BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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                                 THIRD READING


          Bill No:  AB 2012
          Author:   John A. Pérez (D)
          Amended:  8/21/12 in Senate
          Vote:     27 - Urgency

           
           SENATE BUSINESS, PROF. & ECON. DEV. COMM.  :  8-0, 7/2/12
          AYES:  Price, Corbett, Correa, Hernandez, Negrete McLeod, 
            Strickland, Vargas, Wyland
          NO VOTE RECORDED:  Emmerson
           
          SENATE APPROPRIATIONS COMMITTEE  :  5-2, 8/16/12
          AYES:  Kehoe, Alquist, Lieu, Price, Steinberg
          NOES:  Walters, Dutton
           
          ASSEMBLY FLOOR  :  72-0, 5/3/12 (Consent) - See last page for 
            vote


           SUBJECT  :    Economic development

           SOURCE  :     Author


           DIGEST  :    This bill transfers the authority for 
          undertaking international trade and foreign investment 
          activities from the Business, Transportation and Housing 
          Agency (BTH) to the Governor's Office of Business and 
          Economic Development (GO-Biz), including establishing and 
          terminating any international trade and investment office.  
          In addition, this bill transfers the responsibility for 
          establishing an Internet-based permit assistance center 
          from the Secretary of the California Environmental 
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          Protection Agency (CalEPA) to GO-Biz.

           ANALYSIS  :    

          Existing law:

          1. Establishes GO-Biz within the Governor's Office for the 
             purpose of serving as the lead state entity for economic 
             strategy and marketing of California on issues relating 
             to business development, private sector investment and 
             economic growth.  GO-Biz also serves as the 
             administrative oversight for the California Business 
             Investment Service and the Office of the Small Business 
             Advocate.  (Government Code (GOV) Section 12096-12098.5)

          2. Provides that the Governor shall appoint the Director of 
             GO-Biz who shall perform all duties, exercise all 
             powers, assume and discharge all responsibilities, and 
             carry out and affect all purposes vested by law in the 
             office, including contracting for professional or 
             consultant services in connection with the work of the 
             office.  (GOV Section 12096.2)
           
          3. Establishes BTH for the purpose, among other things, of 
             overseeing and coordinating the activities of various 
             departments, offices, and economic development programs, 
             with responsibility for maintaining the strength and 
             efficiency of California's infrastructure and financial 
             markets.  These programs provide financial and 
             programmatic regulation important to the economic 
             marketplace, community development, the safe and 
             efficient flow of commerce, and activities related to 
             international trade and investment.

          4. Provides that BTH shall be the primary state agency 
             responsible for trade and foreign investment activities 
             and directs BTH, among other things, to engage in the 
             following as it relates to trade and foreign investment: 
              (GOV Section 13996.45)

             A.    Attract employment-producing foreign investment to 
                the state. 

             B.    Cooperate in international public infrastructure 

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                projects.

             C.    Provide support for California business in 
                accessing international markets, including but not 
                limited to, export assistance.

             D.    Engage in other trade or foreign investment 
                related activities specifically assigned by the 
                Governor.

             E.    As a condition of that authority, directs the 
                development and implementation of a comprehensive 
                international trade and investment policy and 
                strategies and plans to provide guidance to other 
                agencies and departments related to workforce and 
                infrastructure development.  All international trade 
                and foreign investment activities and funding are 
                required to be consistent with this strategy.

          5. Requires the Secretary of BTH, no later than February 1, 
             2008, to provide to the Legislature a strategy for 
             international trade and investment that takes into 
             consideration, at a minimum, on, policy, goals and 
             objectives to implement a comprehensive international 
             trade and investment program in California, measurable 
             outcomes and timelines, identification of key 
             stakeholders, and other information as specified.  
             Requires the relevant policy and fiscal committees to 
             review and hold a hearing on the strategy presented by 
             the Secretary.  (GOV Section 13996.55)

          6. Requires the Secretary of BTH to convene a statewide 
             business partnership for international trade and 
             investment no later than March 1, 2007, as specified.  
             (GOV Section 13996.6)

          7. Prohibits the Secretary of BTH from establishing any 
             international trade and investment office (ITI Office) 
             unless specified conditions are met including that it is 
             consistent with the policies and the recommendations and 
             priorities established in the international trade and 
             investment strategy and that the strategy conform to 
             requirements, as specified.  (GOV Section 13996.65)


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          8. Prohibits the Secretary of BTH from establishing any ITI 
             Office unless the Secretary submits a business plan, as 
             specified, to the Legislature and meets other 
             requirements, as specified.  (GOV Section 13996.7)

          9. Provides that the State Controller shall not allocate 
             any state funds to the BTH for international trade and 
             investment activities unless the strategy for 
             international trade and investment has be submitted to 
             the Legislature by May 1, 2008, and a report as required 
             submitted to fiscal committees of the Legislature.  (GOV 
             Section 13996.75)

          This bill:

          1. Transfers all authority for undertaking international 
             trade and foreign investment activities from the BTH to 
             the GO-Biz. 

