BILL ANALYSIS �
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Date of Hearing: April 30, 2013
ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT AND THE ECONOMY
Jose Medina, Chair
ACR 48 (Allen) - As Introduced: April 18, 2013
SUBJECT : Start a Small Business Month
SUMMARY : Declares May 2013 as "Start a Small Business Month,"
expresses the Legislature's support of the Governor's efforts in
supporting small businesses, and recognizes that there are key actions
that the Legislature can take to further the success of small
businesses in California. Specifically, this bill :
1)Makes statements which declare, among other things:
a) California is home to the most innovative and competitive
firms in the world, placing the state consistently among the
top-10 economies;
b) Small businesses embody the entrepreneurial spirit that has
driven the economy of our state where over half of our
private-sector workforce is employed by small businesses;
c) Policymakers need to better align workforce and college
readiness courses, ensure career technical education is high
quality and aligned with academic standards, and promote state
and private investments in science, technology, engineering, and
mathematics education;
d) The simple threat of litigation, rather than the actual
adjudication of a lawsuit, under the California Environmental
Quality Act, can be all that is required to create uncertainty
for various projects;
e) Policymakers need to take approaches that recognize and
encourage California's leadership and innovation in the
environmental arena;
f) California has one of the highest tax rates in the nation and
was ranked 47th for the fairness of its litigation environment in
2012, both of which are significant considerations when a company
decides where to locate;
g) California, like 19 other states, is struggling with the
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Unemployment Insurance Trust Fund insolvency and the Governor
signed a workers' compensation reform package negotiated by
employers and labor in September 2012;
h) The Governor, in his 2012 small business proclamation,
reaffirmed the state's commitment to seeing small businesses
thrive and prosper and that supporting small-scale private-sector
job creators is among our most promising strategies to enhance
California's human capital, expand job opportunities, and
increase our competitive advantage in the global marketplace;
2)Resolves that the Assembly and the Senate of the State of California
proclaim May 2013 as "Start a Small Business Month" and expresses
the Legislature's:
a) Support of the Governor's efforts in promoting small
businesses and making California a more friendly business
climate; and
b) Recognition that there are key opportunities to relieve the
uncertainty of doing business in this state including, by keeping
taxes low, fair, stable, and predictable; by reducing the
regulatory and litigation costs of operating a business; by
reducing the cost and improving the certainty and stability of
investing in new equipment and technology; by investing in public
and private works that provide the backbone for economic growth;
and by ensuring the availability of high quality skilled
employees.
EXISTING LAW :
1)Finds and declares that it is in the public interest to aid,
counsel, assist, and protect the interests of small business
concerns in order to maintain a healthy state economy.
2)Finds and declares that the complexity and lack of clarity in many
regulations put small businesses, which do not have the resources to
hire experts to assist them, at a distinct disadvantage.
3)Establishes the Office of the Small Business Advocate (OSBA) within
the Governor's Office of Business and Economic Development (GO-BIZ)
for the purpose of advocating for small businesses including
responding to complaints from small businesses concerning the
actions of state agencies and the operative effects of state laws
and regulations.
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FISCAL EFFECT : None
COMMENTS :
1)Framing the Policy Issue : This resolution seeks legislative support
for declaring May 2013 as "Start a Small Business Month." In making
the case for honoring small businesses with a month, the author
cites the importance of small businesses to the California economy,
the challenges small business face in undertaking business in the
state, and the positive steps the Legislature has already made
toward making the state a more business friendly state.
This analysis provides information on the role of small businesses
within the California economy and a list of the key small business
legislation approved by the Assembly Committee on Jobs, Economic
Development, and the Economy (JEDE) in 2013. Comment 3 includes a
list of suggested amendments.
2)The Role of Small Business within the California Economy :
California's dominance in many economic areas is based, in part, on
the significant role small businesses play in the state's $1.9
trillion economy. Among other advantages, small businesses are
crucial to the state's international competitiveness and are an
important means for dispersing the positive economic impacts of
trade within the California economy. California small businesses
comprised 96% of the state's 60,000 exporters in 2009, which
accounted for over 44% of total exports in the state. Nationally,
small businesses represented only 31.9% of total exports. These
numbers include the export of only goods and not services.
Business owners, with no employees make up the single largest
component of businesses in California, 2.8 million out of an
estimated 3.5 million firms in 2010. As these businesses grow, they
continue to serve as an important component of California's dynamic
$1.9 trillion economy. Microenterprises, meaning businesses with
less than five employees, represent approximately 93% of all
businesses in the state, or approximately 3.2 million of all
businesses. Businesses with 99 or less employees comprise nearly
98% of all businesses and employee approximately 38% of all workers.
