Merced businesses introduced to tax credit

07/31/2014 8:07 PM

07/31/2014 8:08 PM

A new tax credit designed to add jobs in Merced County was greeted with skepticism from some area business owners and accountants when about 60 people were introduced to the program Thursday.

The New Employment Credit signed into law by Gov. Jerry Brown in April is more restrictive than the soon-to-be defunct Enterprise Zone, though it applies to the same businesses. County leaders invited area business people to the informational session at Merced College’s Business Resource Center, where they learned about the program from a state Franchise Tax Board employee.

George Morrow, co-owner of Jim Brisco Enterprises Inc., said he wasn’t sure that the credit would be enough to encourage him to add to his crew. The company, which sells and crushes concrete, employs 10. “Even if we needed one or two employees, the odds of complying with this new program are slim,” Morrow said.

The new hires must fall into one of several categories: the long-term unemployed, unemployed veterans separated from the armed forces for less than year, ex-felons and recipients of the federal Earned Income Tax Credit, CalWORKs or general assistance.

“You’ll find yourself shopping for a guy who’s been laid off for six months,” Morrow said. “It’s just a long shot – at best.”

Under the new program, businesses will be required to show true growth by adding new positions; filling empty positions will not qualify for the credit.

“From the governor’s perspective, they wanted the credit to be influencing their business decisions,” said Sheryl Brandon, a Franchise Tax Board employee who gave Thursday’s class. “In other words, ‘I’m going to hire somebody, and I’m going to try to increase my employment because of this credit.’ ”

The new credit is meant to benefit communities with the highest rates of unemployment and poverty, and Merced, Fresno and Riverside counties are the first to be able to use it. Manufacturing and other industry are the focus of the new credit. It is not available to retailers, food service, temporary employment agencies, casinos or bars.

Ed Spinardi, an accountant with Merced-based Spinardi & Jones, said another restriction will make getting the tax credit difficult, particularly for small businesses. The new program requires that employers report the new employee – what the tax board calls a “reservation” – within 30 days of hiring the person, a process that can be done online.

“The Enterprise Zone was a lot easier,” he said. “You could go back years and qualify someone.”

Credits of any kind are good for businesses, Spinardi said, but because this legislation is so new, business owners will have to read up on all of the restrictions and it could be underused.

Large swaths of Merced are eligible for the tax credit, including along Highway 99 continuing to Atwater; Highway 140; Merced Municipal Airport; spots along Olive Avenue; areas of south Merced; and several other pockets of the city.

Livingston, Dos Palos and Los Banos also have several areas that fall into the program.

“The challenge is letting businesses and (accountants) know how it’s implemented,” said Robert Morris, director of Merced County Workforce Investment, or Worknet.

The state dissolved the Enterprise Zone in January, but Worknet will continue to provide vouchers for employees hired in 2013 through the end of this year, Morris said.

For more on the New Employment Credit or to see if a business is within the boundaries, go to

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