LONG BEACH – “Location, location, location.” That’s what city leaders from Compton were selling during a recent trade mission to China.

And apparently the Chinese were buying, as it was announced Thursday at a briefing before civic and business leaders that Compton was on the verge of closing two deals, one promising to create 150 jobs, with companies in China as a direct result of the recent delegation.

With its proximity to the ports of Long Beach and Los Angeles, the Long Beach (710), Harbor (110), Artesia (91) and Century (105) freeways ringing it, the Alameda Corridor bisecting it, and with a slew of enterprise zones and incentive programs, Compton is perfectly positioned to be a major hub of commerce, leaders say.

Officials representing Supervisor Michael D. Antonovich, who represents the Santa Clarita Valley, said the program should be expanded because it encourages businesses to remain in California.

“Overtaxation and over-regulation are a disincentive to businesses throughout the state,” said Tony Bell, Antonovich’s spokesman. “The state should be providing more incentives to businesses and rolling out the red carpet to keep businesses in (California).”

The resolution can be found here, and the following is the text:

A RESOLUTION OF THE BOARD OF SUPERVISORS OF THE COUNTY OF LOS ANGELES IN SUPPORT OF THE CALIFORNIA ENTERPRISE ZONE PROGRAM

WHEREAS, it is the goal of the Los Angeles County Board of Supervisors to maintain a business-friendly environment that attracts quality employers to the county to provide jobs for the residents of Los Angeles County; and

WHEREAS, the California Enterprise Zone Program offers a variety of incentives to assist businesses in providing quality jobs in Los Angeles County; and

WHEREAS, Los Angeles County has the most Enterprise Zones of any county in the
State of California; and

WHEREAS, the seven Enterprise Zones in the County have approximately 50,000 businesses within them that are eligible for the program; and

WHEREAS, recent reports show these businesses were issued tax credits for employing approximately 35,000 economically or otherwise disadvantaged persons in Los Angeles County; and

WHEREAS, Enterprise Zone Program businesses pay an average salary of approximately $12.50 an hour, well above the minimum wage; and

WHEREAS, due to these factors, the Enterprise Zone Program has and continues to provide a very significant and positive impact to the overall economy of Los Angeles County:

NOW, THEREFORE, THE BOARD OF SUPERVISORS OF THE COUNTY OF LOS ANGELES DOES HEREBY RESOLVE AS FOLLOWS:
1. The Board strongly supports the California Enterprise Zone Program (Program).
2. The Board strongly opposes any changes to the Program that would make it more difficult for businesses to operate within those Enterprise Zones.
3. The Board thanks all those who provide information about the Program to businesses, so they may utilize the tax incentives made available through the Program.
4. The Board thanks those businesses in the Enterprise Zones for providing jobs to the residents of Los Angeles County

Recently some critics have accused me of bullying state employees. Headlines in California papers this month have been screaming “Gov assails state workers” and “Schwarzenegger threatens state workers.”

I’m doing no such thing. State employees are hard-working and valuable contributors to our society. But here’s the plain truth: California simply cannot solve its budgetary problems without addressing government-employee compensation and benefits.

As former Speaker of the State Assembly and San Francisco Mayor Willie Brown pointed out earlier this year in the San Francisco Chronicle, roughly 80 cents of every government dollar in California goes to employee compensation and benefits. Those costs have been rising fast. Spending on California’s state employees over the past decade rose at nearly three times the rate our revenues grew, crowding out programs of great importance to our citizens. Neglected priorities include higher education, environmental protection, parks and recreation, and more.

Much bigger increases in employee costs are on the horizon. Thanks to huge unfunded pension and retirement health-care promises granted by past governments, and also to deceptive pension-fund accounting that understated liabilities and overstated future investment returns, California is now saddled with $550 billion of retirement debt.

The cost of servicing that debt has grown at a rate of more than 15% annually over the last decade. This year, retirement benefits—more than $6 billion—will exceed what the state is spending on higher education. Next year, retirement costs will rise another 15%. In fact, they are destined to grow so much faster than state revenues that they threaten to suck up the money for every other program in the state budget. (See the nearby chart.)

