State should maintain Enterprise Zone program

The California economy is on the mend, and the state’s economic outlook is positive.  But we still have a long way to go to ensure that recovery takes hold in every community throughout the state.

This is especially true in rural and urban low-income neighborhoods, often communities of color, which continually struggle with double digit unemployment figures, in addition to a lack of investment, credit, and capital.

I believe it is imperative that state government policies take this reality into consideration, particularly when it comes to resource allocation and program design aimed at alleviating the fundamental reason these communities are in this position: poverty.

The primary economic development tool for addressing poverty in the state’s most economically challenged communities is the California’s Enterprise Zone (EZ) Program.  The California Enterprise Zone program encourages businesses to open and invest in these disadvantaged areas, hiring local residents suffering from chronic unemployment.

Veterans, laid-off workers, recipients of government assistance, and challenged job seekers residing in these communities are employed because the EZ program exists. Based on vouchers submitted by participating employers, Enterprise Zones led to the hiring of more than 25,000 last year and kept another 115,000 employed.

In recent budget cycles, the EZ program has come under criticism, with calls to eliminate it.  Arguments for elimination have included the belief that the program design is flawed; that it lacks transparency and controls; it is vulnerable to abuse by incumbent practitioners; and that it fails in the retention and creation of jobs.  After four years of experience with the program, I would agree that some elements of the program need reform.

During my tenure as the Chair of the Assembly Committee on Jobs, Economic Development, and the Economy (2008-2012), I initiated a series of oversight hearings to examine the EZ program.  My objective was to provide members of the Legislature and the public with a clearer understanding of where and how the state’s EZ resources were being expended and the value of these types of expenditures for local communities.

The hearing process surfaced myriad ideas to improve the program, while reinforcing the unique economic needs of disadvantaged communities and the significance of the program in helping to address them.

On the heels of this effort, the Brown Administration proceeded with its own reform activities and directed the Department of Housing and Community Development (HCD) to pursue EZ reforms within its regulatory purview.  Though I appreciate the direction of some of the reforms proposed, I am concerned about others that may dilute the program’s core objective or reduce the number of economically distressed communities eligible for the program.

I strongly believe the state needs to maintain its commitment to the EZ program as part of a larger strategy to promote local economic and job growth.  To that end, I have introduced AB 28, which seeks to ensure the long-term sustainability of the EZ program by making specific, sensible reforms, such as limiting the size and scope of zones and adding provisions to make the program more transparent, effective, and accountable to both the public and local communities.

AB 28 serves as a starting point for an important dialogue to add transparency and accountability to the program, but there are other opportunities we can pursue to strengthen the program’s ability to promote economic empowerment through quality jobs. Some reform ideas include:  targeting the program to specific economic development outcomes; improving linkages to current state and local programs assisting unemployed workers; ensuring that credits encourage new job creation and worker benefits; and tailoring the program to better adapt to the needs of small size businesses.

Another consideration is how to best use the EZ program to promote innovation and help our state regain its dominance in manufacturing.  Manufacturing is a key driver of California’s economy, yet it is a sector that faces many challenges to remain competitive and keep pace in both traditional and high-tech fields.

It is critical that all stakeholders are the table for this important discussion. My hope is that working together we can emphasize what’s successful about the program and change elements that are not, while ensuring it stays true to its community development intent.

At the heart of this effort is a commitment to economic opportunity for our low-income communities and workers.  Surely we can unite around that.

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Ed’s Note: V. Manuel Pérez, D-Coachella, represents the 56^th district in the California State Assembly, which comprises eastern Riverside and Imperial counties.  He was the chair of the Assembly Committee on Jobs, Economic Development, and the Economy from 2008-2012. He now serves as Democratic Whip and Vice Chair of the Latino Legislative Caucus.