California's enterprise zones have been a part of state government since the mid-1980s, but there is disagreement as to whether they have successfully attracted and retained businesses or merely shifted commercial activities from communities without zones to others where the program is in effect.

As a budget deal appears to be near, the fate of enterprise zones remains uncertain.

The governor has proposed eliminating the zones, which offer businesses tax breaks for hiring and capital investments, as part of his budget proposals.

"In its current form, it fails to encourage the creation of new jobs and instead rewards moving jobs from one place to another within the state, according to unbiased economic research. This, along with California's persistently high unemployment rate, argues for changes to encourage economic development and increase the number of jobs in California," reads an official summary of Brown's plan.

The Brown Administration wants to get rid of the 40 enterprise zones that exist up and down the state in places including Los Angeles, Long Beach, Pasadena and San Bernardino. If the governor has his way, enterprise zones would be replaced by new tax credits for hiring in areas with high unemployment and poverty as well as sales tax credits for manufacturing equipment purchases or biotech research and development.


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Brown has also proposed establishing what would be called the California Competes Recruitment and Retention Fund for small business promising to add or retain jobs.

The governor tried to eliminate both enterprise zones and redevelopment zones during his first budget go around in 2011. The Brown Administration succeeding in pushing its controversial plan to shut down redevelopment agencies through the Legislature, but enterprise zones survived that year's budget process.

Although it is not yet certain whether enterprise zones will remain in existence beyond this year, they certainly have their defenders.

For example, the Harbor Area Enterprise Zone is a 23.9-square-mile territory including communities in San Pedro and Huntington Park created last year.

Joeann Valle, who serves as executive director of the Harbor City/ Harbor Gateway Chamber of Commerce, credits the zone with both attracting new companies to the area and allowing others to expand.

"It helps so many of our businesses. This is a big incentive and (the reason) why people will move here," she said. "The enterprise zone is such an important tool for us."

Since the zone went into effect, Valle said, several new logistics and light-manufacturing companies have settled into the area, while at least two others want to move in specifically because of the enterprise zone.

To the east, in San Bernardino, Global Environmental Products president Walter Pusic has said the program has helped his company to business in an expensive state.

The company manufactures street sweepers has about 65 employees and claims tax credits for almost all of them, Pusic said.

"The number will continue to climb, provided the incentives are available," he said.

State Sen. Mark Leno, who chairs the conference committee working out differences between Assembly and Senate budget proposals, said in a Monday evening session that he favored Brown's idea, but didn't ask other committee members then to make a decision for or against the plan.

"We're going to keep working on the enterprise zone reform," he said.

andrew.edwards@presstelegram.com @AndrewEdwardsCA on Twitter

Staff writer Kristin Agostoni contributed to this report.