I’ve held a stricter line on government employment and salary increases than any governor in the modern era (overall year-to-year spending has increased just 1.4% on my watch). Nevertheless, employee costs will keep marching upwards because of pension promises, and they will never stop doing so until we get reform.

At the same time that government-employee costs have been climbing, the private-sector workers whose taxes pay for them have been hurting. Since 2007, one million private jobs have been lost in California. Median incomes of workers in the state’s private sector have stagnated for more than a decade. To make matters worse, the retirement accounts of those workers in California have declined. The average 401(k) is down nationally nearly 20% since 2007. Meanwhile, the defined benefit retirement plans of government employees—for which private-sector workers are on the hook—have risen in value.

Few Californians in the private sector have $1 million in savings, but that’s effectively the retirement account they guarantee to public employees who opt to retire at age 55 and are entitled to a monthly, inflation-protected check of $3,000 for the rest of their lives.

In 2003, just before I became governor, the state assembly even passed a law permitting government employees to purchase additional taxpayer-guaranteed, high-yielding retirement annuities at a discount—adding even more retirement debt. It’s as if Sacramento legislators don’t want a government of the people, by the people, and for the people, but a government of the employees, by the employees, and for the employees.

For years I’ve asked state legislators to stop adding to retirement debt. They have refused. Now the Democratic leadership of the assembly proposes to raise the tax and debt burdens on private employees in order to cover rising public-employee compensation.

But what will they do next year when those compensation costs grow 15% more? And the year after that when they’ve risen again? And 10 years from now, when retirement costs have reached nearly $30 billion per year? That’s where government-employee retirement costs are headed even with the pension reforms I’m demanding. Imagine where they’re headed without reform.

My view is different. We must not raise taxes or borrow money to cover up fundamental problems.

Much needs to be done. The Assembly needs to reverse the massive and retroactive increase in pension formulas it enacted 11 years ago. It also needs to prohibit “spiking”—giving someone a big raise in his last year of work so his pension is boosted. Government employees must be required to increase their contributions to pensions. Public pension funds must make truthful financial disclosures to the public as to the size of their liabilities, and they must use reasonable projected rates of returns on their investments. The legislature could pass those reforms in five minutes, the same amount of time it took them to pass that massive pension boost 11 years ago that adds additional costs every single day they refuse to act.

And after they’ve finished passing those reforms, they could take another five minutes to pass legislation terminating the annuity give-away they passed in 2003 and ending the immoral practice of pension fund board members accepting gifts or even campaign contributions from lobbyists, salesmen, unions and other special interests.

Reforming government employee compensation and benefits won’t close this year’s deficit. It will, however, protect the next generation of Californians from overwhelming burdens. The same is true with respect to the other reform I’m demanding—the establishment of a rainy-day fund so that legislators can’t spend temporary revenue windfalls.

All of these reforms must be in place before I will sign a budget.

I am under no illusion about the difficulty of my task. Government-employee unions are the most powerful political forces in our state and largely control Democratic legislators. But for the future of our state, no task is more important.

Augusttax As New York celebrates the long-awaited renewal and expansion of its film tax credit program, California confronts a sobering reality: Its film tax credit money for the current year has run dry.

The California Film Commission has allocated all of the $100 million in tax credits available this year to 30 projects and now has a waiting list of 45 projects.

“The demand is far exceeding the supply,” said California Film Commission Executive Director Amy Lemisch. “We ran out on the first day of funding.”

Costco Wholesale Corp. will open a store in Warner Center that will create 300 permanent jobs, Los Angeles city officials announced Tuesday.

The 146,000-square-foot store will open in late 2012 will generate $1 million in annual sales tax revenue for the city.

“I pledged to bring new Costco stores to our great city,” Los Angeles Mayor Antonio Villaraigosa said in a statement. “Now we are opening another location that will not only bring affordable products, but good paying jobs to Los Angeles.”