          2. Repeals the provisions in #3 above, and instead recasts 
             some of these provisions and requirements for GO-Biz, 
             and also provides that the Director of GO-Biz may 
             establish ITI Offices outside of the United States if 
             certain requirements and conditions are met, as 
             specified.

          3. Requires the GO-Biz, no later than February 1, 2014, to 
             provide to the Legislature a strategy for international 
             trade and investment that takes into consideration, at a 
             minimum, on, policy, goals and objectives to implement a 
             comprehensive international trade and investment program 
             in California, measurable outcomes and timelines, 
             identification of key stakeholders, and other 
             information as specified.  However, removes the 
             requirement that the relevant policy and fiscal 
             committees of each house of the Legislature review and 
             hold a hearing on the strategy presented, and deletes 
             the requirement that the Director consult with other 
             agencies, boards, and commissions which have statutory 
             responsibilities related to workforce development, 
             infrastructure, business, and international trade and 
             investment.

          4. Repeals the obsolete provision in #6 above that required 

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             the Secretary of BTH to convene a statewide business 
             partnership for international trade and investment no 
             later than March 1, 2007, as specified.

          5. Repeals the provisions in #7 above which prohibited the 
             Secretary of BTH from establishing any ITI Office unless 
             specified conditions are met including that it is 
             consistent with the policies and the recommendations and 
             priorities established in the international trade and 
             investment strategy and that the strategy conform to 
             requirements, as specified.  (Note:  To keep this 
             provision would be inconsistent with the new authority 
             granted to the Director of GO-Biz to establish ITI 
             Offices outside of the Unites States if certain 
             requirements and conditions are met, as specified.)

          6. Repeals the provisions in #8 above which prohibited the 
             Secretary of BTH from establishing any ITI Office unless 
             the Secretary submits a business plan, as specified, to 
             the Legislature and meets other requirements, as 
             specified.  (Note:  This provision would also be 
             inconsistent with the new authority granted to the 
             Director of GO-Biz to establish ITI Offices outside of 
             the United States if certain requirements and conditions 
             are met, as specified.)

          7. Requires the Director of GO-Biz to prepare the 
             following:

             A.    A budget for the International Trade and 
                Investment Program (Program) and a separately stated 
                budget for each ITI Office and specifies what 
                information each of the budgets prepared shall 
                include.

             B.    A strategy and business plan for the Program, 
                developed with input from California businesses that 
                shall include, but not be limited to, measurable 
                goals, objectives, and outcomes and timelines 
                necessary to attract employment-producing direct 
                foreign investment to the state and increase 
                California exports.  Specifies what the strategy and 
                business plan shall include.


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             C.    A written review of the implementation of the 
                prior year's strategy and business plan for the 
                Program that addresses the performance of the program 
                and each ITI Office.

             D.    Submit all of the above to the Legislature and 
                policy committees, as specified.

          8. Provides that the State Controller shall not allocate 
             any state funds to the GO-Biz for international trade 
             and investment activities unless the strategy for 
             international trade and investment has been submitted to 
             the Legislature by May 1, 2014.

          9. Recasts current law relative to acceptance of private 
             sector moneys for purposes of promoting international 
             trade and investment offices, and promoting 
             international trade and investment events as follows:

             A.    Prohibits a donor from donating more than 25% of 
                the annual budget of a trade office in any calendar 
                year, including trade offices operated under contract 
                with a nonprofit entity.

             B.    Requires GO-Biz post a report for each donation on 
                its Internet Web site within 30 days of receiving the 
                donation, as specified.

          10.Creates the California Economic Development Fund (Fund) 
             in the State Treasury for the purpose of receiving 
             federal, state, local and private economic development 
             funds, and receiving repayment of loans or grant 
             proceeds and interest on those loans and grants, and 
             provides that upon appropriation by the Legislature, 
             moneys in the Fund may be expended by the GO-Biz to 
             provide matching funds for loans or grants to public 
             agencies, nonprofit organizations, and private entities, 
             and for other economic development purposes, consistent 
             with the purposes for which moneys were received.

