BILL ANALYSIS SB 974 Page A Date of Hearing: June 30, 2010 ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT AND THE ECONOMY V. Manuel Perez, Chair SB 974 (Steinberg) - As Amended: June 15, 2010 SENATE VOTE : 21-16 SUBJECT : Career Technical Education Credit and the California Enterprise Zone Program SUMMARY : Establishes a new Career Pathways Investment Credit, administered by the Superintendent of Public Instruction (SPI), to qualifying business entities that partner with local education agency (LEA) programs to develop and support career pathway programs, as specified. Funding for the credit is provided by eliminating a portion of an existing enterprise zone hiring credit. Specifically, this bill : 1)Makes a number of findings, including, but not limited to, how California's deep recession requires a timely response and strategic investments in order to educate and prepare the workforce for the next stage in the state's economic growth. 2)Provides legislative intent that, among other things, the Legislature shall evaluate the state's tax expenditures as rigorously as it evaluates the state's spending programs and establish fiscal incentives that encourage California businesses to enter into partnership with schools to connect pupils and teachers to real-world experiences that strengthen middle and high school education statewide. 3)Establishes and authorizes the reservation and allocation of up to $78 million in tax credits in calendar year 2011 and $100 million in credits for 2012, and each calendar year thereafter, as adjusted by the Franchise Tax Board to reflect inflation or deflation. Credits may be reserved for up to five calendar years per application. The amount reserved in any calendar year is limited to 50% of the qualified expenditures, as defined. Value of any unallocated credits from a prior year may be rolled forward. Allocation of credits only occurs after the Department of Education audits and verifies that the qualified expenditures have been made in the manner consistent with what was represented in the application. 4)Requires the SPI to annually provide Franchise Tax Board (FTB) SB 974 Page B with a list of qualified tax payers for whom the career pathways credits are reserved or allocated. 5)Authorizes the SPI to charge a fee for the submission of an application for allocation and reservation of the credit, as specified. Fees are required to be deposited in the Career Pathways Investment Credit Fund, which is established in this bill. Loans are authorized to cover administration of the program until sufficient fees are collected. 6)Requires the SPI to establish procedures for reserving and auditing the Career Pathways Investment Credit that, at a minimum, do the following: a) Provide credit reservation only to applicants that agree to enter into an enforceable contract or memorandum of understanding (MOU) with the Department of Education, as specified. b) Implement a reserve criteria that awards applicants that demonstrate that either the applicant or the LEA meets the following criteria: i) The effectiveness of the career pathways program toward preparing students for productive, high-wage employment in growing or high need-sectors of the California economy. Cost effectiveness criteria includes, completion rates, high school graduation rates, percentages of students attaining an industry certification, percentages of students transitioning successfully to postsecondary education and employment and earnings after high school. ii) The level of the applicant's investment in, oversight of and ability to leverage and sustain current career pathways programs and current career technical education programs. 7)Requires that the application include, at a minimum: a) A copy of the contract or MOU between the applicant and the LEA that includes a clear and comprehensive plan for each middle school or high school program that creates career pathways and the budget for the career pathways investment program over the period for which the applicant is applying for credits; SB 974 Page C b) Details regarding the strength and relevance of the education plan to the needs of industry for qualified technical employees; c) Projections of program enrollment; and d) The method by which accountability for program participant enrollments and outcomes will be maintained. 8)Sets certain priorities for allocating credits including: a) Requiring priority allocation in each of the following circumstances: i) The applicant has entered into an MOU or contract with LEA that is located in a community with an unemployment rate above the statewide average, as specified, and has high school graduation rate lower than the statewide average. ii) The applicant has entered into an MOU or contract with LEA that provides for a private to public funding ratio that exceeds the minimum one-for-one public to private dollars. iii) The applicant has entered into an MOU or contract with LEA that is articulated with postsecondary certificate and degree programs in the region. iv) The applicant is not seeking tax credits for existing activities. b) Specifying that to the maximum extent practical and consistent with the above priorities, give priority to applicants serving socioeconomically diverse populations and on a geographically equitable basis. c) Providing that priority not be given on the basis of date the application is submitted, unless necessary to allocate credits where two or more applicants have the same rating. 9)Defines a qualified expenditure to include the following: i) Purchase of equipment or instructional materials; SB 974 Page D ii) Authorizing employees to provide instruction, in partnership with credentialed teachers employed by the school district at the school site; iii) Providing paid jobs or internships; iv) Offering teacher externships; and v) Making contributions to programs administered by postsecondary institutions that provide support for middle or high school programs that create career pathways. 10)Defines a qualified tax payer as an applicant that receives an allocation pursuant to the requirements above and who is either a sole owner, if an individual, partners, if the tax payer is in a partnership; or a shareholder if the tax payer is an "S" corporation; or a tax payer subject to the corporate tax code. 11)Authorizes a tax payer to carry forward any unused credits until the credit is exhausted. Conversely, if the taxpayer fails to meet the requirements of this bill, the credit is disallowed, and assessed and collected until the requirements are satisfied. A disallowed credit would be treated as a math error, as specified. 12)Eliminates the ability of businesses located in an enterprise zone from qualifying an employee for the enterprise hiring credit based on them living in a targeted employment area (TEA). 13)Reduces the time from four years to 42 days for the businesses located in an enterprise zone to obtain certification of its worker as a qualified worker under the hiring credit. Applications for certification are required to be submitted within 28 days of the employee being hired. 14)Makes other technical changes to the enterprise zone hiring credit. EXISTING LAW : 1)Purpose of enterprise zone program : Establishes the California Enterprise Zone Program, administered by California Department of Housing and Community Development (HCD) to stimulate business and industrial growth in depressed areas of the state. Legislative intent states that it is in the economic interest of SB 974 Page E the state to have one strong, combined, and business-friendly incentive program to help attract business and industry to the state, to help retain and expand existing state business and industry, and to create increased job opportunities for all Californians. A maximum of 42 enterprise zones are authorized at any one time. Designations are for a period of 15 years, as specified. 