Businesses with less 500 employees, which is the federal definition
of a small business, comprise 99% of all businesses in the state and
employ more than half of all workers. These non-employer and small
employer firms create jobs, generate taxes, and revitalize
communities.
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In hard economic times, smaller size businesses often function as
economic engines. In this most recent recession the trend
continued, with the number of nonemployer firms increasing from 2.6
million firms ($137 billion in revenues) for 2008 to 2.8 million
firms ($138 billion in revenues) for 2010. In the post-recession
economy, small businesses are expected to become increasingly
important due to their ability to be more flexible and better suited
to meet niche market needs.
Their small size, however, also results in certain challenges in
meeting regulatory requirements, accessing capital, and marketing
their goods and services. Specialized technical assistance, credit
enhancements for private sector loans, state procurement incentives,
and collaborative marketing opportunities all help small businesses
overcome or at least minimize these difficulties.
3)Suggested Amendments : Below is a list of suggested amendments.
a) Clarify the linkage between Fortune 500 companies and business
start-ups;
b) Reinforce the importance of policymakers remaining focused on
economic recovery;
c) Modify the order of the "whereas" clauses;"
d) Modify the workers compensation clauses to emphasize the
importance of the Legislature remaining vigilant in ensuring that
the promises of 2012 reforms are realized; and
e) Make other technical and conforming changes.
4)Related Legislation : Below is a list of key small business
legislation approved by JEDE this session. In total, these measures
assist start-up and small businesses in the areas of technical
assistance, access to capital, and regulatory reforms.
a) AB 172 (Weber) Microenterprise Procurement Incentives : This
bill increases the microbusiness procurement preference from 5%
to 7% for state contracts to purchase goods, services, and
information technology. The preference may be awarded to either
a microbusiness bidder or a non-microbusiness bidder that uses a
microbusiness subcontractor. Status: Pending in the Assembly
Committee on Appropriations.
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b) AB 285 (Brown) Self Employment Training : This bill requires
the California Workforce Investment Board to make recommendations
and provide technical assistance on entrepreneurial training
opportunities that could be made available through local
workforce investment boards. Status: Pending in the Assembly
Committee on Appropriations.
c) AB 305 (V. Manuel P�rez) New Market Tax Credit : This bill
establishes a $200 million New Market Tax Credit Program for the
purpose of stimulating economic development within California's
lower income neighborhoods. Status: Pending in the Assembly
Revenue and Taxation Committee.
d) AB 550 (Brown) Microbusiness Preferences : This bill sets an
annual 25% small business participation level for each state
agency's contracting activity. Status: Pending in the Assembly
Committee on Appropriations.
e) AB 653 (V. Manuel P�rez) Innovation Jobs Act : Establishes
the California Innovation and Jobs Act, which increases the
maximum value of the research and development credit, eliminates
state sales tax on manufacturing equipment, authorizes a new tax
credit for private investments in postsecondary institutions, and
codifies the California Innovation Hub Program. Status: Pending
in the Assembly Revenue and Taxation Committee.
f) AB 780 (Bocanegra) FDC Administrative Funds : This bill
appropriates $2 million from the General Fund for the purpose of
providing administrative funding to the small business financial
development corporations (FDC). Each FDC is eligible to receive
$150,000. The bill also states that it is the Legislature's
intent that the FDCs are to be under the jurisdiction of GO-Biz.
Status: Pending in the Assembly Committee on Appropriations.
g) AB 837 (Compos) Small Business Development Centers : This bill
requires annual reporting to GO-Biz on Small Business Development
Center activities in any year that the state contributes funds.
Status: Pending in the Assembly Committee on Appropriations.
h) AB 1098 (Quirk-Silva) Small Business Regulation Report : This
bill requires the OSBA to commission a study regarding the costs
of state regulations on small businesses. Status: Pending in
the Assembly Committee on Appropriations.
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i) AB 1247(Medina) Restructure of the FDC Programs: This bill
repeals and recasts the provisions of the FDC small business
financing programs from the Business Transportation and Housing
Agency to GO-Biz. Status: Pending in the Assembly Committee on
Appropriations.
REGISTERED SUPPORT / OPPOSITION :
Support
None received
Opposition
None received
Analysis Prepared by : Toni Symonds and Edith Gonzalez / J., E.D. &
E. / (916) 319-2090