BILL ANALYSIS Ó
AB 53
Page 1
Date of Hearing: April 23, 2013
ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT AND THE ECONOMY
Jose Medina, Chair
AB 53 (John A. Pérez) - As Amended: February 20, 2013
SUBJECT : Governor's Office of Business and Economic Development:
Biennial California Economic Development Strategic Plan
SUMMARY : Requires the Governor's Office of Business and Economic
Development (GO-Biz) to lead the preparation of a biennial California
Economic Development Strategic Plan (ED Strategy), as specified. In
addition, the bill requires a copy of the federally required Worker
Adjustment and Retraining Notification Act (WARN) notice be provided
to GO-Biz. Specifically, this bill :
1)Directs GO-Biz to lead in the preparation of a biennial ED Strategy.
In fulfilling this duty, GO-Biz is directed to do the following:
a) Make recommendations regarding a two-year ED Strategy that
includes:
i) A statement of economic goals;
ii) A prioritized list of significant issues learned from
proposals for legislation, regulations and administrative
reforms necessary to improve the business climate and economy
of the state;
iii) An evaluation of the effectiveness of the state's economic
development programs;
iv) A list of key industries in which the state shall focus
its economic development efforts; and
v) Strategies to foster job growth and economic development
covering all state agencies, offices, boards, and commissions
that have economic development responsibilities.
b) Convene a biennial stakeholder meeting, as specified, to
provide recommendations regarding the ED Strategy. At the
meeting there is to be an discussion on:
i) The strengths and weaknesses of the California economy;
ii) Existing, emerging and declining industries in California
and elsewhere;
iii) Effectiveness of California's current economic development
programs;
iv) Adequacy of state and local physical and economic
AB 53
Page 2
infrastructure;
v) Government impediments to economic development; and
vi) The development of a system of accountability for use in
the annual state budget process and in the legislative process
to ensure the performance of all state policies, programs, and
tax expenditures intended to stimulate the economy.
c) Deliver copies of the recommended ED Strategy to every
constitutional officer, legislator, member of the Governor's
cabinet, and every state agency, office, board, and commission
that have economic development responsibilities.
2)Requires the accountability system addressed in the biennial
stakeholder meeting and due by January 1, 2015, include:
a) A standard definition of economic development;
b) A standard measurement for real per capita income, jobs growth
and retention, new business creation, private sector investment,
minority entrepreneurship, and income inequality;
c) A survey and evaluation of efforts by other states to develop
accountability measurers for public investments in economic
development;
d) A determination as to whether a return on investment
calculation is feasible for public investments in economic
development;
e) A comparative study of the statutory of various methodologies
for preparing the economic development sections of the state
budget, as specified; and
f) A study on the feasibility of statutory disclosure
requirements on specified publicly funded subsidies to private
sector businesses.
3)Requires an employer that is making a mass layoff, relocation, or
termination provide a copy of the federal WARN notice to GO-Biz at
the same time that notice is provided to other state and local
government entities.
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.
2)Requires a copy of the federal WARN notice be provided by a covered
AB 53
Page 3
employer to specified state and local government entities 60 days
prior to initiating a mass layoff, termination, or relocation.
a) Covered employers include those that have employed more than
75 individuals during the prior 12-months.
b) State and local government entities include the Employment
Development Department (EDD), the local workforce investment
board (WIB) and the chief elected official of each city and
county government within which the termination, relocation or
mass layoff occurs.
c) A mass layoff is defined as any 30-day period in which 50 or
more employees at a covered establishment are separated from the
business for a lack of funds or a lack of work.
d) Relocation is defined as the removal of all or substantially
all of the industrial or commercial operations in a covered
establishment to a different location 100 miles or more away.
e) Termination is defined as the cessation or substantial
cessation of industrial or commercial operations in a covered
establishment.
FISCAL EFFECT : Unknown
COMMENTS :
1)Author's Purpose : According to the author, "In 2011, Governor Brown
signed AB 29 by Speaker John A. Pérez into law, which created the
Governor's Office of Business and Economic Development (GO-Biz).
AB 53 requires the development of a statewide economic strategic
plan which will provide an economic development roadmap to guide
public policy decisions and actions to foster and promote
California's economic growth and competitiveness. Recognizing the
need to better assist businesses in California and to attract new
and emerging companies to California, the AB 53 strategic plan
requirement seeks develop recommended actions that will assist in
this effort and it will draw input from labor unions, local
government leaders, academics, Chambers of Commerce, and other
business organizations and government agencies.