1)Hiring Credit : Authorizes an income tax credit for businesses in an enterprise zone that hire certain "qualified employees." Among other qualifying criteria, which are described in (6) and (7) below, the qualified employee must be certified that he or she meets meet one of nearly a dozen categories of eligible individuals, including living within a TEA. 2)Purpose of the TEA : Specifies that the purpose of a "targeted employment area" is to encourage businesses in an enterprise zone to hire eligible local residents. A TEA may include, but is not required to include, all or part of the boundaries of the enterprise zone. Further, the TEA does not need to encompass all eligible areas, but may include only those areas that the local government determines have residents who are in the most need of this employment targeting. 3)Definition of a TEA : Defines a TEA to mean an area within a city, county, or city and county that is composed solely of those census tracts designated by the U.S. Department of Housing and Urban Development as having at least 51% of its residents of low- or moderate-income levels, using either the most recent U.S. Department of Census data available at the time of the original enterprise zone application or the most recent census data available at the time the targeted employment area is designated to determine eligibility. 4)Update of TEA : Requires local governments to update the boundaries of their TEA's to reflect new census data within 180 days of the data becoming available. 5)Definition of a qualified employee : Limits the enterprise zone hiring credit to be awarded to only those employees that meet the following requirements: a) The employee provides service to an employer where at least 90% of those services within a taxable year are directly related to the conduct of a taxpayers business or trade located in an enterprise zone; SB 974 Page F b) The employee performs at least 50% of his/her service for the taxpayer during the taxable year in an enterprise zone; c) The employee is hired after the date of the enterprise zone designation; and d) The employer has received a voucher for the employee that certifies that the employee, immediately preceding employment with this employer, met one of 12 eligibility categories. The employee was or is: i) A resident of a TEA, as specified; ii) Eligible for services under the federal Job Training Partnership Act, or its successor; iii) Eligible to be a voluntary or mandatory registrant under Greater Avenues for Independence Act of 1985, or its successor; iv) An economically disadvantaged individual 14 years or older; v) A dislocated worker, as specified; vi) A disabled individual who is eligible for, enrolled in, or has completed a state rehabilitation plan; vii) A service-connected disabled veteran, veteran of Vietnam, or veteran who has been recently separated from military service; viii) An ex-offender, as specified; ix) Eligible to receive specified social services benefits, including Federal Supplemental Security Income benefits, Aid to Families with Dependent Children, food stamps, or state and local general assistance; x) A member of a federally recognized Indian tribe, band, or other group of Native American descent; or xi) A member of a targeted group, as defined by the Internal Revenue Service for the purposes of the Work Opportunity Tax Credit (WOTC), which includes a qualified SB 974 Page G IV-A recipient, a qualified veteran, a qualified ex-felon, a high-risk youth, a vocational rehabilitation referral, a qualified summer youth employee, a qualified food stamp recipient, a qualified Supplemental Security Income recipient, or a long-term family assistance recipient. 6)Further Hiring Credit Requirements : Requires "qualified employees" to be retained in employment for a minimum of 270 days (approximately 9 months) in order to qualify for hiring credit vouchering. The value of the hiring credit incentive totals 50% of the employee's wages in the first year, 40% in the second, 30% in the third, 20% in the fourth, and 10% in the fifth year. Although employees can be paid more, the maximum wage rate used to calculate the credit is 150% of minimum wage. Aircraft manufacturers in Long Beach may calculate the credit based on 202% of minimum wage. The hiring credit may only be applied to offset tax liability attributable to revenues received from activities located within the EZ where the employee is primarily working. While not every employer is able to fully utilize the maximum value of the credit, it could be as high as $37,700 over five years. FISCAL EFFECT : According to the Senate Appropriations Committee analysis, this measure is revenue neutral. Reductions to the hiring credit correspond to the estimated loss in state revenues attributable to the new career technical education credit. The estimated start-up costs for the FTB and the Board of Equalization (BOE) are expected to be covered through a newly authorized fee. COMMENTS : 1)Author's purpose : "SB 974 authorizes the Career Pathways Investment Tax Credit for businesses that partner with public schools to build "career pathway" programs that connect learning to real-world experience and keep students engaged and on track to graduation, further education and productive careers. SB 974 funds the new the credit by enacting two long overdue reforms to the Enterprise Zone program: first, this bill eliminates the practice of "retrovouchering" enterprise zone hiring credits; and second, this bill repeals the Targeted Employment Area (TEA) criterion for the hiring credit eligibility. Retroactive credits, by definition, simply provide bonuses for past actions, but do not encourage businesses to increase employment in future years and thus do not promote job creation. TEA boundaries typically include parts of Enterprise SB 974 Page H Zones but also other areas, and do not need to be updated, even if robust economic growth has occurred and parts of the TEA are no longer economically distressed. TEA residency allows employers to claim tax credits based solely on where a worker lives and not on any objective measure of whether that individual faces a barrier to employment. Thus, SB 974 reflects author's priorities in tax policy: first, that we pay for any new tax credits or expenditure that we authorize - which is essential, given our budget situation - and second, that we critically evaluate the tax credit programs we already have on the books, to make sure that they are maximizing the program benefits of our tax credits." 2)Policy questions : To the extent that this measure proposes to limit one tax expenditure in order to establish another, SB 974 raises the following two central policy questions. a) First, what is the equity proposition for removing $100 million in tax credit authority from businesses located in some of the poorest areas of the state (enterprise zones) in order to finance a new credit for businesses located in all areas of the state? b) Second, what is the appropriate balance between supporting the direct hiring of workers and the preparation of the state's future workforce? 3)California's current and future economy: California is one of the largest and most diversified economies in the world, with a state gross domestic product of over $1.8 trillion in 2008. The efforts of its 38 million people resulted in having the eighth largest economy in the world, ahead of such countries as Spain ($1.4 trillion), Canada ($1.3 trillion), and Brazil ($1.3 trillion). Historically, the state's businesses and workers have played significant roles in the global marketplace. Some of California's strongest economic qualities include its strategic west coast location; its economically diverse regional economies; its access to a wide variety of venture and other private capital; its broad base of small- and medium-sized businesses; its culture of innovation and entrepreneurship; and its large, ethnically diverse population, representing both a ready workforce and significant consumer base. SB 974 Page I The chart above, prepared by the California Employment Development Department, provides detail on California's largest industry sectors in 2008 including the total number of jobs and percentage of state employment. Businesses in this century face increasing challenges to maintaining global and domestic