Costco will be the main anchor tenant of the Village at Westfield Topanga development, between Westfield’s existing Topanga and Promenade centers.

“I am elated that Costco teamed up with Westfield in the West San Fernando Valley,” said Los Angeles City Councilman Dennis Zine, whose district includes the Warner Center area.

To lure Costco to the site, the city used a recent expansion of its enterprise zone, a state program that gives tax credits to companies that hire local workers.

“We’ve been in business in the City of L.A. for over 30 years and we’ve never had a mayor step up to the plate to help like Mayor Villaraigosa has,” said Jim Sinegal, CEO of Costco. “These are good paying jobs with excellent benefits. This is a $50 million investment and we are very excited about this project.”

In a separate press release First Deputy Mayor Austin Beutner said, “This investment by Costco and expansion of the Village development in the San Fernando Valley will create 300 good paying jobs and over $1 million of annual revenue for the city. It is living proof that the expansion of the State Enterprise Zones is creating jobs in Los Angeles.”

Free breakfast will be provided, and yours truly will be one of the speakers.

Click here for the event flier.

While the article on Enterprise Zones raises some important points, I found the article deficient in three major areas:

1. Dolan fails to clearly distinguish between the Enterprise Zone and the Targeted Employment Area. Dolan repeatedly infers that wealthy residents of Targeted Employment Areas may themselves be the recipients of State tax credits that would otherwise be going into the pockets of the poor. As in the story’s lede,

Among the advantages for those who live in multimillion dollar houses on the hillside in Los Feliz are celebrity neighbors, sweeping views of the downtown skyline, the Griffith Observatory in their backyard and designation by state tax authorities that they are economically disadvantaged.

Or in this quote from a “man on the street”:

“I’m a big believer in tax breaks for the disadvantaged,” said waitress Kelsey Jessup. “But it’s hard for me to justify them for the people in here.”

Dolan does not connect all of the dots to demonstrate all of the pieces that need to fall into place in order for a tax credit to actually be generated for a wealthy TEA resident. Instead, the implication is that there is a direct State expenditure related to the fact that Charlie Sheen’s house is in a TEA. Proof of this implication can be seen in the Times‘ PolitiCal blog where Dolan’s article is plugged, “Jack Dolan reports that some affluent areas are taking advantage of tax breaks designated specifically for the poor.”

2. Dolan also did not fully explore or report on current efforts in the legislature to enact certain reforms to the Enterprise Zone program especially regarding the TEA. The Assembly Jobs Committee, at the behest of Speaker Perez, has been working for nearly a year with a working group of various stakeholders to come up with a package of Enterprise Zone reforms or fixes. The group has come up with three proposed changes to the TEA which would address all the concerns raised in the article and more. Only two of the recommendations were even hinted at in the article in his quotation from CAEZ President Craig Johnson,

Craig Johnson, president of the California Assn. of Enterprise Zone administrators, who has strongly opposed Steinberg’s bill, acknowledged that using census tracts to identify disadvantaged neighborhoods is too broad and would allow businesses to claim tax breaks for hiring highly paid professionals.

“That’s a valid concern and one we take seriously,” Johnson said, suggesting that the employment areas be smaller and the hiring credit limited to new employees making no more than the median income for the county.

The proposed legislation from the working group would a.) institute a wage cap for the TEA category so that higher income individuals who happen to live in a TEA would not make their Enterprise Zone employers eligible for the credit; b.) change the way the TEAs are drawn from census tracts to census block groups, a smaller division of the census geography; and c.) require that the TEAs be redrawn more frequently to take advantage of more up to date census data.

3. Dolan reports that City officials refused to release information about employees qualified by Enterprise Zone employers under the TEA category, but he does not report on data that zones would have been willing to provide such as the average wage rate of such employees. A sample of nearly 10,000 vouchers statewide shows that the average annual wage of employees living in a TEA was $25,200.

A popular program is under attack on two fronts in Sacramento, both as a potential place to cut the state’s overdue 2010-11 budget and from legislation to change how it works.

