Review of the California Competes Tax Credit

The California Competes tax credit program provides tax benefits to select businesses in exchange for meeting contractual hiring and investment targets. California Competes was created in 2013 as a part of a larger deal that replaced the state’s Enterprise Zone programs with three new economic development programs. (See the appendix for more information about the state’s former Enterprise Zone programs.) Under current law, the state may only make new California Competes tax credit awards through 2017‑18. Unless additional authority is granted in future legislation, program activities would thereafter be limited to audits and other oversight duties related to already awarded tax credits. In this report, we explain how California Competes works and review its effectiveness in attracting new investments and jobs.