BY NICK DIAMANTIDES
For many years, Long Beach city officials have worked hard at letting local businesses know they can significantly lower their federal and state tax bill by being located within the city’s enterprise zone and by hiring veterans and certain types of economically disadvantaged people. Now the city hopes to use those tax benefits as a way to increase the likelihood that local employers will hire Long Beach residents.
At the May 19 meeting of the Long Beach City Council, Sixth District Councilman Dee Andrews made a motion to direct the city manager to examine methods to implement a “tax credit card.” The council passed the item unanimously. The card will highlight tax-saving opportunities for employers hiring veterans, youth, disabled, unemployed due to layoff or business closure, and other economically disadvantaged people.
“You know that jobs are very important to me and, with the economy the way it is now, we have to think of new ways to get our community employed,” Andrews said. “Our city’s unemployment rate has climbed to 11percent, and it is only a matter of time before that number rises.”
Andrews stressed that in order to better serve its unemployed residents the city had to take proactive steps to help them secure jobs. “What better way to do that than to build our relations with the business community,” he added. “This has been a project of Blake Christian, chairman of the Long Beach Chamber of Commerce, for many years and I want to personally thank Blake for bringing this project forward.”
The tax credits will be listed on the back of the Pacific Gateway Workforce Investment identification card. The federal tax credits available under these programs range from $1,500 to $8,500 per qualified employee. The California tax credits can exceed $11,000 in the first year of employment and can exceed $35,000 during a five-year employment period.
“There are about 12 different categories where an employer gets the ability to deduct taxes if they hire people who live in a certain geographical area or meet certain other criteria,” said John Edmond, Andrews’s chief of staff. He explained that job seekers going through the Pacific Gateway Workforce Investment program would be issued cards detailing the tax benefits to employers who hire them.
“The idea is that, because most job seekers do not know that there is an added benefit to employers who hire them, it reminds them of that.” Edmond said. “And it’s also easy to use the card to communicate what those benefits are to the employer.”
As an example, Edmond described a hypothetical veteran looking for a job. The veteran presents the card to a prospective employer who soon discovers that by hiring the vet, he or she can save several thousand dollars in taxes. “The same thing applies for someone who lives in Long Beach’s enterprise zone,” Edmond said. “The job seeker can show the employer the card and say, ‘By the way, if you hire me, you are entitled to this $5,000 tax credit.’”
He noted that the idea behind the tax credit card is to create a competitive advantage for Long Beach residents who otherwise might not get hired. “Anybody who goes to the workforce development training center is issued a card with a little strip containing all their information on it,” Edmond said. “People who go to the center have access to all the different services that are there, including resumé workshops and workshops that show you how to search the Internet for a job and everything you need to know about finding employment.”
He added that in order to keep track of how many people are using its services, Pacific Gateway Workforce Investment issues cards to its clients. “Christian Blake came up with the idea of listing the tax credits on the cards as a way to benefit local businesses as well as job seekers,” Edmond said. “We think it will take a couple of weeks before the system is in place to attach the tax credits to the cards.”
Meanwhile, California’s approximately $47 billion budget deficit is casting a dark shadow over enterprise zones throughout the state. The legislature is now considering eliminating the zones in order to increase state tax revenues by several billion dollars annually. “What is interesting is that it was Democrats that came up with the idea to have enterprise zones, but now some of them are so far to the left that they are calling enterprise zones corporate welfare,” Edmond said. “That is outrageous because we know it helps the people who live in the poorest areas. The irony is that Democrats and Republicans alike supported enterprise zones because they reduced taxes while helping the poorest of the poor.”
During its Tuesday night meeting, the Long Beach City Council unanimously adopted a resolution urging the legislature to preserve the state’s enterprise zones.
Pacific Gateway Workforce Investment operates several centers in the region. The two Long Beach centers are at 1900 and 3447 Atlantic Avenue.