Those involved in enterprise zones, such as the one covering much of Yuba and Sutter counties, said they are at the mercy of policymakers and politicians who don’t understand such programs, and just focus on dollars.

“I’ve got lots of stories about employees that were hired because of enterprise zones, and that doesn’t always end up in the data,” said Craig Johnson, president of the California Association of Enterprise Zones.

Targeted at economically downtrodden areas, enterprise zones give tax credits and other incentives to businesses choosing to locate or expand within them. Since January, businesses in the Yuba-Sutter zone have received 1,500 credits for hiring employees, according to enterprise zone manager Mary Hansen.

But because the state’s 42 enterprise zones cost about $500 million annually, they are also a target when lawmakers are looking for places to cut California’s deficit-ridden budget.

Johnson said that enterprise zones have been in the firing line in recent budget years, and this one is no different. Of even more concern this year, he said, is Senate Bill 974, which would change an aspect of enterprise zones that he and Hansen called critical.

Businesses now receive hiring credits when made in targeted employment areas, ones with higher unemployment and poverty rates compared to the state.

Under SB974, Johnson said, the targeted employment area would be replaced with credits for vocational training. It would also make it more difficult for businesses to submit information in time for retroactive credit vouchers when they hire an employee.

“This takes an absolute meat ax to the program,” he said. “It’s as if they were specifically targeting minority communities.”

The bill by Sen. Darrell Steinberg, D-Sacramento, is held up in a state Senate committee while advocates for enterprise zones work to make it more effective and less damaging, he said.

Targets on enterprise zones focus on the numbers and not the impact, Hansen said. “The problem with the state budget is they have to understand how businesses use the numbers,” she said.

John Fleming, Yuba County’s economic development coordinator, said the enterprise zone is the region’s main attraction to outside businesses.

During the recession, he added, it’s obvious how severe the economic situation is by how many more businesses have applied for credits under the program.

As Wayne Bishop gears up for his peak season, the co-owner of Bishop Pumpkin Farm in Wheatland said the enterprise zone has proved beneficial. Bishop said he has used it in the last two years for hiring, and used the tax credit to re-invest in his business.

“When you run a small business, you hope to make a living, and anything extra goes back into the business,” he said.

Johnson said he acknowledges some reports find fault with enterprise zones for minimal return on big investments, while other reports, including one from 2008, show benefits.

“These are the kinds of metrics that need to be looked at,” he said.

Third, we have been making needed policy changes to support sustainable job growth.

We expanded L.A. Enterprise Zones, giving businesses greater incentive to stay here and to create jobs. We streamlined permitting for restaurants and cut the time it takes to open one by two-thirds. We created a Business Tax Holiday for new businesses that could generate more than 55,000 new jobs and sorely needed revenue for the city. Stay tuned – there are more policy changes to come.

California’s enterprise zone program, which provides tax incentives to business, could soon face drastic changes, which some business owners say could hurt their bottom line.

Many businesses in Redding enjoy using the Enterprise Zone Program. The Best Western on Hilltop Drive is just one of them. The idea behind the program is that it gives tax credits to companies who meet certain criteria. Legislation in Sacramento could make those already complicated requirements even harder to meet.

The general manager of Best Western says if they don’t get those tax credits, they’re will have to scale back: “What they’re going to see is less hours available for employees so they’ll have to go back and adjust their labor pool a little bit. Some businesses say that they might have to lay off several positions.”

With the budget deficit, some legislators thought making the program more strict would make the state more money.

H.R. 5685 introduced by Congressman Steve Cohen (D-TN) would increase the WOTC credit by $1,000 for employers who open a new grocery supermarket in an “under served area,” defined as federal empowerment zone, enterprise community or renewal community.

And Senator Sam Brownback (R-KS) has introduced S. 3556 which would expand the qualified employees for WOTC to include members of the Ready Reserve or National Guard.

Furthermore, Senator Schumer (D-NY) has introduced S. 3623 to extend the recently enacted HIRE Act tax credit.