Taxpayer Dollars to Strip Clubs, Courtesy of the Broken Enterprise Zone Program

We've known for years that the state’s enterprise zone (EZ) program is a mess of wasteful spending that does nothing to create new jobs. But even I was surprised when we uncovered through a recent Public Records Act request that the EZ tax breaks are going into the pockets of strip club owners.

A stunning investigative report by KCRA News last night revealed that a Sacramento-area strip club has raked in tens of thousands in EZ tax credits.

California Labor Federation Executive Secretary-Treasurer Art Pulaski:

The enterprise zone program has been bilking taxpayers without creating jobs. It’s appalling to find out now that taxpayer money that’s supposed to be going to boosting jobs and our economy is actually going to enrich strip club owners. This broken program is in desperate need of serious reform. We hope this new report is enough to finally get legislators to act.

Even before the strip club revelations, it was increasingly clear that this program is a disaster for taxpayers. Studies from the Public Policy Institute of California and the California Budget Project show that this corporate enrichment program has “no statistically significant effect on either employment levels or employment growth rates” and that it’s “expensive and not strongly effective.”

A report by Pulitzer Prize-winning journalist Gary Cohn that appeared in yesterday’s Frying Pan News blog highlights one of the program’s biggest flaws: providing incentives for companies to move from one area of the state to another, creating no net new jobs and devastating families along the way.

And the worst part about it? The public has no idea just how big a boondoggle this program has become, because the tax credits are shielded from public view.


It’s even more disturbing that we have no idea how widespread this problem is. Because this program is cloaked in secrecy, we aren’t able to know how many of our taxpayer dollars are going to strip clubs all across the state. That lack of transparency is indefensible.

We've been pushing to expose and reform the broken EZ program for years, and our campaign is finally gaining serious momentum (reports about taxpayer money going to strip clubs certainly help).

Both Governor Brown’s budget proposal and legislation in the Senate, SB 434 (Hill), offer significant reforms that would stop the worst abuses of the program, incentivize good, middle class jobs and make the program more transparent and accountable.  

If legislators want to defend this broken program, they’re going to have start being honest with their constituents, who no doubt are going to be a little agitated when they find out that the state is giving their taxpayer dollars to strip clubs through a “job creation” program that doesn’t do much of anything to create new jobs.

United Food and Commercial Workers Executive Director Jim Araby:

Today’s report makes clear that the EZ program has strayed from its intention to be an economic driver for the state and now operates recklessly with no accountability or oversight. It’s time legislators stood up for taxpayers by  getting serious about real reform that prioritizes good jobs over wasteful strip club subsidies.

Learn more about EZs at http://www.EndTheCorporateGravyTrain.com.