competitiveness, including providing a skilled workforce to support the changing needs of commerce and maintaining cost-effective productivity in the face of lower safety and wage standards in emerging foreign markets. Workers and communities are being affected from both the direct and indirect impact of loss of jobs and, in some instances, the potential shift of entire industry sub-sectors out of California, as in the 18,800 jobs at-risk with the closure of NUMMI automotive assembly plant in May 2010. In 2008, 14.6% of the population lived in a household with an annual income below the federal poverty line of $22,000. This reflects a statistically significant increase from 2007 when 12.7% of Californians were reported to be living in poverty. The chart to the left further illustrates the change in job growth between certain industry sectors and the relevance of those shifts to worker wage rates since the beginning of the century. Significant drops in consumer spending during the recession have also led to greater workforce reductions and business bankruptcies across the state. For much of 2009, the number of unemployed workers rose 40,000 to 60,000 per month, and the year ended with 2.25 million people officially identified as unemployed (excludes those that have stopped looking for work, among others). In May 2010 the seasonally adjusted state unemployment rate was 12.4%, a slight improvement over April's unemployment rate of 12.5%, but still representing 2.28 million unemployed California workers. Within the state, however, unemployment ranges from 27.5% in Imperial County and Sutter County at 20% to Marin County with 7.9% and Santa Barbara at 8.3% unemployment. While some economists believe California may have emerged from the recession, there is little disagreement among economic forecasters that unemployment in the state is expected to remain above double digits throughout 2010, 2011 and into the first quarter of 2012. Jobs are expected to recover to their SB 974 Page J pre-recession peak in the first half of 2013; however, unemployment rates are likely to remain above 8% in the state through much of 2014. In designing an economic recovery strategy, public policy makers are challenged in providing sufficient support to particularly economically troubled areas, such as those designated as enterprise zones, and the need to prepare the next generation of workers and entrepreneurs. This bill poses the policy question in a very direct manner by proposing to limit enterprise zone credits and replace them with new career technology credits. Is policy best served pursuing one to the detriment of the other? 4)Career pathways to prosperity and self sufficiency : California's future is dependent upon the state's education system in delivering a quality workforce that supports its current and emerging industries. While California cannot reasonably compete as the cheapest place to do businesses, the state has historically held a comparative advantage over other states and nations based on quality and productivity of its workforce and entrepreneurial environment. Maintaining this advantage, however, is challenging and many policy makers believe that fundamental change needs to occur within the state's education and workforce training framework. Increasing concerns regarding high school drop out rates, student academic achievement and changing demographics are just some of the drivers of a renewed push toward greater integration of career tech/work-based learning programs and college preparation. Implementation of SB 974 would offer a new tax credit for businesses that make meaningful contributions, also known as qualified contributions, to programs that can demonstrate they meet certain criteria and conditions, such as having systems for measuring the program's success in assisting students prepare for high-wage employment in growing or high-need industry sectors. Approved programs could be delivered through a variety of educational delivery systems including high schools, regional occupation centers, California Partnership Academies and other career academies, alternative education programs and adult education programs. The distinguishing quality of these programs is that they integrate academic and technical learning. Eligible programs must include core academic courses that SB 974 Page K replicate real world work environments, while remaining aligned with the State Board of Education's approved career technical education standards. The author's office provided multiple examples of programs that could potentially qualify as an eligible LEA partner under this bill. Below are four of those examples. a) The Central County Occupational Center (San Jose, CA), in existence for 40 years, is one of the largest centers in California. In 2009, the Center served about 2,200 students in the day program and 600 in the evening program. It is part of the Metropolitan Education District, a joint powers agency created by six school districts to provide CTE and Adult Ed in central Santa Clara County. b) The AYES/NATEF Auto Program at Ontario High School (Ontario, CA) is a thriving program at a Title I school. It has solid local dealership support and strong academic reinforcement. The program is comprised of a district operated ROP and the Baldy View ROP. The program provides a pathway into Chaffey College with articulated college credit for high school students. c) Arthur A. Benjamin Health Professions High School (Sacramento, CA) opened fall 2005 with a mission "to provide students with an outstanding education, rich with relevant academic, application and leadership experiences" - using healthcare as a theme. Partners provide key resources to the school from internships to collegiate mentors that are currently enrolled in post-secondary healthcare programs. Current partners include Kaiser, Mercy, Shriners, Sutter, U.C. Davis Medical Center, Sacramento State, U.C. Davis, Stanford University and the Bill and Melinda Gates Foundation. d) The Coachella Valley Economic Partnership's Career Pathways Initiative, established in 2005, partners more than 250 industry, economic development and education professionals along with students across nine cities in the Coachella Valley of eastern Riverside County. Its objective is to transform teaching and learning for 70,000 PreK-12th grade students; empower educators to engage students in perfecting critical thinking and communication skills through real-world, rigorous, inquiry-based learning; and partner employers in developing their next-generation talent SB 974 Page L pipeline. Research demonstrates that work-based learning increases outcomes both in helping to keep students in school and in longer term outcomes that extend beyond school. As an example, in Career Academies: A Proven Strategy to Prepare High School Students for college and Careers (February 2010), the report found conclusive evidence that career academies were effective in improving outcomes for students citing a number of academic studies including the following: High school drop out rates in academies averaged 7 to 8% over the three years, which is about half the rate in the general population of California students (Dayton 1997). Academy 10th graders were more likely to have passed both sections of the California High School Exit Examination; Academy 12th graders were more likely to graduate at the end of the year; and Academy graduates were more likely to have completed the 15 "A to G" courses required for admission to the University of California or California State University (Bradby and others 2007). Academy graduates were at least as likely to be enrolled in post secondary education as their non-academy schoolmates one or two years after high schools. However, at the same time, they also had more hours of paid employment (Stern, Raby and Dayton 1992). The James Irvine Foundation funded a broader study, "Work-Based Learning in California, Opportunities and Models for Expansion" ( November 2009), which closely examined the key elements and conditions of using a multiple pathways model to increase the number of low-income students in California who complete high school on time and attain a post secondary credential by age 25. Their model uses the same basic elements required in SB 974 of academics linked to real world work experiences. Their research found that combining a student's career interest with practical job preparation, supported by related academic work, contributed to higher graduation rates, increased college enrollment and higher earning potential. 