          11.Specifies that GO-Biz is the primary state agency 
             responsible for international trade and investment 
             activities in areas other than those covered by the 
             Department of Food and Agriculture. 

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          12.Requires the GO-Biz to establish an electronic online 
             permit assistance center, called the "California 
             Government-On Line to Desktops" (CALGOLD), through the 
             Internet, and that the CALGOLD shall be available for 
             use by any business or other entity subject to a law or 
             regulation implemented by an agency, authority, bureau, 
             board, commission, conservancy, council, department, 
             state district or office, and shall provide a business 
             or other entity with assistance in complying with those 
             laws and regulations, and to the extent feasible, 
             incorporate permit assistance activities of local and 
             federal entities and of other entities of the state into 
             its operations.  

           Background
           
           (GO-Biz)  .  In February 2010, the Little Hoover Commission 
          (LHC) undertook a review of the state's economic and 
          workforce development programs.  In its final report, 
          Making up for Lost Ground:  Creating a Governor's Office of 
          Economic Development, it analyzed the status and 
          effectiveness of current programs since the 2003 demise of 
          the Technology, Trade and Commerce Agency and recommended 
          the creation of a new governmental entity to fill the void 
          left by the dismantled agency.

          The report called for a single entity that would promote 
          greater economic development, foster job creation, serve as 
          a policy advisor and deliver specific services (i.e., 
          permitting, tax, regulatory, and other information) 
          directly to the California business community.  In April 
          2010, Governor Schwarzenegger issued Executive Order 
          S-05-10 as a means to operationalize the report 
          recommendations including the creation of the Governor's 
          Office of Economic Development (GOED).

          Since its inception, GOED has served over 3,000 businesses, 
          95% of which are small.  The most frequent types of 
          assistance include help with permit streamlining, starting 
          a businesses, relocation and expansion of businesses, and 
          regulatory challenges.

          Under the auspices of GOED, a number of state programs and 

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          services are administered, including programs related to 
          international trade, permit assistance, the Office of the 
          Small Business Advocate, and innovation.  There are 23 
          positions assigned to GOED in 2011-12 Budget, which are 
          funded through existing state resources and staffed by 
          personnel loaned from state agencies and departments.   In 
          October 2011, the Governor signed AB 29 (cited and 
          described below), which effectively codified GOED and 
          changed its name to GO-Biz, effective January 1, 2012.

          Among other programs, GO-Biz administers the Innovation Hub 
          (iHUB) program in partnership with the statewide network of 
          Small Business Development Centers.  There are currently 12 
          regional iHUBs located throughout the state.  The iHUB 
          program is designed to improve the state's national and 
          global competitiveness by stimulating partnerships, 
          economic development, and job creation around specific 
          research clusters.  Key assets and partners of the 
          initiative include technology incubators, research parks, 
          universities, federal laboratories, economic development 
          organizations, business groups, and venture capitalists.

          Another key initiative of GO-Biz is the "strike teams" 
          which can be mobilized to help attract and/or retain 
          specific businesses.  Strike teams are especially well 
          suited to engage with major employers and have been 
          successfully activated to assist Bayer Healthcare, Jazz 
          Semiconductor, and Baxter Pharmaceutical to locate and/or 
          expand in California.
          GO-Biz is also sponsoring a permit streamlining pilot 
          project, which will offer a One-Stop-Shop for state and 
          local permits.  The pilot, launched in partnership with the 
          City and County of San Francisco, will allow a business 
          owner to login to a single Web site (24x7) and apply for 
          and pay all necessary city, county and state permits.   
          
           Expansion of GO-Biz and Reorganization  .  In signing AB 29 
          (J. Perez, Chapter 475, Statutes of 2011), Governor Brown 
          also issued a letter outlining his continued interest in 
          expanding the role of GO-Biz for the purpose of better 
          focusing the state's multiple economic development 
          activities.  The Governor reiterated this policy when he 
          released his proposed 2012-13 Budget.


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          On March 30, 2012, the Governor submitted a reorganization 
          plan to the Little Hoover Commission, which operationalized 
          his earlier statements.  Key GO-Biz related elements within 
          the reorganization plan include:

           Dismantling BTH and transferring the following programs 
            to GO-Biz:
               o      The Small Business Loan Guarantee Program;
               o      The California Travel and Tourism Commission;
               o      The California Film Commission; 
               o      The Film California First Program; and
               o      The Infrastructure and Economic Development 
                 Bank (I-Bank).

           Locating a Small Business Center program with GO-Biz, 
            which is most likely, refers to the Small Business 
            Development Centers Program (SBDC).  The SBDC is 
            currently co-located at GO-Biz.

