Lawmakers Target Loophole Revealed in Honda Center Layoff

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State legislators have moved to insert language into next year’s proposed budget that seeks to close a loophole which would enable Honda Center management to seek job creation tax credits when more than 500 food service workers are laid off and replaced at the end of the month, according to the Sacramento Bee.

Tuesday’s effort comes as Gov. Jerry Brown pushes to completely reshape the enterprise zone programs that administer the credits. Brown has asserted that the credits fail to generate new jobs and largely reward employers for simply moving jobs around the state.

From the Bee:

In support of the union, Assembly budget writers inserted language that would prohibit Anaheim [Arena] Management from claiming hiring credits under the state’s enterprise zone program. Meanwhile, however, Gov. Jerry Brown has proposed a broader overhaul of enterprise zones to, he says, concentrate its benefits more narrowly on areas of high unemployment.

Brown’s enterprise zone proposal looms as one of the most contentious issues in the budget as the June 15 deadline for its enactment approaches. It arose during Tuesday’s meeting of the two-house budget conference committee without resolution.

However, the change appears to still allow the job creation credit for replaced workers if they are paid the same amount or more, based on The Orange County Register‘s report:

[Assemblyman Tom] Daly’s provision, which was approved by the Joint Legislative Budget Conference Committee on Tuesday even though the actual bill language has not yet been written, specifically says Honda Center operators would not be eligible for the hiring credit if it lays off workers and hires cheaper replacements, according to Assembly budget committee staff.

The Register’s description indicates that the new restriction would apply only to the Honda Center and not to all employers statewide who replace workers in a similar fashion.

Arena management, which originally didn’t comment on its ability to seek the job creation credit, has since said it will not seek the tax break and never intended to.

The zones amount to about $750 million per year in state tax credits to businesses, according to the California Department of Finance.

In the face of Brown’s effort, enterprise zone supporters continue to stand by the program, arguing that it’s the most effective economic development program in California.

“It’s creating jobs, creating investment, just as it’s designed to do,” Todd Ament, president and CEO of the Anaheim Chamber of Commerce, said Tuesday.

You can reach Nick Gerda at ngerda@gmail.com, and follow him on Twitter: @nicholasgerda.

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