1)The California Enterprise Zone Program : Existing law authorizes the creation of up to 42 enterprise zones based on a statutory list of criteria related to poverty and economic dislocation. The EZ program is based on the economic principle that targeting SB 974 Page M significant incentives to lower income communities allows these communities to more effectively compete for new businesses and retain existing businesses, which results in increased tax revenues, less reliance on social services, and lower public safety costs. Residents and businesses also directly benefit from these more sustainable economic conditions through improved neighborhoods, business expansion, and job creation. Enterprise zones are located in portions of 54 Assembly Districts and 35 Senate Districts. They range in size from one square mile to 70 square miles and in geographic locations ranging from Eureka and Shasta Valley near the Oregon border to San Diego and Calexico along the Mexican border. Under the enterprise zone program, businesses and other entities located within the area are eligible for a variety of local and state incentives. In its application, a prospective enterprise zone is required to identify specific local government incentives that will be made available to businesses located in the proposed enterprise zone. The local incentives can, among other things, include writing down the costs of development, funding related infrastructure improvements, providing job training to prospective employees, or establishing streamlined processes for obtaining permits. The state also offers a number of incentives, including tax credits, special tax provisions, priority notification in the sale of state surplus lands, access to certain Brownfield clean-up programs, and preferential treatment for state contracts. Below is a chart comparing the state tax incentives offered to businesses located in an enterprise zone and other geographically targeted economic development areas (G-TEDA). ------------------------------------------------------------ | Comparison of State Tax Benefits by Targeted Area | ------------------------------------------------------------ |-----------+------+---------+---------+----------+----------| | |Hiring|Longer |Sales |Accelerate|Lender | | | |NOL<1> |and Use |d |Interest | | |Credit|Carry- |Tax |Depreciati|Deduction | | | |Forward |Credit |on | | | | |Period | | | | |-----------+------+---------+---------+----------+----------| |Enterprise | X | X | X | X | X | ----------------------------- <1> NOL= Net Operating Loss SB 974 Page N |Zone | | | | | | |-----------+------+---------+---------+----------+----------| |Manufacturi| X | | | | | |ng | | | | | | |Enhancement| | | | | | | Zone | | | | | | |-----------+------+---------+---------+----------+----------| |Targeted | X | X | X | X | | |Tax Area | | | | | | |-----------+------+---------+---------+----------+----------| |Local | X | X | X | X | | |Agency | | | | | | |Military | | | | | | |Base | | | | | | |Recovery | | | | | | |Area | | | | | | ------------------------------------------------------------ ------------------------------------------------------------ |Source: Legislative Analyst's Office | ------------------------------------------------------------ FTB reported that in 2007 - the most current data available - $481 million in G-TEDA credits and deductions were claimed through corporate and personal income tax (PIT) returns. Additionally, FTB reports hundreds of millions in carryover credits have been earned by businesses located in G-TEDAs, but have not been claimed. Below is a chart that displays the dollar amount of G-TEDA incentives claimed through each of the tax incentives. ------------------------------------------------------------ | Claimed G-TEDA Incentives 2004 to 2007 | ------------------------------------------------------------ |----------------------+---------+---------+---------+---------| | | 2004 | 2005 | 2006 | 2007 | | | | | | | |----------------------+---------+---------+---------+---------| |Hiring and Sales Tax | $349,127| $362,620| $385,677| $430,934| |Credit | | | | | |----------------------+---------+---------+---------+---------| |NOL Deductions | $72,326| $74,024| $126,106| $207,993| |----------------------+---------+---------+---------+---------| |Tax Impact | $5,171| $5,966| $11,351| $15,807| |----------------------+---------+---------+---------+---------| |Net Interest | $432,867| $490,129| $517,310| $520,372| SB 974 Page O |Deductions | | | | | |----------------------+---------+---------+---------+---------| |Tax Impact | $29,103| $32,395| $34,156| $34,438| |----------------------+---------+---------+---------+---------| |Business Expense | $4,387| $4,770| $4,463| $5,136| |Deductions | | | | | |----------------------+---------+---------+---------+---------| |Tax Impact | $222| $200| $188| $197| |----------------------+---------+---------+---------+---------| |Total Tax Impact | $383,624| $401,181| $431,371| $481,376| -------------------------------------------------------------- ------------------------------------------------------------ |Data Provided by the Franchise Tax Board | |11/9/09 | | | ------------------------------------------------------------ Across the U.S., 37 other states have G-TEDA type programs. Economic developers have testified that the G-TEDA programs are among the state's last remaining marketing tools for attracting new businesses and investment to California. Others, however, remain unconvinced and have suggested that this level of tax expenditure could be better spent elsewhere. 2)Assessments of the California Enterprise Zone Program : Measurement of the success and failure of the enterprise zone and the other G-TEDA programs has been central to the debate on whether to expand or limit, as in the case of this measure, the enterprise zone program. Complicating the matter is that much of the discussion around the relative successes or failures of the G-TEDA programs and individual areas is anecdotal. The academic attempts to assess the state's G-TEDA programs have produced mixed results. Some of the variance among study findings can be attributed to the limited access to good data sets. Research generally requires the development of a set of assumptions in order to undertake the study. The assumptions made in the case of the G-TEDAs have, however, left most, if not all, of the methodological approaches open to debate. Moreover, the problems in assessing the G-TEDA programs have been further complicated by a lack of consensus on why the programs were established and what objectives are trying to be achieved. Responding to the differing reports, HCD commissioned its own study in 2006, which looked at the impact of the program on neighborhood poverty, income, rents, and vacancy rates. The report showed that, on average, within enterprise zones between SB 974 Page P 1990 and 2000: a) Poverty rates declined 7.35% more than the rest of the state; b) Unemployment rates declined 1.2% more than the rest of the state; c) Household incomes increased 7.1% more than the rest of the state; and d) Wage and salary income increased 3.5% more than the rest of the state. Since HCD's 2006 report, two additional reports have been released. One report also found favorable impacts of the enterprise zone program and another found the program lacking in its ability to stimulate jobs. In November 2008 and later revised and re-released in March 2009, economists from the University of Southern California (USC) released a report with findings consistent to the HCD report. The USC study found that federal empowerment zone, federal enterprise communities, and state enterprise