As part of the GO-Biz mission, it has the ability to convene strike
forces or teams to address key business development situations,
including, but not limited to, attracting new businesses, the
relocation of large manufacturers, or the closure of a large
business employer. Under AB 53, GO-Biz will be provided mandatory
reporting status, pursuant to the WARN Act, so that it can
AB 53
Page 4
effectively respond to companies that may be contemplating
relocating, closing, or significantly scaling back on their instate
business operations."
2)Framing the Policy Issue : This measure proposes the development of
a strategy to guide the state's economic development activities.
Just like a business strategy, a state strategy provides the big
picture that shows how all the individual activities are coordinated
to achieve a desired end result. As the ninth largest economy in
the world, California's lack of a strategic plan impedes the state's
ability to communicate clear priorities on key issues such as
infrastructure development, workforce preparation, and support for
emerging and dominant industry sectors with the state's nine
regional economies.
This analysis includes additional information on the advantages of a
strategy, the interrelationships between state planning and funding,
key elements of the bill (including WARN notice), and the role of
GO-Biz. Suggested amendments are discussed in comments 4 and 7.
3)What the Strategy would Accomplish : There are eight key drivers of
the California economy: capital, infrastructure, labor, business,
education, consumers, nonprofits, and government actions. Each of
these drivers has both its own unique characteristics and also
qualities that they share in common. In addition, each of the
drivers is inextricably linked within the overall economy. A
weakness within any one of the drivers affects the others.
As an example, California's aging infrastructure limits the state's
ability to move products from farm to factories and on to foreign
and domestic markets. These delays in moving goods and the higher
costs of transportation impacts businesses all along the supply
chain resulting in less job growth, lower discretionary income, and
ultimately less tax revenues.
While the impacts of poor quality infrastructure are known,
addressing this challenge requires a coordinated and comprehensive
approach by both public and private stakeholders. Since financing
often requires long-term commitments and development projects are
fairly permanent structures within the environment, agreements need
to be reflected in public documents that can guide related decision
in the future.
The ED Strategy would serve such a purpose of identifying important
issues and engaging appropriate stakeholders for the purpose of
AB 53
Page 5
prioritizing key state actions. Up until August 2011, existing law
required the state to have a two-year state Economic Development
Strategic Plan, substantially similar to the ED Strategy proposed in
AB 53. Based on an evaluation of current conditions, the required
updates were designed to allow the Administration and Legislature to
monitor the effectiveness of programs and initiatives on an ongoing
basis. The last ED Strategy was prepared in 2002 and its statutory
mandate was eliminated as part of the 2011-12 budget actions. AB 53
would re-establish a requirement for a comprehensive strategy that
could support job creation, business development and attraction of
private sector investment.
4)Strategy for the Post-Recession Economy : AB 53 is modeled after an
earlier law which called on a government board, the California
Economic Strategy Panel, to facilitate the development of a biennial
ED Strategy. This measure takes a more modern approach by calling
for direct stakeholder engagement to inform the development of the
strategy. In moving forward, it may be useful to expand the
language to direct or encourage GO-Biz to collaborate with existing
broad-based stakeholder engagements, such as the California
Stewardship Council and the REAL Coalition, among others. With so
many regionally-based statewide networks it doesn't seem necessary
to require GO-Biz to convene its own meeting or limit engagement to
a single meeting. In addition, the author may wish to:
Authorize private funding to finance the strategy and
stakeholder engagement;
Set a date for the completion of the first ED Strategy;
Extend the term of the ED Strategy from two to five years,
while still recognizing the need for an annual review of progress
and possible adjustment;
Refresh the accountability language to reflect what the state
has learned since the last time these provisions were law;
Specifically identify economic developers among the groups
invited to the stakeholder meeting; and
Expand the stakeholder engagement to discuss leveraging
federal funds, strategies for supporting regional economies and
entrepreneurship, methods for attracting private capital, and
nongovernmental impediments, such as the cost of energy.
The rate of economic change is exponentially increasing. From
having a few select centers of innovation in Western industrialized
nations, the world now supports multiple centers of new technology
and innovation around the world. Geographic locations compete not
just on what they offer to local business, but also on how they can
AB 53
Page 6
link those businesses to other regions around the world. AB 53 can
play an important role in keeping California highly competitive in
this more technologically sophisticated, hyperlinked, and
globally-connected world.
1)State Planning and Funding : California's community and economic
development policy has historically been driven by a number of
statutory mandates including the Environmental Goals and Policy
Report (EGPR), Five-Year Infrastructure Plan (Infrastructure Plan),
the International Trade and Investment Strategy (ITI Strategy), and
the Economic Development Strategic Plan.
