Gov. Arnold Schwarzenegger on Wednesday used a Fresno housing development as a backdrop to tout his proposal to extend and enlarge a popular program that gives tax credits to first-time homebuyers.
Last year, the state offered a tax credit of up to $10,000 for buyers of new, unoccupied houses in California. By July, the $100 million allocated had been exhausted.
This year, Schwarzenegger has proposed $200 million in his budget for the program and wants to extend it to the purchases of existing homes.
The governor said job creation is vital to the state's economic recovery, and the tax credit will fuel home buying, which will in turn create jobs building new houses.
"Housing is a very important part of [the job-creation] puzzle," he said.
Schwarzenegger talked about the credit in his final State of the State address last week, proposing it as part of a package that includes subsidized training programs, tax breaks for green-tech industries and limiting lawsuits against businesses.
But not everyone thinks the homebuyers tax credit is a good idea -- especially with the state in dire fiscal straits.
Some economists say the federal $8,000 tax credit is enough. Some advocacy groups say the credit is a bad use of state funds when other programs are facing budget cutbacks as the state wrestles with a projected $20 billion deficit through June 2011.
Schwarzenegger on Wednesday said the state can afford the investment.
"The best way to solve the budget crisis is to bring the economy back," he said at the La Ventana housing development, located west of Highway 99 near Bullard and Grantland avenues. The development is owned by Granville Homes. Darius Assemi, a Granville vice president, was named last September by Schwarzenegger to the California Transportation Commission.
The Fresno-Clovis market was among the top areas of the state that took advantage of the tax credit last year.
Joseph Penbera, a California State University, Fresno, business professor, supports the idea. He just doesn't think it will be enough in a housing market he sees struggling for several more years.
"It is a very small plus; a small impact," he said. "It's like throwing a pebble in the ocean."
Local officials, however, were enthusiastic about the plan.
Fresno Mayor Ashley Swearengin, who introduced Schwarzenegger, said the credit "is particularly important" to Fresno, which has been hit hard by the recession. She said more home sales create jobs "in an industry that desperately needs it."
Al Smith, president and chief executive of the Greater Fresno Area Chamber of Commerce, told Schwarzenegger "we are behind you 100% on this."