By now you may have heard that our economy has some problems. After years of fueling our nation’s growth, the home equity credit card was cut up when overleveraged investment banks shut the party down. Without homeowners spending their equity to drive our national economy, we now feel the massive financial hangover.
With 30-50% declines in home values in just a few short years, even the most conservative homeowners are feeling the sting. And as consumers tighten their belts, the resulting shrinkage in manufacturing and retail sales is leading to mass lay-offs and closing businesses nationwide. Now, many people who “did everything right” are facing the real threat of losing both their home and their job.
There will be some pain (and government tinkering) but the housing mess will eventually heal. Locally, however, the City needs to do something to keep things from getting worse. We need to get honest about the growing competition we face in keeping and attracting jobs in our city.
As the economy has weakened, other cities and states are also feeling the pain of closing businesses and lost revenues and they have become much more savvy in luring new business away from us. A good example is the recent migration of Los Angeles’ famed film industry. The taxes collected when local film crews were hired, equipment was rented, land was leased and movies were filmed, are now being collected by Canada – and more recently, Michigan.
The double-whammy is that the dollars earned by these film crews, actors and caterers are now being spent elsewhere. As a result, local coffee shops, restaurants, hardware stores, offices, and other retail spaces are taking huge hits.
Now, think about other business. Princess Cruise Lines, for instance, has roughly 2,000 employees in Santa Clarita. But how long will they continue here when California’s corporate income tax rate is the highest in the western U.S. and #9 nationally? Add to this that our state has the highest sales tax in the country and California’s worker’s comp rates skyrocketed 24% this year alone! What’s attractive about staying here?
A good start was the Enterprise Zone (EZ) designation our city received from the state in 2007. More than 97% of Santa Clarita businesses are eligible to receive substantial direct tax credits for payroll and capital expenditures, provided they hire qualified local employees and place their equipment into use within our city’s EZ.
Such programs have been fundamental to the upscale redevelopment seen in Pasadena, which is also the nearest EZ to our city. We don’t have to emulate Pasadena but these programs give our city the leverage needed to attract the businesses our citizens want here.
Looking ahead to the future of our city, I envision a true live-work city with well-planned corporate centers, high paying jobs, and premium venues at a local, upscale arts and convention center. But without competitive incentive programs, it will be virtually impossible for Santa Clarita to attract the companies we need to make this happen.
There is a plan. Early in 2009, a few local business leaders formed an Economic Development Committee within the Chamber of Commerce for the purpose of identifying and helping to implement similar programs. After nearly a year of incredible volunteer effort, the committee received its nonprofit corporation status and through private donations and local tax dollars, it will be our city’s official Economic Development Corporation (SCVEDC) in 2010.
I joined the SCVEDC in the spring and now serve as co-chair of the group’s Small Business Subcommittee. While many SCVEDC programs are targeted toward attracting new business, I am committed to giving local small business a larger voice in its offerings. Good process dictates that we achieve certain benchmarks and these should include active communications with local business and broader small business participation in its incentive programs.
To start, we need a comprehensive database of city businesses. The city doesn’t have one, so it is very limited in its ability to analyze business trends, survey needs, or communicate programs. When you consider that 60%-70% of our local economy is made up of small business, we are potentially missing two-thirds of our target! We can do better.
With programs that are beneficial to our entire community, the SCVEDC is an absolute must for a city of our size and I am very pleased that the city approved its initial funding last night. My hope is that private donors and the county will now step up to convert this small investment into huge rewards for our city.
We must remain competitive with other cities and protect business –and jobs– in Santa Clarita. This is essential to a vibrant and healthy economic future for our city and our families depend on it.
Please support the SCVEDC. Also, please vote for me for the Santa Clarita City Council to secure the future of Santa Clarita business.
Thank you,
David Gauny
