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Jerry Brown unveils jobs plan to spur hiring in California

The governor wants to change the tax code to draw more revenue from firms that employ the bulk of workers outside the state while creating new breaks for firms that hire or buy equipment in California.

August 26, 2011|By Anthony York, Los Angeles Times
  • Gov. Jerry Brown, left, and Sen. Darrell Steinberg (D-Sacramento) share a laugh with members of the media as they answer questions about Brown's corporate tax plan at the Capitol on Thursday.
Gov. Jerry Brown, left, and Sen. Darrell Steinberg (D-Sacramento) share… (Bryan Patrick / Saramento…)

Reporting from Sacramento -- Facing stubborn unemployment and political pressure from his own party, Gov. Jerry Brown unveiled a jobs plan Thursday that he said would spur companies to hire California workers.

He wants to change the state's tax code in a way that would reap more revenue from some companies that employ the bulk of their workers outside California, while creating new tax breaks for firms that hire in the state or buy business equipment here.

The package is an expansion of an idea Brown included in his January budget plan. It received no Republican support — and GOP officials said it was unlikely the latest iteration would win any, either.

Originally, the governor intended to use the roughly $1 billion the state would receive from the tax change to avoid cuts in public services. Now, he wants to spend that money in a way Republicans generally prefer — business tax credits.

At a Capitol news conference Thursday, he argued that outside the context of California's bitter budget wars, he might be able to pick off a few Republicans.

"I can win support from the business community and get four or five Republican votes," Brown contended.

The governor said he had discussed his plan with some GOP lawmakers and found signs of support, although he would not name the legislators. He made similar statements throughout last spring's budget debate, but no GOP backing materialized in the end.

Publicly, GOP reaction was unenthusiastic. Sen. Bob Huff (R-Walnut) called Brown's proposal "window dressing" and said the governor appeared more interested in scoring political points than in making sound policy.

Indeed, Thursday's news conference at times seemed more like a partisan rally than an attempt to reach across the aisle. Democrats used the governor's announcement to rap Republicans' knuckles for favoring out-of-state companies at the request of conservative activists who oppose changes in the corporate tax structure.

"Does the minority party fear Grover Norquist and the [conservative] bloggers more than they care about creating jobs in California?" asked Senate leader Darrell Steinberg (D-Sacramento), referring to the Washington-based anti-tax crusader who has pressured Republicans to sign no-tax pledges.

For his part, Brown focused on policy. The complex tax formula California now uses, he noted, allows a tax break for companies that move jobs out of state. He wants to eliminate that "outrageous and perverse" incentive.

He is proposing tax credits for companies of up to 50 employees for new workers they hire in the state. He would also give businesses a 3% to 4% sales tax credit for new equipment they purchase here.

Economist Christopher Thornberg said the governor was right to try to alter the tax code. But he was dubious about how much that would affect the state's jobless rate, the nation's second highest.

"If I told you I was going to give you a 4% discount on a new car, is that going to change your decision to buy?" said Thornberg, a principal at Beacon Economics, a consulting firm in Los Angeles. "This new credit will have some marginal impact, but will it dramatically alter the pace of the state's economic recovery? Of course not."

Brown sidestepped questions about how many jobs he expected the proposed incentives to create. He said attempts to assign such a number were an example of "the fallacy of misplaced concreteness."

The governor had been criticized for remaining silent about the state's stubborn unemployment rate while others, such as Democratic Lt. Gov. Gavin Newsom, have unveiled their own job-creation proposals.

"It's odd that he's been so quiet on this issue up until now," said Dan Schnur, director of the Jesse M. Unruh Institute of Politics at USC.

Schnur drew comparisons between Brown's announcement and President Obama's recent bus tour through the Midwest to discuss job creation.

"You've got to figure out a way to let people know about your plan and motivate them to support it," Schnur said. "That's why Obama got on the bus last week, and that's the next logical step for this governor if he thinks that there's potential support for what he's proposing."

Brown's announcement came as he and fellow Democrats struggle to find a tax message palatable to voters. Since the breakdown of bipartisan budget talks, Brown has been silent about his plans for one or more tax measures on a November 2012 ballot except to say more levies are needed to end the state's decade-long financial crisis.

anthony.york@latimes.com

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