California Governor-elect Jerry Brown is laying the groundwork for a budget plan that would couple deep cuts to state services, including university systems and welfare programs, with a request that voters extend temporary tax hikes on vehicles, income and sales that are set to expire next year, according to the Sacramento Bee.
Among the breaks are multibillion-dollar incentives for redevelopment projects and hundreds of millions of dollars of “enterprise zone” credits meant to encourage investment in blighted neighborhoods, according to the L.A. Times.
According to the City of Santa Ana’s website, a qualified business may reduce its state income tax by $37,440 per qualified employee, over a 5-year period. The credits may be carried over until they are exhausted.
The Santa Ana website also explains that California income or franchise tax may be reduced by the amount of sales or use tax paid on certain machinery, machinery parts, and equipment purchased for exclusive use in an Enterprise Zone.
Brown appears to be targeting those tax credits, as the State of California faces a $28 billion budget shortfall – equivalent to nearly a third of the general fund. Brown is also targeting redevelopment funds. That too could have a considerable impact on the City of Santa Ana.
According to Good Jobs First, a think tank, the State of California spent $333 million on Enterprise Zone tax credits in 2005. Good Jobs First also raised the issue of transparency. California was rated a D-, as hardly anyone can tell if the Enterprise money has actually created jobs or been effective at all.
Santa Ana Mayor Miguel Pulido is close to Brown, who visited his home several times during this year’s hard-fought campaign against Republican Meg Whitman. Perhaps that will help, but Brown is desperate for money to replenish the State’s coffers. I don’t think he will leave any stone unturned.