Fresno Bee (California)
August 20, 2007 Monday
FINAL EDITION

Hollow, flashy schemes do anything but help economy

Dan Walters Bee Capitol Bureau

When John Garamendi segued from state insurance commissioner to
lieutenant governor this year he found himself in a duty-free zone.

The lieutenant governor’s only real job, as someone sagely observed,
is to check the newspaper each morning and assure himself that the
governor is still alive. His unspoken task is to garner media
attention and thus position himself to run for governor, although
only one lieutenant governor in recent memory made that happen and
voters recalled him.

The last time a governor tried to help a lieutenant governor move
upward was when Ronald Reagan appointed Ed Reinecke to the job nearly
40 years ago and then created an " Economic Development Commission"
with Reinecke as chairman and securing the space shuttle project its
mission.

Reinecke became enmeshed in scandal and was forced to resign, but the
Economic Development Commission remained alive, embraced by his
successors as a source of patronage and a vehicle for gaining public
attention even though it has not generated any economic development
that anyone has ever catalogued.

True to time-dishonored tradition, Garamendi claims that he has
"revitalized" the Economic Development Commission and will make it
into a force for economic progress. Current cost: $651,000 a year.

If nothing else, it illustrates the hapless quality of the state’s
fitful efforts at spurring business investment. Governors and other
politicians are forever promoting schemes they say will enhance the
state’s economy and create oodles of new jobs.

They are piled one upon the other with little coordination or review,
many surviving simply because no one has enough guts to give them the
merciful deaths they deserve.

A few years ago, the state’s overseas trade offices were shuttered —
but there’s an effort in the Capitol to keep the one remaining
outpost, albeit privately financed, in Armenia, open. Why? It’s
merely a sop to Southern California’s politically influential
Armenian-American community.

The various tax breaks targeted to specific communities and/or
industries are especially egregious.

One of the costliest is the two-decade-old "enterprise zone" program
under which communities offer tax breaks for investment that
supposedly helps low-income people. Last January, the Los Angeles
Times detailed how enterprise zone "vouchers" only rarely help the
poor, more often benefit the wealthy and are sold by cities to firms
far removed from their borders.

The Franchise Tax Board is questioning the legality of some vouchers
and the Legislature has adopted some modest reforms, while extending
the life of existing zones.

Instead of a cleanup, however, the Schwarzenegger administration is
expanding use of enterprise zones and legislation to make it easier
to create them is moving. Meanwhile, the Assembly has voted to punch
more than a half-billion dollars in new loopholes into the state’s
already distorted tax laws.

They never learn.

Dan Walters writes for The Bee’s Capitol bureau. E-mail:
dwalters@sacbee.com; mail: P.O. Box 15779, Sacramento, CA 95852.