BILL ANALYSIS Ó AB 29 Page 1 Date of Hearing: May 18, 2011 ASSEMBLY COMMITTEE ON APPROPRIATIONS Felipe Fuentes, Chair AB 29 (John A. Perez) - As Introduced: December 6, 2010 Policy Committee: Jobs Vote:6-0 Urgency: No State Mandated Local Program: No Reimbursable: SUMMARY This bill codifies the Governor's Office of Economic Development (GOED) and establishes its powers and duties. Specifically, this bill: 1)Codifies the Governor's Office of Economic Development (GOED) with a director appointed by the governor and subject to confirmation by the Senate. 2)Transfers the existing Office of the Small Business Advocate (OSBA) to GOED. 3)Creates the California Business Investment Services Program (CalBIS) within the office and states that CalBIS role is to service employers, corporate executives, business owners and site location consultants considering California as a site for investment and expansion. 4)Specifies the economic develop duties for GOED, including making recommendations to the Governor and Legislature on new and existing state policies, programs and actions for the purpose of advancing statewide economic goals. 5)Provides that funding for GOED in the 2011-12 fiscal year shall be from existing resources and staffed by personnel loaned from other state agencies and departments FISCAL EFFECT 1)Ongoing costs in the range of $500,000 per year to maintain and update the website, to advertise the required phone AB 29 Page 2 number, and to provide staff to answer the dedicated telephone line and assist callers. 2)General Fund costs in the range of $400,000 for the Economic Development Council to produce the required strategic plan. 3)General Fund costs in excess of $200,000 for the director and support staff. 4)Despite the intent of the bill to redirect existing resources, presumably such a redirection results in reduced production from the redirected entities. COMMENTS 1)Purpose. In February 2010, the Little Hoover Commission released a report entitled Making up for Lost Ground: Creating a Governor's Office of Economic Development . The report analyzed the status and effectiveness of the various pieces of the defunct Technology, Trade and Commerce Agency that had been reorganized into other entities. The report recommended the creation of a new governmental entity that would promote greater economic development, foster job creation, and deliver specific services (i.e. permitting, tax, regulatory, and other information) directly to the California business community. According to the author, AB 29 creates the Office of Economic Development within the Governor's Office, and establishes specific tasks and duties for the office, including reorganizing such entities as the Small Business Advocate and CalBIS into this new office. Ultimately, this new office will establish long-term economic goals and strategies as well as specific and effective services to California's businesses both large and small." 2)Executive Order S-05-10 , issued on April 8, 2010, creates the Governor's Office of Economic Development or GOED. The governor stated that its purpose is to promote California as a place to do business, to support those interested in starting, growing, financing, expanding or relocating a business in California, and to help, to the extent possible, those businesses facing challenges to operating in California. AB 29 Page 3 3)The Little Hoover Commission and renewed legislative responses : While the commission heard substantial criticism about the state's business climate, this report focused on how the state could better organize and utilize its existing business focused and broader economic and workforce development programs and services. The report noted that the state's current economic development activities are spread out over numerous agencies, boards, commissions and financing authorities. 4)Related legislation. AB 1233 (V. Manuel Pérez), authorizes the creation of a joint economic and workforce development strategic plan as well as making other updates to its content. AB 1233 is a two-year bill. 5)Previous legislation. AB 2734 (John Pérez) of 2010 was similar to this bill. AB 2734 was vetoed by Governor Schwarzenegger, with the message that the director of GOED was subject to Senate confirmation, which inappropriately infringed on the rights and powers of the Governor. 6)There is no registered opposition to this bill. Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081