Columnist Dan Walters points out the dirty little secret about the hefty tax breaks that are offered in these commercial zones: They do next to nothing to spur job growth, and they're costing the state around $500 million a year. But they sound so good. Listen to what L.A. Mayor Antonio Villaraigosa said about the creation of an enterprise zone near LAX:
"The Westside of Los Angeles is a major economic engine for the city of Los Angeles," Villaraigosa said. "This expansion means business owners will have the tools and incentives to create jobs in all Los Angeles communities."
From last year's Public Policy Institute of California report on enterprise zones:
Our main finding is that enterprise zones have no statistically significant effect on either employment levels or employment growth rates.
The program has no statistically significant effect on employment even when a longer period of time is examined.
Jed Kolko, the study's co-author, said, "The state can ill afford to continue the enterprise-zone program without clearer evidence of its benefits or a well-defined plan to make it more effective." Previous studies have turned up much the same conclusion. There's been some discussion by Senate President Pro Tem Darrell Steinberg about adjusting the way these credits are set up, although there's little indication that the governor is interested. He was at the LAX shindig with Villaraigosa.