By David Benda
Redding Record Searchlight, March 2013
A state program that offers hiring and other tax credits to eligible businesses is undergoing changes proponents say would reduce its benefits.
But backers also say California’s Enterprise Zone Program seems to have bipartisan support, which bodes well for its future.
“The good news is there is support from both sides of the aisle for this program,” Scott Nelson of Tax Incentive Partners LLC said Thursday during a lunch-hour presentation at the Greater Redding Chamber of Commerce.
Nelson and other enterprise zone boosters say the program is the only economic development and business retention effort California has left.
Changes are expected to take effect May 1, Nelson said, and they will affect the hiring-credit portion of the program.
Under the program, businesses can earn $37,440 or more in state tax credits for each qualified worker they hire.
“I think it’s important to note that these credits are only issued to an employer who hires disadvantaged employees with barriers that would impede employment opportunities,” Economic Development Corp. of Shasta County President Mark Lascelles
said. “So the intent is to help get these people off public assistance and back into the workforce as productive citizens.”
The most significant change will be reducing how far back a business can go to claim hiring credits. Companies currently can claim retroactive credits of up to four years. The state will limit that to one year under the new rules, Nelson said.
Nelson said it won’t so much affect businesses that currently participate. It’s those employers who haven’t signed up that will see reduced benefits because they can’t go back as far to cash in on hiring credits.
Lance Goble, president of Foothill Distributing in Redding, agreed. His company has participated since the late 1990s.
“It’s an important program,” Goble said after Nelson’s presentation.
Bernice Corey, co-owner of McHale Sign Co. in Redding, said the enterprise zone program can benefit a business whether it takes full advantage or not. Corey said the program has saved her business thousands over the years.
There are 42 enterprise zones in California, including the Shasta Metro in Shasta County, which essentially stretches along the Interstate 5 corridor from Mountain Gate to Cottonwood.
Other program benefits include firms earning sales tax credits on purchases of up to $20 million of qualified equipment, and unused tax credits can be applied to future tax years.
Nelson’s business partner, former EDC President Jim Zauher, said banks that loan to zone businesses may receive a net interest deduction.
Tax Incentive Partners LLC shepherds businesses through the enterprise zone process.
In 2012, there were 2,265 hiring credit vouchers issued in the Shasta Metro Enterprise Zone, which Lascelles of the EDC says is a number consistent with the last three years.
The Smart Business Resource Center in Redding processes the applications and administers the vouchers.
“It’s impossible to get any type of accurate value of what this means to the region as we will never know how many of the credits get claimed and how long an employee stays on the job,” Lascelles said. The credit decreases 10 percent each
year before phasing out after five years.
But there is no doubt the program is a value “for our local economy,” Lascelles said.
Enterprise zones have had their detractors over the years. Opponents argue the program cost California in foregone tax revenue.
Meanwhile, efforts to expand the boundaries of the Shasta Metro Enterprise Zone, which was established in 1991, are underway.
Lascelles said the cities of Redding, Shasta Lake and Anderson, and Shasta County have endorsed the expansion, which incorporate areas like Palo Cedro, Bella Vista, Burney and Fall River.
“We are waiting on the final maps from the county, at which point we will be ready to submit the package to the state,” Lascelles said.
For more information on the Enteprise Zone program click here.