AB 1398 Update And Suggestions

AB 1398 (Assemblyman Arambula's Enterprise Zone overhaul bill) will not be heard in Committee on April 17 as previously reported. Apparently there is going to be a more extended discussion on the issues and it has been made into a two year bill. Expect some hearings or other meetings on the topic in the coming months and a final version of the bill next January.

I have two suggestions for the bill so far (which should not be necessarily construed as an endorsement of the concepts):

1. Preserve the name "Enterprise Zone" for the newly constituted zones. "G-TEDA" just doesn't have a ring to it. Besides that, there is a lot of value to the Enterprise Zone "brand" and the important role it has played in California's economic development strategy. Redefining the Enterprise Zone will be perceived very differently then ending the Enterprise Zone and replacing it with something else. This one small adjustment in semantics would change the bill from one that ends the Enterprise Zones to one that expands the Enterprise Zones (albeit at the expense of MEAs, TTAs and LAMBRAs).
2. Instead of changing the hiring credit to be 30% of wages for five years, keep the 50% in the first year and then drop it down to 30% for subsequent years. If that doesn't create the "revenue neutral" result necessary, then keep the 50% credit in the first year, and offer 30% for years two to four and no credit in the fifth year. This adds up to a net reduction of the overall credit (but one that people might be willing to live with) which could then be useful in enhancing other aspects of the program. The logic being that there are two incentives here: to hire a qualified employee, and to retain them. I think it is important to provide the extra impetus to employers to go out on a limb and hire that person; once they are employed there are many other factors involved in their retention and the credit plays a smaller role.

Let me know what you think: max@ezpolicyblog.com