End the Enterprise Zone Abuse: Gov. Brown’s Good Jobs Proposal

“Last week, Gov. Brown detailed his proposal to flip this broken system into a real job creation program that will help build our middle class.”

In How Enterprise Zones Are Killing the California Dream, Frying Pan investigative reporter Gary Cohn looked at the impact of the controversial program, including workers who lost their jobs while their former employers received tax breaks for hiring lower-paid replacements. He also reported on two strip clubs revealed to have benefited from the secretive program. The governor and legislators have now put forward proposals to reform the program or replace it with other economic development programs. This post originally appeared in Labor’s Edge. 

You’ve probably seen the stories by now: Enterprise zone tax breaks, which are supposed to provide incentives for good jobs, are instead going to strip clubs and low-wage mega corporations like Walmart.

The current enterprise zone program is shrouded in secrecy, with virtually no accountability or transparency. Study after study shows the program is a massive failure, wasting $750 million a year without doing much of anything to create new jobs.

But momentum is building for much-need reform. Last week, Gov. Brown detailed his proposal to flip this broken system into a real job creation program that will help build our middle class. The governor’s reform is a three-pronged approach that tackles tough issues facing our economy in a smart, strategic way.

• The governor’s proposal repurposes the broken enterprise zone program to more effectively create good new jobs in areas of the state with the highest levels of unemployment and poverty. The hiring credit is wisely targeted to those who need it most – returning veterans, the long-term unemployed and low-income individuals receiving public assistance.
• The governor’s proposal also recognizes the important role manufacturing plays in California’s economy. By reinvesting in manufacturing statewide, the plan would boost California’s competiveness and stimulate a vital job sector that is key to rebuilding the middle class.
• The third prong of the governor’s proposal, the California Competes Fund, requires companies to publicly apply and win approval for tax credits based on job creation and retention standards. This proposal begins a new model of transparency and accountability, recognizing that job creation programs shouldn’t be shrouded in secrecy. Lawmakers will regularly be informed of the program’s performance, ensuring the effectiveness of taxpayer dollars is maximized.

We strongly support the governor’s proposal. It ends the waste and abuse of the current enterprise zone program and uses those resources to spur the creation of good jobs. While the governor’s proposal seems like a no-brainer to most taxpayers who demand our dollars are spent wisely, there are a number of politicians who are still defending the broken enterprise zone program, even in light of the overwhelming evidence that enterprise zones are nothing more than a boondoggle. Put simply, they treat enterprise zone funds as their own personal piggy banks for their districts and their donors like Walmart.

To reform enterprise zones, we need a two-thirds vote for the governor’s proposal. We need every legislator to hear loud and clear that we’re not going to allow the enterprise zone boondoggle to continue any longer.

The governor’s proposal grows our economy and builds the middle class. Join the California Labor Federation in urging legislators to support the governor’s proposal to create good jobs and stop the waste and abuse of our taxpayer dollars through the broken enterprise zone program. Click here to send a message to your legislators today!