UPDATE 10:40am | Apparent plans by Governor Jerry Brown to implement drastic budget cuts could affect Long Beach in more ways than one.
While his reported idea to eliminate local redevelopment agencies would certainly make an impact here, the plan that may affect the city most is the elimination of enterprise zones.
Enterprise zones are boundaries within which businesses can receive significant tax credits for hiring employees. The zones are very important to cities trying to attract or retain operating businesses. About 70% of the city of Long Beach falls under enterprise zones.
“This zone is definitely alive and strong,” said Bryan Rogers, executive director of the Pacific Gateway Workforce Investment Network. Rogers said that no one will know Governor Brown’s intentions until the budget proposal is released on January 10, but Long Beach would be greatly affected if rumors are true that enterprise zones are on the chopping block.
Brown had promised to find creative ways to cut spending in the State budget after several consecutive years of massive deficits.
“For Long Beach, that would be a significant hurdle for us, and in this past year we issued somewhere around 7,000 vouchers for hiring tax credits for local businesses,” Rogers said.
Over the course of five years, businesses can receive as much as $37,500 in tax credits per employee hired under the voucher program. It’s an effective tool to keep businesses operating and hiring.
The Long Beach Chamber of Commerce released a statement yesterday indicating their opposition to Brown’s reported budget proposal.
“We agree that budgeting within our means should be priority number one for the new Governor and the Legislature,” said Chamber President and CEO Randy Gordon.
“However, cutting programs such as redevelopment agencies and enterprise zones is the wrong approach. The facts are clear, redevelopment agencies provide the needed investment to spark local economic revitalization, development and job growth. Our enterprise zones provide the needed relief for many businesses so they can create and retain jobs. The Governor and Legislature must not look to steal local benefits such as redevelopment agencies and enterprise zones that provide returns greater than their investments. Instead, the Governor and the Legislature must instead look more closely at programs that drain valuable resources.”
9:55am Tuesday | Less than 24 hours into Jerry Brown’s third tenure as Governor of California, controversy is swirling around a Sacramento Bee article that claims his proposed budget could seek to eliminate some 400 redevelopment agencies across the state in a cost-cutting move.
The Bee cites unnamed sources that have leaked some of the Governor’s budget plans that also include huge cuts to social service benefits, Medi-Cal access and both the California State University and University of California systems.
But it’s the redevelopment move that will have everyone talking. Faced with a huge deficit in 2009, State officials dipped into local redevelopment agencies to borrow tens of millions of dollars from each in some cases as they attempted to right California’s budget. In November 2010, voters approved Proposition 22 in order to prevent such raids of local funds.
That was extremely controversial, but it would be nothing compared to outright elimination of all agencies, if the Bee‘s report is accurate and Governor Brown is set to propose the idea in his budget.
The RDA in Long Beach is not always popular after a 2009 scandal that led to its director’s demotion and plans such as the 2010 decision to partially demolish the historic Atlantic Theatre. But it is certainly important to the City, both as a source of revenue and decision-making entity when it comes to future planning.
Would the potential cost savings for the State be worth eliminating so many local redevelopment agencies?
Disclosure: Long Beach Post publisher Shaun Lumachi is Chairman of the Pacific Gateway Workforce Development Board of Directors and a public policy consultant to the Long Beach Area Chamber of Commerce.