Senator George Runner
Serving the 17th District which incorporates portions of the Los Angeles, San Bernardino, Ventura and Kern counties.

Congratulations to the City of Santa Clarita, which just celebrated the one year anniversary of its successful Enterprise Zone. Here’s why Enterprise Zones are important: They encourage economic growth – particularly jobs – through offering tax incentives for business. The results are a larger tax base for the community and the improvement of blighted areas.

Furthermore, in Santa Clarita and other Southern California locations, Enterprise Zones are steps in the right direction by encouraging more businesses to keep money and jobs in California.

Enterprise Zones began in the 1980s when the state offered special tax incentives for businesses that chose to locate in designated areas. In an effort to revive economically depressed or blighted regions, businesses received incentives to provide well paying jobs for people living in those communities. This win-win situation provides economically disadvantaged residents with more employment opportunities and businesses with cost savings.

In Santa Clarita, businesses can earn up to $37,000 in tax credits over five years for hiring an employee either living within the targeted development zone, one who was recently laid off, or on one who participated in qualified training programs. This gives businesses the incentive to hire local people who need these jobs the most.

Businesses can also receive a $40,000 business expense tax deduction for purchasing equipment and supplies. All told, the Santa Clarita Enterprise Zone offers $3.7 million in potential savings.

The Antelope Valley Enterprise Zone also provides similar incentives, offering $31,574 in tax credits over five years for hiring, $20,000 in business expense deductions, and providing corporations with up to $20 million for purchasing qualified machinery and equipment.

The Victor Valley offers incentives too through the Local Agency Military Base Recovery Act, which also provides sales tax credits for up to $20 million for qualified machinery and equipment, hiring credits and other deductions.

With the deficit looming over the Capitol, policy-makers are frantically searching for ways to close the $16 billion hole in the budget. Some suggest eliminating the tax credits for these Enterprise Zones throughout the state. This wrongheaded approach would only serve to drive more businesses away and exacerbate an already sour economy.

With the celebration of the Santa Clarita Enterprise Zone’s one year anniversary, and the continued success in the Antelope Valley’s Enterprise Zone, we should look to expand the tax base by encouraging increased investment in California.

Enterprise Zones are the right approach to fixing blighted areas, and I believe these policies would work statewide. Let’s continue utilizing strategies that encourage growth rather than hinder it.