Strip clubs: Financial perk under fire in Sacramento

June 3, 2013 12:00:00 AM PDT
A financial perk designed to attract businesses to troubled neighborhoods is under fire in Sacramento as Gov. Jerry Brown and some others want to do away with Enterprise Zones.

Under a California program created in the mid-80's called Enterprise Zones, even strip clubs qualify for tax breaks for hiring in economically depressed areas. As much as $37,400 per employee can be claimed within five years even though many jobs are barely above minimum wage.

Two state senators stood outside a Sacramento-area strip club to complain about how easy it is to qualify for the tax break.

They also highlighted companies that fired workers, relocated to an Enterprise Zone in a different part of the state and hired new people for half the wages.

"I don't think that the average taxpayer thinks that's a good use of tax dollars," said state Sen. Anthony Cannella, R-Ceres.

Most local governments refuse to disclose which companies are benefiting from the program. Only the Sacramento area complied with an open-records request by the California Labor Federation.

A bi-partisan proposal aims to make it harder to claim an Enterprise Zone hiring credit.

But the California Association of Club Executives says the program works and is only applicable to a small number of employees, plus it gives opportunities to people struggling to find a job no matter the type of business.

"This is a suppressed area. The economy is floundering in California. I think people are happy to be able to put food on the table and pay their mortgages and rent," said Matt Gray of the California Association of Club Executives.

"These tax credits have cost Californians; cost the state over $4 billion since the creation and it's growing at 30 percent a year," said state Sen. Jerry Hill, D-San Mateo.

Brown wants to eliminate the Enterprise Zone Program completely. He tried unsuccessfully last year and faces an uphill climb in 2013.


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