In a 4-1 vote, the Anaheim City Council Tuesday night rejected a motion by Mayor Tom Tait to terminate the Anaheim Chamber of Commerce's $2.3-million contract to administer the city's soon-to-be defunct enterprise zone, a statewide program that grants tax credits to businesses that hire disadvantaged employees.
Under new legislation, the program — which allows businesses tax vouchers for hiring certain employees in geographic zones deemed economically challenged — will be eliminated Dec. 31 and be replaced by a more targeted set of tax incentives. Tait's motion called for the chamber's contract to be terminated at the same time.
Gov. Jerry Brown had pushed hard to eliminate the zones, which he said are wasteful and haven't proved to be job creators. Supporters said the zones have been invaluable tools for economic development. Because tax laws make the information confidential, it is largely unknown who receives tax vouchers under the program.
The five-year contract, which the city awarded the chamber last year, was controversial even before the state eliminated the program. Enterprise zones are typically managed by cities, and a good-government expert has questioned whether outsourcing Anaheim's program to the local business chamber is a conflict of interest.
And there is less reason for a contract with the chamber under the replacement program, because unlike enterprise zones, it will be administered by the state, not the city, said Anaheim Planning Director Sheri Vander Dussen.
But members of the council majority argued that it was premature to begin terminating the chamber's contract. In coming months, they said, Sacramento will be defining how the new tax incentives will be distributed, so the chamber could still have a role. They also argued that notifying the chamber of its contract ending could upset the tax voucher effort through December.
“It's premature to cut that off,” said Councilwoman Kris Murray. “Tonight I'm not prepared to vote against jobs in Anaheim.”
Tait said that terminating the contract is the “obvious” option, because the program will be ending. He rejected the council majority's idea of amending the contract later once the new program is better defined. The current contract pays the chamber more than $400,000 annually to administer and market the program for local businesses.
“This contract is for processing of vouchers, and the voucher program goes away,” Tait said. “It would be like if a man has a contract to buy a horse and the horse dies, you wouldn't move into a contract to paint your house.”
Underlying the debate over whether to continue paying city funds to the chamber is an ongoing political battle between Tait and the four-member council majority, which is supported by the Disneyland Resort and other high-powered business interests.
For example, the chamber opposed district-specific council elections that Tait championed and Latino activists said would grant them fair representation. The chamber also strongly supported a controversial $158-million tax subsidy to the developer of two high-end hotels, a move that Tait and other city activists passionately opposed.
Signs of the ongoing political strife were apparent during parts of the debate.
Councilman Jordan Brandman, who was visibly annoyed, called the mayor's motion “reckless,” because Sacramento has yet to consider cleanup legislation on the matter. He tried to stop the debate with a two-thirds vote but couldn't muster the support.
“There is no rush to do this until after Gov. Jerry Brown and the Legislature do all their considerations,” Brandman said.
Tait argued that the council majority was reckless when it earlier this year granted a $600,000 contract increase without changing the scope of work and before a performance audit on the chamber was released. And he said that it doesn't make sense to give the chamber money for a task that the state will already be doing. That money could be spent on services to the community, such as parks, libraries and firefighters, he said.
“Why would we want to take more general fund money, spend more money on what the state is willing to do?” Tait said.