With California unemployment rates hovering around 9 percent, and unemployment rates in areas of San Diego County as high as 16 percent, job creation and retention needs to be at the top of our priority list.
The San Diego Regional Enterprise Zone (SDREZ), which offers certain tax breaks and incentives to businesses within specified areas, helped create 2,300 new jobs and retain approximately 7,000 jobs last year alone. That’s nearly 10,000 people in our region with job security and stable income who will go to work tomorrow.
And now, Gov. Jerry Brown proposes to modify a program that has greatly helped spur economic growth and vitality in some of our region’s most economically disadvantaged areas.
Are there areas in the state’s current Enterprise Zone program that can be improved? Of course. But we need to work to fix whatever these issues are, not eliminate a tool that has been vital to so many communities and families. If Gov. Brown’s legislation is approved, several consequences will negatively impact the advances San Diego has experienced as a result of the SDREZ.
One of the greatest assets of the Enterprise Zone is the boost it gives to economically disadvantaged areas in the state. Under the governor’s new outline, the eligible areas and who can benefit from the Enterprise Zone will be narrowed. The proposal also narrows the employee pool by reducing the categories of “qualified employees.”
The transfer of control from local government to the state government is of equal concern. If Sacramento takes over the newly proposed plan, the state’s objectives and strategies might not align with those of local jurisdictions.
San Diego's economy is regional in nature. Collaboration among our cities and the state to expand business incentives increases San Diego County's ability to compete with other states and counties, create new jobs and increase investment in San Diego. Local governments know the local economy best and want to use the incentives to entice the types of businesses we need in our region.
If Gov. Brown wants to do what is best for the state’s economy, and local governments within the state, he should meet with local jurisdictions and economic development agencies that are in tune with their communities’ needs, with this system that has worked for them and the business community, and who can speak first-hand to the benefits of the Enterprise Zone and the ways in which it can be improved to work even more effectively and bring additional high-quality jobs to California.
The city of Chula Vista and the South County Economic Development Council (South County EDC) have worked extensively with employers to identify their business needs and find solutions that drive economic activity in our region.
Last year, South County EDC published a report on the state of manufacturing in San Diego County and surveyed more than 280 businesses to identify the challenges that manufacturers face and provide the necessary resources, as a region, to address these challenges to recapture manufacturing opportunities that have gone overseas or out of state.
It’s no secret that other states are courting California businesses by offering tax incentives and relocation benefits. More than 33,000 manufacturing jobs were lost in San Diego from 2000-10, and California lost over half a million manufacturing jobs in that same time.
When identifying issues that challenge their business, nearly 120 respondents cited taxes, making it the second-highest reported issue. And yet, we have seen that the SDREZ has helped bring and keep such companies here by reducing the tax burden through incentives offered in the Enterprise Zone.
Companies like Dalla & Co., The Wheat Group, Jensen Meats and others decided to keep their operating business here, in large part, because of Enterprise Zone benefits. Equally important, they located those businesses in economically challenged areas, bringing jobs to the people who need them the most.
We urge Gov. Brown to reconsider his proposal to modify the Enterprise Zone program and instead, work in conjunction with local governments and economic development agencies to streamline the current Enterprise Zone program and provide real change that works for businesses and that does not to disrupt the progress we are making.
Cheryl Cox, Chula Vista mayor
Ricardo Macedo, South County Economic Development Council chair