Collectively, these four policy mandates form the foundation for the
state's short-, middle-, and long-term economic success. The EGPR
sets the overall long-term framework in which individual departments
and agencies develop more detailed plans, including elements of the
state transportation and state housing plans. The Infrastructure
Plan allows the state to keep track of its infrastructure needs and
set a rational infrastructure development agenda that supports the
long-term economic and population growth assessments outlined in the
EGPR. The ED Strategy sets measureable economic objectives relative
to the state's position within the global economy. Finally, the
development of the ITI Strategy is built on the information and
policies provided in the EGPR, the Infrastructure Plan, and the ITI
Strategy.
Currently the EGPR and Infrastructure Plan are out of date. The
requirement for an Economic Development Strategic Plan, as noted
earlier, was removed a budget action. Governor Brown has, however,
committed to preparing a Strategic Growth Plan in 2013, which could
serve as a partial Infrastructure Plan. Chair Jose Medina
introduced AB 1081 to update the content of the five-year plan and
the ITI Strategy to include goods movement-related infrastructure.
AB 53 reinstates the ED Strategy to bring together the state's
planning and funding paradigm.
2)Office of Business and Economic Development : In April 2010, the
Governor's Office of Economic Development was established to provide
a One-Stop-Shop for serving the needs of businesses and economic
developers. While initially established through Executive Order
S-01-10, the office was later codified and renamed as the Governor's
Office of Business and Economic Development (GO-Biz), in AB 29,
Chapter 475, Statues of 2010. In 2012, GO-Biz directly assisted
5,308 companies, resulting in the creation and/or retention of 9,050
jobs and $1.45 billion in investments.
AB 53
Page 7
Among other programs, GO-Biz provides permit and other technical
assistance for new and expanding businesses, as well as
administering the California Innovation Hub Program in partnership
with the statewide network of 12 regional economic development
partnerships. The Office of the Small Business Advocate is located
at GO-Biz and the state's international trade and foreign investment
activities are coordinated through GO-Biz.
In 2012, the Governor initiated, and the Legislature allowed to
advance, a comprehensive reorganization of the state's
administrative structure. Key changes included the dismantling of
the Business, Transportation and Housing Agency (BTH) and further
consolidating GO-Biz' position as the state's lead in economic
development. Effective July 1, 2013, GO-Biz will have
administrative authority for more economic development related
programs and services including the Small Business Loan Guarantee
Program and the Infrastructure and Economic Development Bank.
3)Responding to Sever Economic Circumstances : Existing law requires
specified notice to employment-related resources and local officials
in instances where a significant number of workers will become
unemployed. This notice allows EDD and the local WIB to organize
and provide essential assistance to potentially unemployed
individuals. AB 53 adds GO-Biz to this notice for the purpose of
potentially addressing the challenges facing the covered business
and averting the layoff. The author may want to consider having
GO-Biz notified 30 days prior to WARN notice in order to give GO-Biz
time to respond.
4)Related Legislation : Below is a list of related legislation.
a) AB 29 (John A. Pérez, Feuer and V. Manuel Pérez) Office of
Business and Economic Development : This bill established GO-BIZ
to include a newly codified California Business Services and the
existing Office of the Small Business Advocate. Status: Signed
by the Governor, Chapter 475, Statutes of 2011.
b) AB 699 (Portantino and V. Manuel Pérez) Update State Economic
Strategy 3 : This bill would have updated the requirements for
the development of a State Economic Development Strategy,
especially in the areas of technology and innovation, and
requires it be submitted to the Legislature by May 1, 2010.
Status: Held in Assembly Appropriations Committee in 2009.
AB 53
Page 8
c) AB 1233 (V. Manuel Pérez) State Economic & Workforce
Development Strategy : This bill would have required the Director
of the Governor's Office of Business and Economic Development to
prepare a five-year economic and workforce development strategy.
The blueprint will help the state set a strategic path forward by
prioritizing and coordinating state activities, supporting local
and regional economic development activities, and better
leveraging of private and public sector resources. Status: Held
in the Assembly Appropriations Committee in 2012.
d) AB 1606 (Arambula and Lieu) Update Economic Strategy Version1 :
This bill would have updated the requirements the Economic
Strategy Panel (ESP) and required the development of a targeted
set of actions to increase private investment in California's
historically underserved communities, also known as emerging
domestic markets. Status: Vetoed by the Governor in 2007.
e) AB 1916 (Portantino, Arambula, Price, Salas, and Caballero)
Update Economic Strategy 2 : This bill would have updated the
membership and requirements of the ESP, especially in the areas
of technology and innovation, and required that the next ED
Strategy be submitted to the Legislature by January 1, 2010.
Status: Vetoed by the Governor in 2008.
REGISTERED SUPPORT / OPPOSITION :
Support
None received
Opposition
None received
Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916) 319-2090