$5M in job tax breaks coming to SD

In a first for California, the state on Monday unveiled the list of companies set to receive $30 million in hiring tax credits, nearly $5 million of which will go to companies that plan to add jobs in San Diego County through 2018.

Locally, the biggest award for what’s called the California Competes tax credit is scheduled to go to retail giant Petco, which will break ground on a 300,000 square-foot headquarters in Rancho Bernardo. The state plans to award the company $2.6 million in exchange for adding 263 jobs that will pay an average of more than $80,000, well over San Diego County’s average wage of $51,000. Petco’s award is the second largest tax break in the state.

Additionally, the Governor’s Office of Business and Economic Development, Go-Biz, proposed to award $1.45 million to BST NanoCarbon LLC, a high-tech commercial fiber design and manufacturer in Rancho Bernardo, which will add 632 jobs in San Diego and potentially Temecula that pay an average salary around $50,000 a year; $700,000 to AI California, LLC, which plans to add grocery stores and other operations across Southern California with 182 jobs that pay an average $25,000 per year, and $30,000 to National City-based American Marine Abatement Services to add six jobs that pay an average $25,000 per year.

Gov. Jerry Brown and the state legislature approved the credit program last year as a way to compete with states like Texas, which tries to lure companies by paying them cash to relocate. Petco, for instance, in 2010 got a $3.1 million check from the Lone Star State to build an operation in San Antonio. Still, in San Diego Petco is investing a total $84 million on its headquarters and other hiring, and said in a statement that it is glad to expand here.

“For nearly 50 years, Petco has been proud to call San Diego home,” the company said. “We remain committed to the region and are pleased with the strong support and engagement we’ve received from Go-Biz and the state of California.”

Unlike Texas, California won’t be writing any companies checks, but wants some tools to try to retain businesses in a state that has some of the nation’s highest tax rates and what some consider strict regulations.

The California Competes program is being funded by the elimination of the 25-year-old enterprise zone program, which Brown said did not create jobs as intended in its designated areas. Additionally, the state is eliminating sales tax on manufacturing and biotech research and development equipment, and introducing a hiring credit for those who have a hard time finding work, such as ex-offenders, the long-term unemployed, and recently discharged veterans.

Next fiscal year, which begins July 1, the amount of hiring credits available increases to $150 million. It then jumps to $200 million in fiscal 2016 and fiscal 2017. No business can get more than 20 percent of the credits. This year the maximum $6 million was awarded only to Samsung Semiconductor, which will add 400 jobs in San Jose at a minimum salary of $90,000 per year and an average $163,000. Additionally, a quarter of the credits are reserved for small businesses.

California’s job tax credit program hasn’t stopped the recruiting trips to California.

In the past few months, Texas Gov. Rick Perry has paid California-based companies Websense, of San Diego, $4.5 million, and $40 million to Toyota, in Torrance, to relocate to Texas. Later this month, Virgina Gov. Terry McAuliffe will host a dinner at Petco Park to recruit businesses to his state.

The California Competes Committee, chaired by Brown’s senior jobs advsior Mike Rossi, will officially award the tax credits at a public hearing in Sacramento on June 19. Go-Biz declined to comment on the list.