The legislation, a priority of Gov. Jerry Brown's, will now head to an uncertain future in the Assembly.
The proposed overhaul of the enterprise zone program, which has provided employers in locally designated areas large tax breaks for years, would largely retain those areas' geographic boundaries but with significantly scaled back hiring credits.
The measure also includes a sales tax exemption for manufacturing and biotech research companies and about $30 million in the budget year beginning July 1 for tax credits negotiated on a case-by-case basis with the state.
According to the Senate's Democratic leadership, amendments made Tuesday would extend to 10 years from five years a carry-forward provision for existing enterprise zone hiring credits. The changes would also extend a sunset on other parts of the program to seven years from five years or less, and they would make ex-criminals eligible for hiring credits.
The proposal would provide hiring credits only to employers paying at least 150 percent of the minimum wage. With the exception of qualified small businesses, it would exclude temporary worker agencies, retailers, restaurants and bars.
Brown and labor groups have said the enterprise zone program is wasteful and ineffective, while many Republicans and municipalities have argued it is vital to economically distressed areas, especially in the Central Valley.
As the Senate began its floor debate on the bill about 8:30 p.m., Senate Republican leader Bob Huff, R-Diamond Bar, objected to the limited public review of the legislation resulting from late-hour changes.
He called the process "inappropriate and unfair."
Before the legislation was amended, the Senate Committee on Budget and Fiscal Review voted 9-5 in favor of the measure on Monday, along party lines. The measure, which required two-thirds approval, passed the Senate 30-9, with Republican Sens. Anthony Cannella, Tom Berryhill and Steve Knight in support.
Cannella, R-Ceres, said, "I think we have a pretty good compromise."
Sen. Lois Wolk, D-Davis, said the existing enterprise zone program is in need of major changes, and she called the proposed overhaul a "comprehensive economic development program."
PHOTO: Sen. Mark Leno, D-San Francisco, left, and Senate President Pro Tem Darrell Steinberg, D-Sacramento, talking to reporters at the Capitol on Wednesday, June 19, 2013. Associated Press/Rich Pedroncelli.