Calif. Bill That Would Cut Tax Credits to SOBs Sent to Governor

Rhett Pardon

SACRAMENTO — California's Legislature on Wednesday sent Gov. Jerry Brown a bill that would curtail employment tax credits to sexually oriented businesses.

Meant to stimulate job creation in areas of high poverty and unemployment, the enterprise zone program provides millions annually in tax breaks to businesses. There are 40 such controlled enterprise zones in the state.

But state lawmakers were embarrassed by recent media reports that said some tax credits went to two Sacramento County clubs that feature topless or nude dancers. 

Poker parlors and retail establishments in the enterprise zones also were on the bill's target.

AB 93 overhauls the enterprise zone program and redirects $750 million in business tax breaks. The bill sailed through both the state Assembly and state Senate.

A governor's spokesman told XBIZ that Brown will sign the legislation.

The measure retains the geographic boundaries of existing enterprise zones but tightens and scale back hiring credits. Hiring credits would be available only to employers paying at least 150 percent of the state's minimum wage.

Temporary worker agencies, bars, retailers and restaurants would be excluded from the program that begins July 2014 and scheduled to end January 2019.

Under the enterprise zone program, businesses can receive as much as $36,000 over five years for each employee who earns as much as $12 an hour and is economically disadvantaged or meets other qualifications.

New programs proposed by AB 93 include a sales tax exemption for manufacturing and bioresearch companies and a tax-credit program — $30 million next year and shooting up to $200 million in 2015-16 — that would be negotiated at a later date.