Governors May Revise

This week the Governor came out with his May Revision to the budget. One issue that many small businesses have been watching is the fate of the Enterprise Zone[EZ] program. In his May Revise he took away $700 from the EZ and redirected the funding to



Sales Tax The existing sales tax credit for businesses located in the EZ will be expanded to a statewide sales tax exemption on manufacturing equipment or research and development equipment purchases by firms engaged in manufacturing or biotechnology research and development. The cost of this is $400 million



Hiring Credit A hiring credit for businesses located in census tracts with the 25% percent highest share of both unemployment and poverty in the state. This will include some areas inside and outside EZ. The credit will only be allowed to taxpayers who have a net increase in jobs. 25% of these funds are allocated to small business. The cost is $100 million



Investment Incentive. This is called the California Competes Credit and will be administered by GO-Biz. Businesses will have to compete for this tax credit and will be determined by an impartial committee. 25% of these credits are designated for small business. The cost is $100 to $200 million.



Current EZ Zones. Taxpayer will be allowed to continue using EZ carryover credits for 5 years and will be able to continue to earn hiring credits for employees hired prior to Jan 1 2014.



What do you think? If you want additional information and a side by side comparison of the current EZ program and the Governors proposal please let me know.





Scott Hauge

President

Small Business California

2311 Taraval Street

San Francisco, CA 94116

shauge@cal-insure.com

415-680-2188