cent Only, Bank of America, Bank of santa Clarita, Bank of the West, Big 5, Boston MArket, Carls, Enterprise Rent a Car, Fed Ex, Food for Less, Citibank, Chevron, McDonalds, Macy’s Lowes, Kohls, JC Penny, Hyatt Hotels, Office Depot, Olive Garden, Panda Restaurant, Pei Wei, Petco, Radioshack, Safeway, Target. Starbucks, Ralphs, Taco Bell, Walmart, Vons, US Banckcorp, and all the auto dealers except for Power.
Seems like corporate welfare at it’s best.
SCVBJ.com is registered by LA County for Meg Whitman.
5-10: one day, it will all make sense.
You might be a real G after all. You’re half way there.
CHICAGO (AP) — Cash-strapped communities have a message for corporations that promised jobs in return for tax breaks: A deal’s a deal.
As the economy sputters along, municipalities struggling to fix roads, fund schools and pay bills increasingly are rescinding tax abatements to companies that don’t hire enough workers, that lay them off or that close up shop. At the same time, they’re sharpening new incentive deals, leaving no doubt what is expected of companies and what will happen if they don’t deliver.
“We will roll out the red carpet as much as we can (but) they are going to honor the contract,” said Brendon Gallagher, an alderman in DeKalb, Ill., where Target Corp. got abatements from the city, county, school district and other taxing bodies after promising at least 500 jobs at a local distribution center.
So when the company came up 66 workers short in 2009, Target got word its next tax bill would be jumping almost $600,000 — more than half of which goes to the local school district, where teachers and programs have been cut as coffers dried up.
The newfound boldness comes from communities and states that have long bent over backward to lure companies and jobs by offering abatements and other incentives — to the tune of an estimated $60 billion a year in the United States, according to the Washington-based economic development watchdog group Good Jobs First.
The willingness to write — and enforce — the “clawback” provisions comes even as companies across the country struggle and against a broader backdrop of governments getting tough on business practices.
What’s more, the poor economy has communities thinking about how the tax breaks they dole out will play with residents who have grown increasingly angry at the thought of anything that hints of corporate welfare.
“The public is a lot more aware of tax abatements and there’s a climate of skepticism about what can be perceived as corporate handouts,” said Geoff McKimm, a member of the Monroe County Council in Indiana.
With that in mind, county officials drew up an agreement with Printpack, a packaging company, that includes a provision requiring the company to refund either $197,000 or that year’s abatement, whichever is more, if the number of employees at a new factory falls below 140.
Another provision requires Printpack to refund the entire abatement if it employs fewer than 75 people — a guarantee meant to prevent companies from leaving a “skeleton crew” at a location to avoid paying up.
“With so many businesses going to Mexico, communities are desperately trying to hold onto jobs,” said Amy Gerstman, the county’s auditor. “This was a carefully put-together abatement.”
And businesses increasingly are being forced to hold up their end of the bargain.
In Texas, where companies can get money from the Texas Enterprise Fund if they promise to create a specific number of jobs, the number of clawbacks rose to nine in 2008, compared to a total of seven for the previous three years combined, the governor’s office said.
In Illinois, the number of companies from which the state sought to “recapture” incentive money has steadily climbed, from six in 2005 to a total of 37 by 2008.
Meanwhile, more communities are contemplating similar action.
In St. Louis County, officials have told Pfizer Inc. that if it cuts 600 jobs, as planned, they’ll rethink the $7 million in tax breaks they promised to give the drugmaker for the next 10 years.
And in Detroit, while the state was approving expanded tax credits in exchange for General Motors Co.’s promise not to move its headquarters, the city council was talking about cracking down on tax breaks for GM and other major employers.
“We know that there are more clawbacks getting triggered because more deals are falling short,” said Greg LeRoy, executive director of Good Jobs First, who has written extensively on clawbacks.
It’s unclear exactly how much is being recovered because nobody collects comprehensive statistics on clawbacks, LeRoy and others say. States that do keep statistics track only their own deals, not those initiated by local governments. Communities also may revoke the entire abatement or only a portion of it, while others sometimes simply rule out future abatements, LeRoy said.
Finally, some communities crack down on companies quietly, out of concern that they could scare off other potential employers, LeRoy said. He said that fear persists even though there is no evidence that having or enforcing clawbacks poisons the business climate.
“We were told that we were going to ruin Topeka’s ability to attract businesses; we’d give Topeka a black eye,” said James Crowl, assistant county counselor in Shawnee County, where last year officials approved a settlement that calls for Target to pay $200,000 a year for 10 years after failing to create as many jobs as it had agreed to.
So what happened?
“Last year we opened a Home Depot distribution center right next door,” said County Counselor Rich Eckert.
In DeKalb, some officials were concerned about sending a bad message to other businesses considering locating there, said Gallagher, the alderman. But he didn’t buy it.
“We are 65 miles from Chicago (and) if someone wants to locate 120 miles from Chicago, I can’t stop them,” he said.
Besides, he said, $600,000 means less to Target than to a struggling community, where he said the city alone is facing a $2 million revenue shortfall.
Target was disappointed, but understood the decision, spokeswoman Jill Hornbacher said.
“We are very committed to DeKalb and that distribution center and proud to be there,” she said.
And don’t expect communities to back down soon, officials said.
“There is much more (language) tied to jobs now because of economy,” said Lee Garrity, city manager in Winston-Salem, N.C., which along with the surrounding county is sharing more than $26 million that computer giant Dell Inc. paid after announcing it will close its assembly plant next year.
Garrity said officials are thinking about provisions that are even more specific.
“We are discussing whether we need to require the jobs of the company go to people who live in the city,” he said.