Kish Rajan promotes a new approach at the Sierra Regional Economic Forum in May (Photo Credit: Susan Lovenburg)
California is often characterized as a state not friendly to business. That perception may be changing if Governor Brown has his way.
The Governor has a new prescription for fueling growth in California and modernizing the state’s approach to economic development.
The head of the Governor’s office of Business and Economic Development, Kish Rajan, is promoting this week what his “GO-Biz” office is calling a “more focused and nimble” approach to attracting and growing business in the Golden State.
The GO-Biz team is proposing that the Enterprise Zone incentive program be replaced with three more focused programs which are being touted as better job creation catalysts geared toward outcomes. The Governor will ask the Legislature to approve moving the $750 million spent on the Enterprise Zone program to the three new business incentives to strengthen California’s case in competing with other states.
The first is a sales tax exemption on equipment purchased in manufacturing, research and development and biotech, which drew praise from California’s large manufacturing sector. California is one of only a few states that still taxes purchases of equipment, which according Rajan puts the state “at a significant competitive disadvantage.”
The second is a “California Competes” tax credit program which would create a small committee composed of key players from three state departments (GO-Biz, Treasury and Finance) to perform some creative problem solving for businesses who come to them wanting to commit to creating California jobs and industry. Each decision would be made on a “deal-by-deal” business, and according to Rajan would be transparent so that the public, the companies and the state would all know what incentives had been negotiated and what would happen to the state’s economy as a result of them.
The final piece is a hiring tax credit, aimed at creating net new jobs where poverty and unemployment in the state are the highest, especially in the eastern half of California. Twenty-five percent of these funds would be reserved for small businesses.
Rajan said the approval of these proposals—which he said are “urgently needed” and “can help bring positive and instant impact to the already recovering California state economy.” Business leaders will be asked to contact their legislators and urge support of the Governor’s attempt to ease the cost of doing business in California.
The California Economic Summit has just wrapped up its second annual set of regional meetings to improve the state’s ability to create jobs and to compete in the global economy. The information from these meetings is being distilled into a group of Signature Initiatives that will be discussed at a statewide meeting in Los Angeles in November.
California’s leadership in innovation, manufacturing and information technology are driving change around the world. Rajan and his team believe that California businesses who conceive cutting edge ideas will scale up outside of California because of the cost of doing business in the state. His proposal gives the state “the tools to stop that job loss.”
The state budget is scheduled to be passed this month, and Rajan is hoping that the three main elements of this plan are included in that budget.