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San Diego Enterprise Zones Have Pros, Cons

Evening Edition

Aired 6/6/13 on KPBS Midday Edition.

GUESTS

Ron Morrison, Mayor of National City

Richard Barrera, Secretary-Treasurer of the San Diego and Imperial County Labor Union and member of the San Diego Unified School District's board of education

Transcript

A group of business leaders and politicians gathered today in Chula Vista in support of state enterprise zones, designated business areas that offer tax breaks and other incentives to employers in an effort to stimulate job growth.

Supporters in San Diego have said enterprise zones have generated $1.7 billion and brought 20,000 jobs to the San Diego region.

National City Mayor Ron Morrison says the enterprise zones brought Jenson's Meats to National City.

He said "they said our only opportunity is going to be to go to Colorado or Texas. We talked to them and said wait a minute, here's what can be done with the enterprise zone. They moved to Otay Mesa and are now employing an additional 100 employees. That's 250 employees that we were going to lose from the state."

The zones are in danger of being replaced by a new system of economic stimulus supported by Gov. Jerry Brown.

A 2009 Public Policy Institute of California study compared data from businesses inside and outside of enterprise zones and found the zones were ineffective in creating jobs in most cases.

California Governor Jerry Brown speaks during a news conference at the Port of Oakland on July 9, 2012 in Oakland, California.
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Above: California Governor Jerry Brown speaks during a news conference at the Port of Oakland on July 9, 2012 in Oakland, California.

Opponents of enterprise zones hold that the program is not an appropriate use of taxpayer money.

Richard Barrera, CEO and secretary-treasurer of the San Diego and Imperial Counties Labor Council, says there is nothing in the current enterprise zone program as it's set up that requires employers to create good jobs.

He said "the company that Mayor Morrison was out at today is a manufacturing company. But right next to it is a Wal-Mart. And right next to the Wal-Mart is a strip club. And the point is that under the current enterprise zone program, all of those companies are getting taxpayer subsidies and there is no accountability in terms of the kinds of jobs that get created, how much are people making in wages. There's no accountability about were the decisions of firms to locate and to hire people and receive credits, had they already made those decisions?"

Another criticism of enterprise zones is that any business within the zone can get a tax credit. That means card rooms, fast-food chains and giant corporations are eligible. Last week, an investigative report by Sacramento NBC station KCRA found strip clubs within enterprise zones that received tax credits.

Morrison said "we all want the higher paying jobs and the ones that have all the benefits, everything else. That would be great if we could have them. But at the same time, if you've got someone who's providing a job, even if it is at the lower wage, $10 an hour, and doesn't have all the fringe benefits, it's a lot better than that $10 an hour job being in Colorado."

The investigation also found a lack of transparency by the state in making information about companies participating in the program public.

Barrera said "currently we don't actually know which jobs are being created, which companies are being subsidized in these enterprise zones. In fact, the state federation of labor made a request to the City of San Diego asking them to tell us and the city responded under state law 'we're not allowed to tell you that.'"

The governor's proposed changes to the enterprise zone program would allow businesses located in census tracts with a 25 percent higher share of both unemployment and poverty to get hiring credits instead of having a designated geographical area.

Morrison said "the problem is, it puts limits on the amount of money that can be used and it puts what I'm going to call the 'peanut butter effect.' It spreads it throughout the state. Right now, it's concentrated in specific areas, so you can see the benefit there within that area."

Barrera said the governor's plan is doing just the opposite.

He said "what we currently have, I think, is more of a peanut butter approach. For instance, downtown San Diego, employers get credits for hiring folks in an enterprise zone program. That means a law firm that hires a lawyer could potentially get a voucher under the notion that they're helping the economy and helping job growth."

This isn't the first time Brown has tried to eliminate enterprise zones. But Barrera said this time, he thinks the state legislature will support the governor's proposal.

Morrison said "we're trying to look at what tools are in our toolbox and the state has basically eliminated one tool after another. Redevelopment, it took that away. We're sitting in limbo right now because they eliminated it before they figured it out. Now, they want to do the same thing here. They haven't sat down with anybody. We're asking them, if there is problems, sit down with us."

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