zones have "positive, statistically significant impacts on local labor markets in terms of the unemployment rate, the poverty rate, the fraction with wage and salary income, and employment." The Public Policy Institute of California (PPIC) released its study of the enterprise zone program in June 2009, looking at whether the EZ program had been successful in creating more jobs than would have otherwise been established without the zone. The main finding of the report was that, "Enterprise zones have no statistically significant effect on either business creation or employment growth rates." The PPIC report also noted that the effects of the program differed between zones, appearing to have a greater effect on job creation in zones with lesser amounts of manufacturing and those where the administrators spent greater amount of time on marketing and outreach activities. The report further stated that PPIC encouraged a more critical evaluation of the program overall and on individual zones using both employment and other metrics such as poverty, unemployment, and property values. It is important to note, however, that while the USC and PPIC SB 974 Page Q reports discussed above were released in 2008 and 2009, the business development data used to form the statistical analyses are from 2004 and earlier. This date is significant, as both HCD and the Legislature approved significant reforms to the program in 2006 (discussed below), thus drawing into question whether either of the studies accurately reflect the impact of the enterprise zone program today. 3)Oversight hearings drive reforms : While the G-TEDA programs have been around for decades, it was not until the winter of 2005 that the first comprehensive legislative oversight hearings were held. Following the hearings, publication of a final report and work group meetings, lead by the Assembly Committee on Jobs, Economic Development and the Economy (JEDE), legislation was negotiated and approved by the Senate and Assembly floors on 40-0 and 77-0 votes [AB 1550 (Arambula and Karnette), Chapter 718, Statutes of 2006]. G-TEDA issues again came to the forefront of the committee's agenda in 2009 and JEDE initiated a thorough examination of how the prior reforms were progressing and what additional areas were in need of improvement. During the course of its 2009 review, JEDE held three public hearings, met with a variety of stakeholder groups, and produced an expanded white paper that details the structure and activities of the G-TEDA program in California, as well as in other states. In addition to the authors of the USC and PPIC reports, speakers included economic development practioners, researchers, nonprofits, local governments, labor, and business leaders. At the first hearing, witnesses provided a general overview of the G-TEDA programs including presentations on the most recent program evaluation studies. The second hearing focused on how the G-TEDA programs help the state's innovation-based industries - especially those in the manufacturing area. At the third hearing, presentations were arranged around three topics: workforce training, small business development, and models for measuring success. A final report was issued by JEDE in January 2010 which included summaries of each of the hearings, a comparative review of how California's program stacked up against other state's enterprise zone programs, and a list of the 100 recommendations developed over the course of the hearings. The JEDE report made five key findings, including the need for more structure and accountability mechanisms within the tax incentives and the need SB 974 Page R to better link workforce development into the overall G-TEDA framework. In February of 2010 Speaker John A. P?rez asked JEDE Chairman V. Manuel P?rez to convene a working group to review the final report and develop a comprehensive set of reforms to the enterprise zone program. The work group has been meeting several times a month since March 2010. Members include representatives from Democratic and Republican policy and fiscal staff from both houses, labor organizations, business lobbyists, and local government representatives and associations. Key program revisions under discussion include: a) Increasing accountability of the program; b) Better targeting of tax incentives to low and moderate income households; c) Reforms to structure of the hiring credit; and d) Increased integration of the enterprise zone program with other state and local community development programs, including public programs that support workforce development and job placement. This effort has captured the interest of the broad set of enterprise zone stakeholders including local governments, labor and the business community. Concerns have been raised that adoption of SB 974 could derail these larger programmatic reform discussions. Given the complexity of the program and the work that has already been undertaken, the committee may wish to consider whether the enterprise zone portions of this bill should be removed and those issues be raised within the larger context of the reform discussions. 4)Examining the enterprise zone hiring credit : Existing law authorizes the establishment of a TEA as a means for encouraging businesses within an enterprise zone to hire new workers that live in and around the zone. TEAs are designated based on the most current U.S. Census data and can include areas both within and adjacent to the zone. The TEA is an especially important component to a geographically-based program because it is the only category of the 13 eligible employee categories that directly links the people in and near the enterprise zone community with the hiring SB 974 Page S credit. Another indicator of its importance is its high frequency of use. Well over half of the hiring credit certificates, more commonly called vouchers, use the TEA designation for qualifying employees. The high usage of the TEA designation is related to a number of factors. One of the most significant advantages of the TEA over qualifying an employee under the other criteria is the employer's ability to more easily access the appropriate documentation for submitting the certificate application. As an example, to demonstrate that an employee qualifies as a resident of a TEA, an employer has the option of submitting a copy of the employee's driver's license or state identification card. By contrast, in order to demonstrate that an employee qualifies for the other eligibility categories, employers have to ask employees to provide them with copies of sometimes very personal documents, such as bankruptcy documents, physician's statements, letters from parole officers, and public assistance records. Some employers have voiced concerns about asking an employee questions regarding his or her personal history, as it could be perceived as violating the employee's right to privacy. Further clouding an accurate understanding of which employees are being advantaged by the program is the fact that an employer certifies an employee based on a single category of eligibility - not multiple categories of worker eligibility. This means that to the extent that an employee is living in a TEA, is a Vietnam Veteran, a member of a federally recognized tribe, was unemployed and receiving assistance at the local One-Stop Career Centers at the time of employment in a company located in an enterprise zone, the current data system only registers that employee meets one category of eligibility - most likely that being the employee lives in a TEA. Beyond making the request for the documentation, employers face challenges in accessing the documentation. The chart below, prepared as an example from the San Diego Enterprise Zone, illustrates some of the timeframes and different entities to which an employer would have to apply to receive the documentation necessary to submit a hiring credit certificate to the zone administrator for certification. --------------------------------------------------------------- | Example of Hiring Credit Documentation Time | SB 974 Page T --------------------------------------------------------------- |----------+--------------+-----------------+------------------| |Enterprise|Required |Agency |Timeframe to | | Zone |Document | |Obtain | |Eligibilit| | |Documentation | |y | | | | |Category | | | | |----------+--------------+-----------------+------------------| |Low |Income |state Employment | At a minimum | |Income |Verification |Development |30 to 60 days | |Dislocated| |Department | | | Worker | | | | |----------+--------------+-----------------+------------------| |Previously|Award letter |County |3 to 4 weeks | | on | | | | |Public | | | | |Assistance| | | | | | | | | |----------+--------------+-----------------+------------------| |Veterans |DD14 or |Federal |In some cases up | | |verification |Department of |to 6 months | | |letter |Veterans Affairs |(based on San | | | | |Diego's | | | | |experience) | | | | | | |----------+--------------+-----------------+------------------| |Ex-Offende|Agency |Background check |30-60 days | |r |confirmation |through private | | | |letter or |agency or | | | |print |multi-agency | | | |out, if |(County) | | | |available |database | | |----------+--------------+-----------------+------------------| |Eligible |Certificate |state Employment |Best case | |for Work | |Development |scenario is 5 | |Opportunit| |Department |months. However, | |y Tax | | |it can take | |Credit | | |upwards of 9 | | | | |months to a year | | | | |depending on the | | | | |department's | | | | |workload. All | | | | |certificates are | | | | |issued from a | | | | |single central | | | | |office | SB 974 Page U | | | | | -------------------------------------------------------------- --------------------------------------------------------------- |Source: San Diego Enterprise Zone, June | |2010 | | | --------------------------------------------------------------- 5)Proposed changes to the hiring credit : SB 974 proposes to limit the time to apply and receive certification of the employee's eligibility to 28 and 42 days, respectively. This alternative timeline is based on the federal Work Opportunity Tax Credit (WOTC) which has a 28-day timeline for submitting a certification application to the Employment Development Department (EDD). The comparison of the state and federal programs is, however, not well matched. As an example, under the federal credit the business has no meaningful documentation requirement as is required under state law. The business is only required to ask a job applicant to sign a waiver that gives EDD permission to check on whether the employee's background qualifies the employer for a hiring credit. EDD then has the responsibility for researching and verifying eligibility. Another difference between the two systems is that under the federal credit, submission of the certification application is free. State law, however, permits the local zone and requires the state to charge a fee on every voucher. Local fees range from a nominal cost to $100 per certificate application. The state charges a fee of $8 per certificate application, however, pursuant to current budget discussions the fee is expected to be increased to $15 resulting in 100% of HCD costs associated with the program being covered. Given the level of fees per employee, some businesses choose to not apply for a certificate until they know that both the employee is eligible and that the credit is needed to apply to their tax return. Existing law allows tax payers, in general, to apply a hiring credit on an initial or amended return. Another timing issue is that state law requires that an employee has worked at least 50% of the time in the zone during the year and that 90% of his/her work be directly related to the business's trade in the zone. For companies with multiple locations or for an employee that works out of the office, it is not until the close of the tax year that eligibility can be SB 974 Page V established. Another related state law requires that employees be retained in the job for not less than nine months. These requirements suggest that employers are unable to know which employees can meet the qualifications for credit eligibility until the close of the calendar year. The ease of the WOTC federal application process has perhaps also led to a very inefficient program, from an administrative standpoint. In 2009, 125,777 requests for certification were made to EDD; 43,223 certifications were issued and 50,292 were denied. Local enterprise zone administrators say that the state program, requiring both documentation and fees prior to submission of the certification application, results in a much higher certificate approval rate and less waste of staff time reviewing applications. Opposition to the current certificate process states that convenience and cost to the business should be a minor consideration in the administration and structure of the hiring credit. The public, who is foregoing state revenues, must be confident that state tax expenditures are spent effectively and achieve identifiable public benefits. In determining an appropriate timing for certifying an employee for a hiring credit, opponents of the current process state that employers need to be timely in their certificate application. The JEDE-led work group on enterprise zone reform has been discussing a number of proposals to reform this process that improve public accountability without rendering a credit that fails to encourage a business to hire people in impacted neighborhoods or others who face barriers to employment. 6)Issues related to administrative structure : Establishing a new credit can be very challenging. Below are a few issues the author may wish to address as measure moves to its next committee. a) Offer pre-certification of qualifying career pathway programs. This bill limits the credit to only be available to those businesses that enter into an MOU with a LEA that administers or proposes to administer a career pathway programs that meets certain criteria. Most businesses would have a difficult time knowing which LEAs were associated with such programs and it may be more appropriate that the LEA be held more statutorily responsible for those areas of the career pathways programs that lie almost exclusively within SB 974 Page W their control. b) Clarify eligibility, threshold and priority rating and ranking criteria. Several sets of amendments have potentially weakened the clarity of each of these elements. Having these core elements more directly spelled out in the bill will help the SPI in implementing the measure. c) Standardize or create models for the MOU between the businesses and the LEA. Significant detail is required in the MOU between the business and the LEA. Offering flexibility can sometimes drive up the administrative costs for the Department of Education. Standardization could also encourage other LEAs to more broadly market the program to neighborhood businesses. 7)Related legislation : The following is a list of related legislation. a) AB 121 (Maze) and AB 2709 (Maze) - Hiring Credit Eligibility for Former Foster Youth : These bills would have established a separate category of employee eligibility under the California Enterprise Zone Program's hiring income tax credit program to include a person who was a former foster care recipient. Status: Held in Assembly Committee on Revenue and Taxation during the 2007-08 Session. b) AB 579 (Swanson) - LAMBRA Code Update : This bill would have extended the official term of the designation of a LAMBRA from eight to 15 years, except that the term may be for 20 years if the Department of Housing and Community Development determined that certain conditions existed in year five. Status: Held in Assembly Committee on Appropriations during the 2007-08 legislative session. c) AB 1139 (John A. P?rez) - Enterprise Zone Hiring Credit : This bill proposed to make four changes to the G-TEDA programs including: i) Establishing a two-tier hiring credit - one funding level for jobs with health care and another for those without; ii) Requiring applications for hiring credit certification to be submitted to the certifying agency within 21 days