L.A. Times: Pull the Plug on State’s Enterprise Zones

The ripples continue to spread from Frying Pan News reporter Gary Cohn’s piece on California’s enterprise zones, which were created in 1984 to help small businesses and create jobs by giving tax breaks to companies in the state’s economically depressed regions. Last Friday the Fresno Bee called for reform of the zones and today a Los Angeles Times editorial declared that nothing less than pulling the plug on the program would do.

The zones, said the Times, “were a well-intentioned experiment that was tried, failed and has been kept around too long. This is one experiment that should be ended, not merely mended.”

Cohn’s May 28 article appeared at the same time Governor Jerry Brown was maneuvering to reform the program out of existence. The Frying Pan News story emphasized that 61 percent of the enterprise program’s beneficiaries are companies with more than $1 billion in assets, along with the fact that the program – whose applications are shrouded in tax-law secrecy – is replacing middle-class jobs with benefits with ones that barely rise above the minimum wage and have few if any benefits. Moreover, many of the companies are not located in economically distressed areas. Cohn’s report also found that recently approved applicants to the program include a pair of Sacramento-area strip clubs.

The enterprise program has its supporters – primarily the state Chamber of Commerce and other trade associations – and they are fighting back. So, it seems, are supporters of the strip clubs.

“A business is a business,” protested Matt Gray, a spokesman for the Association of Club Executives (ACE), a strip-club industry group. “It employs people legitimately, and I think the employees are more than happy to pay their rent and put food on the table like anyone else.”