A pending state Senate bill that would remove some tax credits in enterprise zones has economic development officials worried.

SB 974, sponsored by Sen. Darrell Steinberg, D-Sacramento, would phase out a portion of the enterprise zone tax credit in favor of a newly created Career Pathways Investment Credit for businesses that partner with schools providing technical and vocational instruction. The California Department of Education would administer the new program.

Steinberg could not be reached for comment, but spokeswoman Alicia Trost said California suffers from too many high school dropouts, too few middle and high school career pathway programs, and a shortage of skilled workers.

"While we face the current budget deficit we need to scrutinize all state spending and tax credits programs to make sure scarce resources are put to their most productive uses," Trost said. "Study after study has shown that the enterprise zone program has failed to achieve its key goal of increasing economic and job development. The non-partisan Legislative Analyst Office has even suggested that the program be eliminated or restructured.

"Instead of foolishly proposing an unfunded new tax credit, Sen. Steinberg is proposing to pay for it by redirecting taxpayer dollars from an ineffective program to an innovative tax credit that will help build a strong workforce for the future while reducing our high school dropout rate."

The tax credits on the chopping block cover things like employees and equipment for employers in the state's 42 enterprise zones.

Arvin, Delano and Shafter have enterprise zones and Taft has a provisional one that hasn't taken effect yet.

Enterprise zones are critical tools in the effort to woo new employers to the county, said Richard Chapman, president and CEO of the Kern Economic Development Corp.

"If you've got a choice between two locations, and one offers tax credits and the other doesn't, at the end of the day they're going to look at their bottom line and go where they can operate most efficiently," he said. "Some California companies may not leave the state, but relocate to an enterprise zone."

Railex, a rail transport company, opened a facility just outside Delano in 2008 that employs about 175 people. The company attributes its decision to open there in part to tax incentives.

"The enterprise zone tax credits have saved Railex money, enough to continue to use the program in the future," said spokesman Rajeep Brown.