of the commencement of employment; SB 974 Page X iii) Removing the targeted employment areas as an eligible category for the issuance of hiring credits; and iv) Requiring annual reporting from tax payers who have vouchered an employee under the hiring credit. Status: Held in JEDE in December 2010. d) AB 1159 (V. Manuel P?rez) - Enhancement of Sales and Use Credit for Cleantech Projects : This bill would have established the California Cleantech Advantage Act of 2008 providing a targeted incentive to strengthen California's competitive edge in the leading emerging clean technologies. Status: Held in Assembly Appropriations in May 2010. e) AB 1550 (Arambula) - Final Enterprise Zone Reform Act from 2005-06 Session : This bill made a number of significant changes to the management and oversight of the G-TEDA programs. This bill is the result of extensive oversight hearings by JEDE and Revenue and Taxation, as well as extended discussions with stakeholder groups. Status: Signed by the Governor, Chapter 718, Statutes of 2006. f) AB 1766 (Dymally) - Initial Enterprise Reform Act from 2005-06 Session : This bill would have made a number of significant changes to the G-TEDA Programs including streamlining the selection criteria, authorizing noncontiguous zones, extending certain zone designations, and tightening up of the TEA. Status: Held on the Senate Floor in the 2005-06 Session. g) AB 2044 (Caballero) - Cap on Enterprise Zone Credits : This bill places annual caps on certain EZ related tax credits and increases the basis for calculating the hiring credit from 150% of minimum wage to 250%. Status: Author chose to not pursue her own bill and is a joint author on AB 2476 (V. Manuel P?rez and Caballero). h) AB 2589 (Runner) - Aggregate Credits to Offset Tax Liability within Zones : This bill would have authorized a business to use credits generated in an EZ to offset taxes attributable to the business from any EZ. Status: Held in the Assembly Committee on Revenue and Taxation during the 2005-06 Session. SB 974 Page Y i) AB 2476 (V. Manuel P?rez) - Reform of TEA : This bill would have tightened the criteria for designating a TEA for the purposes of establishing one of thirteen worker eligibility criteria under the EZ hiring tax credit requirements. Status: Held in the Assembly Committee on Appropriations in May 2010. j) SB 1008 (Ducheny) - Initial Enterprise Reform Act from 2005-06 Session: This bill would have made a number of significant changes to the G-TEDA programs including streamlining the selection criteria, authorizing noncontiguous zones, extending certain zone designations, and tightening up of the TEA. Status: Held in the Assembly Committee on Jobs, Economic Development, and the Economy during the 2005-06 Session. aa) SB 341 (Lowenthal) - EZ CEQA Reform : This bill expanded the ways in which a local government applying for an EZ designation after October 1, 2007, may meet the requirements of California Environmental Quality Act and eliminates the ability of these jurisdictions to limit subsequent environmental reviews based on the contents of the initial CEQA documents. Status: Signed by the Governor, Chapter 643, Statutes of 2007. bb) SB 763 (Lowenthal) - Voucher Fees : This bill expanded HCD's fee authority for the purpose of offsetting the cost of administering the geographically-targeted economic development area programs. Status: Signed by the Governor, Chapter 634, Statutes of 2006. 8)Double Referral : The Assembly Committee on Rules has referred this measure to JEDE and the Assembly Committee on Revenue and Taxation (R&T). Should SB 974 pass JEDE, it will be referred to R&T for further consideration. REGISTERED SUPPORT / OPPOSITION : Support California Association School Business Officials Clovis Unified School District Los Angeles Unified School District Metropolitan Education District Metzer Farms San Diego Unified School District SB 974 Page Z California Catholic Conference Inc. Opposition SB 974 Page A -------------------- |7-Eleven Franchise | |Owners of San Diego | |--------------------| |Ace Hardware, Long | |Beach | |--------------------| |ACE Parking | |--------------------| |All American | |Plastics, Inc. | |--------------------| |Aloha Restaurants, | |Inc. | |--------------------| |Amazon Consultants | |--------------------| |American Capital | |and Money Centers | |--------------------| |American National | |Investments, Inc | |--------------------| |Anderson & Doig | |Structural | |Engineers | |--------------------| |Apex Advisors, Inc. | |--------------------| |Atlas | |Transportation, LLC | |--------------------| |Atomic PR | |--------------------| |Baja Mex Currency | |Services, Inc. | |--------------------| |Barbosa Cabinets, | |Inc. | |--------------------| |Basic Urban Kitchen | |--------------------| |BikeBandit.com | |--------------------| SB 974 Page B |Blum and Clark | |Accounting Firm | |--------------------| |Brawley Chamber of | |Commerce | |--------------------| |Brawley, City of | |--------------------| |C&I Tax Consultants | |--------------------| |C&M Motors, Inc. | |--------------------| |Caf? 222 | |--------------------| |Caf? Sevilla, Inc. | |--------------------| |Cal Tax Group, Inc. | |--------------------| |California | |Advocates, Inc. | |--------------------| |California | |Aerospace | |Technology | |Association | |--------------------| |California | |Association of | |Enterprise Zones | |--------------------| |California Bankers | |Association | |--------------------| |California Business | |Properties | |Association | |--------------------| |California Chamber | |of Commerce | |--------------------| |California | |Employment | |Opportunity Network | |--------------------| |California Grocers | SB 974 Page C |Association | |--------------------| |California | |Independent Grocers | |Association | |--------------------| |California | |Manufacturers and | |Technology | |Association | |--------------------| |California | |Retailers | |Association | |--------------------| |California Space | |Authority | |--------------------| |California | |Taxpayers | |Association | |Carbon Tech Bio | |Fuel & Bio | |Generation | |--------------------| |Caterpiller Inc. | |--------------------| |Ceedub Construction | |--------------------| |Central California | |Economic | |Development | |Corporation | |--------------------| |Chabin Concept's | |--------------------| |Chambers of | |Commerce Alliance | |of Ventura & Santa | |Barbara Counties | |--------------------| |Chula Vista, City | |of | |--------------------| |Chung and Company, | SB 974 Page D |LLC | |--------------------| |CIBA Property | |Management | |--------------------| |Cinder Block, Inc. | |--------------------| |City of Coalinga | |--------------------| |City of Eureka | |Enterprise Zone | |--------------------| |City of Oroville | |--------------------| |City of Porterville | |--------------------| |Citymark | |Development, LLC | |--------------------| |Clovis Chamber of | |Commerce | |--------------------| |Clovis, City of | |--------------------| |Commercial | |Transport Concepts, | |Inc. | |--------------------| |Community Bank of | |the Bay | |--------------------| |Compete Consulting, | |LLC | |--------------------| |Contractors | |Wardrobe, Inc. | |--------------------| |County of Riverside | |--------------------| |Courtney Tires, | |Inc. | |--------------------| |Cowbay Star | |--------------------| |Cozad Trailer | SB 974 Page E |Sales, LLC | |--------------------| |Custom Woodworking | |Products | |--------------------| |CustomEyes | |Optometry | |--------------------| |Dairy Institute of | |California | |--------------------| |Dallo Enterprises, | |Inc. | |--------------------| |Dana Point Chamber | |of Commerce | |--------------------| |Del Monte Foods | |--------------------| |Dillard's Inc. | |E & E Industries | |--------------------| |Dos Amigos | |Distribution. Inc. | |--------------------| |Easy Cash Community | |Pawn Centers | |--------------------| |Economic | |Development | |Corporation of | |Oxnard | |--------------------| |Economic | |Development | |Corporation serving | |Fresno County | |--------------------| |Edgwater Grill | |--------------------| |El Centro Chamber | |of Commerce & | |Visitors Bureau | |--------------------| |Evapco West | SB 974 Page F |--------------------| |Exeter, City of | |--------------------| |EZ Tax Credits, LLC | |--------------------| |Gateway Metro | |Center LLC | |--------------------| |Gatto, Pope & | |Walwick, LLP | |--------------------| |General Dynamics | |NASSCO | |--------------------| |Geological Technics | |Inc. | |--------------------| |Golden Image Window | |Coverings | |Gonzales, City of | |--------------------| |Gourmet Fresh Pasta | | | |--------------------| |Greater Fresno Area | |Chamber of Commerce | |--------------------| |Grocery Outlet | |--------------------| |Harbor House | |Restaurant | |--------------------| |Hassard Bonningtn | |LLP | |--------------------| |HP Hood LLC | |--------------------| |Indio Chamber of | |Commerce | |--------------------| |Integrated Marine | |Services, Inc. | |--------------------| |Interactive, Inc. | |--------------------| SB 974 Page G |International Paper | |--------------------| |International Surf | |Ventures, Inc. | |--------------------| |Jaylahn, LLC | |--------------------| |Jillison & Roberts | |--------------------| |Kieran Label Corp. | |--------------------| |Kings County | |Economic | |Development | |Corporation | |--------------------| |Kuhler Associates | |--------------------| |Leauge of | |California Cities | |Lemoore, City of | |--------------------| |Lindsay, City of | |--------------------| |Long Beach Area | |Chamber of Commerce | |--------------------| |Long Beach Sierra | |Associates | |--------------------| |Los Angeles Area | |Chamber of Commerce | |--------------------| |Los Angeles Cold | |Storage Company | |--------------------| |Lost Coast Brewery | |& Caf? | |--------------------| |Marcus & Millichap | |--------------------| |Marine Service | |Commercial Diving | |--------------------| |Marza Consulting | SB 974 Page H |--------------------| |Mascarro Concrete | |Construction Inc. | |--------------------| |MD&CD, Inc. | |--------------------| |Means and | |Associates | |--------------------| |Mejia's Ranchero, | |Inc. | |--------------------| |Merced County | |--------------------| |Metal Supply Inc. | |--------------------| |Michael L. Dworkin | |and Associates | |--------------------| |MIRA California USA | |Center, LLC | |--------------------| |Mission Caf? | |--------------------| |Modesto Chamber of | |Commerce | |--------------------| |Molina Healthcare | |of California | |--------------------| |Monterey County | |Board of | |Supervisors | |--------------------| |Multimodal Esquer | |--------------------| |National City | |Chamber of Commerce | |--------------------| |National City, City | |of | |--------------------| |National Federation | |of Independent | |Business | SB 974 Page I |--------------------| |National Mechanical | |Services | |--------------------| |National Tax Credit | |Group, LLC | |--------------------| |Noble & Company, | |LLC | |--------------------| |Nor-Cal Foods, Inc. | |--------------------| |Oakland | |Metropolitan | |Chamber of Commerce | |--------------------| |O'Brothers | |Restaurant | |--------------------| |Orange County | |Business Council | |--------------------| |Otay Mesa Chamber | |of Commerce | |--------------------| |Overhead Door | |--------------------| |Oxnard Chamber of | |Commerce | |--------------------| |Pacific Business | |Centers | |--------------------| |Pacific Credits | |Group | |--------------------| |Pacific Gas & | |Electric | |--------------------| |Pacific Lift and | |Equipment | |--------------------| |Pacific Real Estate | |--------------------| |Palm Desert Chamber | SB 974 Page J |of Commerce | |--------------------| |Paramount Windows | |and Doors | |--------------------| |Parlier, City of | |--------------------| |Pasadena Enterprise | |Zone | |--------------------| |Paul Mitchell | |Partner Schools | |--------------------| |Paul, Hastings, | |Janofsky & Walker, | |LLP | |--------------------| |Peppertree | |Distributors, Inc. | |--------------------| |Peterson, Slater, | |Osborne Accountacy | |Corporation | |--------------------| |Pier Caf? | |Pierson & | |Associates | |--------------------| |PJ's Desert | |Trophies & Gifts ad | |McDowell Awards | |--------------------| |Porterville Chamber | |of Commerce | |--------------------| |Portfolio Realty | |Management, Inc. | |--------------------| |Professional | |Solutions Group LLC | |--------------------| |Proper Gastropub | |--------------------| |Rainbow Mart | |--------------------| SB 974 Page K |Reginal Economic | |Association Leaders | |Coalition | |--------------------| |Regional Economic | |Association Leaders | |of California | |--------------------| |Riverview Systems | |Group, Inc. | |--------------------| |SA Recycling | |Salinas, City of | |--------------------| |Salinas Valley | |Enterprise Zone | |--------------------| |San Diego Desserts | |--------------------| |San Diego Pretzel | |Co. | |--------------------| |San Diego Regional | |Chamber of Commerce | |--------------------| |San Diego Workforce | |Partnership | |--------------------| |San Francisco | |Center for Economic | |Development | |--------------------| |San Gabriel Valley | |Economic | |Partnership | |--------------------| |San Jose, City of | |--------------------| |San Ysidro Chamber | |of Commerce | |--------------------| |Sandicast | |--------------------| |SC Design, Inc. | |--------------------| SB 974 Page L |Seat Advisors, Inc. | |--------------------| |Selma, City of | |--------------------| |Sempra Energy | |--------------------| |Seraplex | |Biologicals | |--------------------| |Sfparty | |--------------------| |Side Bar | |Silver Eagle | |Construction | |--------------------| |Sixth Avenue Bistro | |--------------------| |Skilled Healthcare | |LLC | |--------------------| |Small Business | |California | |--------------------| |Sofia Hotel | |Soledad, City of | |--------------------| |South County | |Economic | |Development Council | |--------------------| |Southwest Airlines | |--------------------| |Stingaree San Diego | |--------------------| |Stockton, City of | |--------------------| |Summit Bank | |--------------------| |Tactical Assault | |Gear | |--------------------| |Taft, City of | |--------------------| |Targeted Management | |Company, Inc. | SB 974 Page M |--------------------| |Teasdale Quality | |Foods | |--------------------| |Tenacore Holdings | |Inc. | |--------------------| |The Enterprise Zone | |Co. | |--------------------| |The Fleetwood | |--------------------| |The Incentives | |Group | |--------------------| |The Kebab Shop | |--------------------| |The Tin Fish | |--------------------| |The Walt Disney | |Company | |--------------------| |Tilted Kilt | |--------------------| |Tittle & Company, | |LLP | |--------------------| |Tooth Fairy Dental | |Group | |--------------------| |Troll Systems | |Corporation | |--------------------| |TUFF Acoustical and | |Thermal | |--------------------| |Ultimate Beauty | |Companies | |--------------------| |Unity Forest | |Products | |--------------------| |Urban Industries | |Embroidery | |--------------------| SB 974 Page N |Valley Industry & | |Commerce | |Association | |--------------------| |Vermont Outlet, | |Inc. | |--------------------| |Visalia, City of | |--------------------| |Walton Management | |Services, Inc. | |--------------------| |Waterfront Bar and | |Grill | |--------------------| |Watsonville, City | |of | |--------------------| |Weir Floway, Inc | |--------------------| |Western Growers | |Association | |--------------------| |Wincentive | |Corporation | |--------------------| |Windsor Mortgage | |and Capital | |--------------------| |Watsonville, City | |of | |--------------------| |Wine Institute | |--------------------| |Wine Steals | |--------------------| |World Wide | |Petroleum | |--------------------| |WW Wholesale | |--------------------| |Yreka Chamber of | |Commerce | | | -------------------- SB 974 Page O Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916) 319-2090