State audits show two enterprise zone failures

Windmills on Highway 58 near Barstow in the Mojave Desert. An enterprise zone in Barstow recently failed a state audit.
(Irfan Khan/LAT)

SACRAMENTO -- The state Senate is poised to cast a crucial vote late Tuesday on the governor’s plan to eliminate enterprise zones, which hand out tax breaks to businesses.

Charges and countercharges are flying over the effectiveness of the 40 locally administered agencies, and the rush by the administration of Gov. Jerry Brown to force a vote to revamp the $750-million-a-year incentive program.

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Critics point to a number of academic studies that say enterprise zones don’t create jobs that wouldn’t have happened otherwise. Supporters of the zones say they reaped 25,000 new jobs and saved 110,000 others in 2012 alone.

Backers of the governor’s plan scored a blow just hours before the 4 p.m. vote session after two recent audits gave failing grades for poor management at enterprise zones in Arvin in the San Joaquin Valley and Barstow in the Mojave Desert.

According to the May 1 audit by the state Department of Housing and Community Development, Arvin’s enterprise zone failed because of “an overall lack of achievement and documentation for its goals and objectives.” Detailed findings noted that the zone operated without a full-time manager and that management controls and documentation were lacking in all aspects of the agency.

The Barstow findings were similar: “weak internal controls ... noncompliance with regulations” and housing department policies and procedures.

Calls and emails to the managers of both enterprise zones were not returned.

Craig Johnson, a Long Beach enterprise zone official and president of the California Assn. of Enterprise Zones, said he couldn’t comment on the specific findings for Arvin and Barstow.

“We have always supported rigorous oversight to make sure that enterprise zones are meeting their commitments to create jobs for Californians who need them most,” Johnson said.


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