Dan Walters' Nov. 9 column, "It's high time for hard look at tax dodges," questions the effectiveness of "enterprise zones," yet evidence to the contrary points to the continued success of the program. Business owners large and small face the challenges of the cost of doing business, meeting payroll and ensuring a return on investment in a state with the highest state sales tax, the second highest state income tax and the second highest workers compensation rates in the nation. Simply put, the enterprise zone program is an investment in our state's future.
A 2006 report to the Department of Housing and Community Development revealed that poverty decreased 7.35 percent more in enterprise zones, unemployment rates fell by 1.2 percent, household incomes grew 7.1 percent faster, and the wages and salary levels grew 3.5 percent more than the rest of the state. Hardly the signs of a "tax dodge" designed to give employers an incentive to do business in California.
Looking beyond the numbers, there are countless stories of businesses that have remained or expanded their California operations because of the enterprise zone program. Most recently, the Bayer manufacturing facility in Berkeley was on its way to the East Coast, but the expansion of the Oakland enterprise zone to include Berkeley persuaded Bayer to keep its operations and its 1,300 employees in the East Bay. Bayer now will invest more than $100 million in plant upgrades to manufacture a new drug to treat hemophilia.
The value of enterprise zones is clearly understood by local governments – there were 15 applications submitted to the Department of Housing and Community Development for four openings in the most recent round of designations. Rather than being viewed as a drain on local budgets, cities and counties compete through a rigorous and costly application process for an enterprise zone designation that will bring measurable economic development benefits to their communities.
Enterprise zones encourage economic growth and job creation, resulting in higher revenues for state and local budgets. The program puts people to work who face the greatest barriers to employment, reducing the strain on overburdened social service programs.
In the face of deep spending cuts, it is short-sighted to suggest elimination of the enterprise zone program. It is the cornerstone of our state's economic recovery strategy and will lead the way to economic growth and expanded business activity in California.
Craig Johnson is president of the board of directors of the California Association of Enterprise Zones and currently serves as manager of the Long Beach Enterprise Zone.
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