The Importance of the Enterprise Zone Program
By Craig Johnson, California Association of Enterprise Zones

Year after year, California continues to be ranked as one of the worst states to
do business. Chief Executive Officer magazine and corporate relocation expert
Ronald Pollina have listed California dead last for the past five years.

Although I champion for California business development, I find it hard to disagree.
There are several reasons why California is classified as an unfriendly state to
businesses. This state has the highest business tax rate in the Western region and
when you combine its high workers' compensation costs, many business owners feel
like bureaucrats in Sacramento are singling them out for punishment.

It’s no surprise that many California business owners are now surveying the economic
and political landscape and considering relocation to more business-friendly states,
such as Arizona, Nevada and Texas.

Cal Worthington Ford, based in Long Beach, is a recent example of this growing trend.
The iconic car dealer, which employs approximately 100 workers and contributes hundreds
of thousands of dollars in annual sales tax revenue to the city, considered relocation
to another community. Fortunately, the company decided to stay, and Long Beach avoided
the devastating effects it would have caused on the local economy.

The Golden State needs to offer companies like Cal Worthington Ford more incentives to
stay here. Currently, the best business incentive the state offers is the Enterprise Zone
program.  An Enterprise Zone is an area that has been deemed economically distressed
by the California Department of Housing and Community Development. Businesses located
in an Enterprise Zone qualify for special business and tax incentives that promote
business expansion and job creation. Among the incentives is a hiring tax credit,
which provides an employer a tax credit of more than $37,000 for one qualified worker
over a five-year period. At a time when they need it the most, every penny saved helps
employers remain stable and continue to employ local residents.

Studies have shown that companies located within Enterprise Zones pay higher wages
and that the program raises household incomes and lowers poverty rates.

Now is the time for policy makers to understand that we can no longer assume that
employers will stay in California simply because of the sunshine. 

There is fierce competition from other states to attract California businesses and jobs.
These states offer lower operating costs and attractive relocation packages that include
paying worker's salaries for a year, tax credits and even constructing buildings for new
businesses.

At one time, California was known as a business and innovation leader. To reclaim this
title and lower the state’s staggering unemployment rate, we must continue to support
the Enterprise Zone program, which encourages and promotes entrepreneurship in
California’s most distressed communities.

At a time when businesses need all the help they can get, we need to give them more
reasons to keep and create jobs. The Enterprise Zone program is a proven business
retention and job creation tool that provides California businesses the opportunity
to grow and prosper.

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Craig Johnson is the President of the California Association of Enterprise Zones and
is the manager of the Long Beach Enterprise Zone.