           Replacing the Secretary of BTH with the Director of 
            GO-Biz as Chair of the California Travel and Tourism 
            Commission and the I-Bank.  A newly established Secretary 
            of Transportation replaces the Secretary of State and 
            Consumer Services on the I-Bank board.

          The Little Hoover Commission had 30 days to analyze the 
          Plan and submit its recommendations to the Governor and 
          Legislature.  The Legislature has until July 3, 2012 (60 
          days) to consider the Plan.  The Plan will go into effect 
          on July 3rd unless the Legislature takes an action pursuant 
          to a resolution to disapprove the Plan with a majority of 
          the Members in each house voting.

          On April 23 to April 25, 2012, the Commission held a series 
          of public hearings and received written testimony, 
          interviewed experts and reviewed analyses of the 
          departments involved, including its own previous work when 
          relevant.  On April 25, May 11 and May 22, 2012, the 
          Commission also held three public hearings to develop and 
          discuss its report and recommendation to the Legislature.  
          In regards to the changes as mentioned, the Commission 
          stated, "These moves are consistent with the Commission's 
          previous recommendations, and the Commission endorses them 
          as they should bolster the state's economic development 

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          efforts."  As further stated by the Commission:  "The 
          functions of the entities that would become part of GO-Biz 
          are a natural fit for economic and business development.  
          They are not physically relocating but are virtually 
          becoming a part of GO-Biz, similar to what the Commission 
          envisioned."
          
           Transfer of the State's Trade Program within BTH  .  Between 
          1986 and 2004, the Technology, Trade and Commerce Agency 
          (TTCA) was the responsible government entity for promoting 
          economic development, international trade, and foreign 
          investment in California.  When the TTCA was eliminated due 
          to its poor administrative performance, the authority for 
          all state trade activity was also struck from statute. 

          Beginning in the 2005-06 session, several legislative 
          measures were introduced to reinstate the state's trade 
          authority.  No measures were successful until a compromise 
          was negotiated with SB 1513 (Romero, Chapter 663, Statutes 
          of 2006).  During deliberations on the re-establishment of 
          the state's trade authority, concerns were repeatedly 
          raised that the state lacked a comprehensive, or even 
          generally understandable, statutory scheme related to trade 
          and foreign relations.  

          SB 1513 addressed these concerns by first requiring the 
          Business, Transportation and Housing Agency (BTH) to 
          undertake a trade study to determine what role, if any, the 
          state should play in international trade and foreign 
          investment activities.  Second, the bill required BTH to 
          establish a business advisory committee to provide 
          California businesses with direct access to the policy 
          making process.  Third, the bill required the development 
          of a trade strategy that is consistent with the trade study 
          and acts as the vehicle for implementing the state's trade 
          policy.  The first five-year strategy was published in 
          February 2008.  The next update is required in February 1, 
          2013.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes   
          Local:  No

          According to the Senate Appropriations Committee, $100,000 
          to $200,000 by May 1, 2014, to the General Fund for 

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          workload and contracts to update the strategy for 
          international trade and investment.

           Estimated $250,000 to $1,000,000 from private funds 
            annually depending on the location of the trade office.

           SUPPORT  :   (Verified  8/21/12)

          California Asian Chamber of Commerce
          California Workforce Association


           ASSEMBLY FLOOR  :  72-0, 5/3/12
          AYES:  Achadjian, Alejo, Allen, Ammiano, Atkins, Beall, 
            Bill Berryhill, Block, Blumenfield, Bradford, Brownley, 
            Buchanan, Butler, Charles Calderon, Campos, Carter, 
                                                  Cedillo, Chesbro, Conway, Cook, Davis, Dickinson, 
            Donnelly, Eng, Feuer, Fong, Fuentes, Beth Gaines, 
            Galgiani, Garrick, Gatto, Gordon, Gorell, Grove, Hagman, 
            Halderman, Harkey, Hayashi, Hill, Huber, Hueso, Huffman, 
            Jeffries, Knight, Lara, Logue, Bonnie Lowenthal, Ma, 
            Mansoor, Mendoza, Miller, Mitchell, Monning, Morrell, 
            Nestande, Nielsen, Norby, Olsen, Pan, Perea, V. Manuel 
            Pérez, Portantino, Silva, Skinner, Solorio, Swanson, 
            Torres, Valadao, Wagner, Wieckowski, Yamada, John A. 
            Pérez
          NO VOTE RECORDED:  Bonilla, Fletcher, Furutani, Hall, Roger 
            Hernández, Jones, Smyth, Williams


          JJA:m:d  8/21/12   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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