BILL ANALYSIS                                                                                                                                                                                                    Ó







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        |Hearing Date:July 1, 2013          |Bill No:AB                         |
        |                                   |53                                 |
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                      SENATE COMMITTEE ON BUSINESS, PROFESSIONS 
                               AND ECONOMIC DEVELOPMENT
                              Senator Ted W. Lieu, Chair
                                           

                      Bill No:        AB 53 Author:John A. Pérez
                         As Amended:June 25, 2013 Fiscal: Yes

        
        SUBJECT:  Governor's Office of Business and Economic Development:   
        biennial California Economic Development Strategic Plan. 
        
        SUMMARY:  Requires GO-Biz to lead the preparation of a California  
        Economic Development Strategic Plan.  

        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 (GC) §§ 12096 - 12098.5)

        2)Authorizes GO-Biz as the lead entity for economic strategy and the  
          marketing of California on issues relating to business development,  
          private sector investment and economic growth.  Authorizes GO-Biz,  
          in this capacity, to coordinate the development of policies and  
          criteria to ensure that federal grants administered or directly  
          expended by state government advance statewide economic goals and  
          objectives.  Authorizes GO-Biz to market the business and investment  
          opportunities available in California by working in partnership with  
          local, regional, federal, and other state public and private  
          institutions to encourage business development and investment in the  
          state.  (GC § 12096.3)

        3)Makes the following definitions:  (Labor Code (LC) § 1400)






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           a)   "Covered establishment" means any industrial or commercial  
             facility or part thereof that employs, or has employed within the  
             preceding 12 months, 75 or more persons.

           b)   "Employer" means any person, as defined, who directly or  
             indirectly owns and operates a covered establishment.  A parent  
             corporation is an employer as to any covered establishment  
             directly owned and operated by its corporate subsidiary.

           c)   "Layoff" means a separation from a position for lack of funds  
             or lack of work.

           d)   "Mass layoff" means a layoff during any 30-day period of 50 or  
             more employees at a covered establishment.

           e)   "Relocation" means 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.

           f)   "Termination" means the cessation or substantial cessation of  
             industrial or commercial operations in a covered establishment.

           g)   "Employee" as a person employed by an employer for at least 6  
             months of the 12 months preceding the date on which notice is  
             required.

        2)Provides that an employer may not order a mass layoff, relocation,  
          or termination at a covered establishment unless, 60 days before the  
          order takes effect, the employer gives written notice of the order  
          to the employees of the covered establishment affected by the order,  
          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.  (LC § 1401)

        3)Provides that an employer required to give notice of any mass  
          layoff, relocation, or termination under this chapter shall include  
          in its notice the elements required by the federal Worker Adjustment  
          and Retraining Notification (WARN) Act (29 U.S.C. Sec. 2101 et  
          seq.).  (Id.)

        4)States that notwithstanding the above requirements, an employer is  
          not required to provide notice if a mass layoff, relocation, or  
          termination is necessitated by a physical calamity or act of war.   
          (Id.)






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        This bill:

        1) Requires GO-Biz to lead the preparation of a California Economic  
           Development Strategic Plan.  Provides that in fulfilling this duty,  
           GO-Biz shall commission a study that includes, but is not limited  
           to:

           a)   Recommendations regarding an economic development strategic  
             plan for the state, covering a two-year period for the first  
             report and then a three-year time period for subsequent reports  
             and containing a statement of economic goals for the state.

           b)   Governmental and nongovernmental impediments to economic  
             development and a list of legislative, regulatory, and  
             administrative reforms necessary to ease those impediments and  
             improvements to the business climate and economy of the state.

           c)   An evaluation of the effectiveness of the state's economic  
             development programs.

           d)   A list of key industries in which the state shall focus its  
             economic development efforts as well as providing strategies to  
             foster job growth and economic development, covering all state  
             agencies, offices, boards, and commissions that have economic  
             development responsibilities.

           e)   An evaluation of policies and goals developed at the regional  
             level.

           f)   Strengths and weaknesses of California's economy and the  
             state's prospects for future economic prosperity.

           g)   Existing, emerging and declining industries in California and  
             elsewhere.

           h)   Effectiveness of California's economic development programs in  
             creating and retaining jobs and attracting industries.

           i)   Adequacy of state and local physical and economic  
             infrastructure.

           j)   Governmental and nongovernmental impediments to economic  
             development.

           aa)  Opportunities to leverage federal resources for state  
             priorities.





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           bb)  Tactics for attracting private capital to the state and  
             investment in state priority areas.

        2)Provides that upon completion of the study, GO-Biz shall convene a  
          stakeholder advisory group consisting of representatives from  
          businesses, labor unions, organizations representing the interests  
          of diverse ethnic and gender groups, local government leaders,  
          academic economists and business professors, chambers of commerce  
          and other business organizations, economic development  
          organizations, government agencies and key industries to assist with  
          evaluating and preparing the California Economic Development  
          Strategy.

        3)Requires GO-Biz to submit a report of its findings and  
          recommendations to the Governor and Legislature no later than  
          October 1, 2016 and every three years thereafter.  Requires GO-Biz  
          to electronically deliver copies of the Plan to every constitutional  
          officer, legislator, member of the Governor's cabinet, and every  
          state agency, office, board and commission having economic  
          development responsibilities.

        4)Adds GO-Biz to the list of entities that an employer must provide  
          notice of any mass layoff, relocation, or termination. 

        FISCAL EFFECT:  According to the Assembly Committee on Appropriations  
        analysis dated May 15, 2013, this bill will result in significant  
        costs to GO-Biz in the hundreds of thousands of dollars for the  
        development of a statewide economic strategic plan and minor and  
        absorbable costs to EDD.

        COMMENTS:
        
        1. Purpose.  The  Author  is the  Sponsor  of this measure.  The Author  
           notes that the statewide economic strategic plan in this bill will  
           provide an economic development roadmap to guide public policy  
           decisions and actions to foster and promote California's economic  
           growth and competitiveness.  According to the Author, recognizing  
           the need to better assist businesses in California and to attract  
           new and emerging companies to California, the strategic plan  
           requirement in this bill seeks to 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.  
           
           The Author states that as part of the GO-Biz mission, it has the  





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           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.  The Author states that as a  
           result of this bill, GO-Biz will be provided mandatory reporting  
           status, pursuant to the WARN Act, so that it can effectively  
           respond to companies that may be contemplating relocating, closing,  
           or significantly scaling back on their business operations within  
           California. 

        2. Economic Development Strategy.  Typically a comprehensive economic  
           development strategy and coordinating strategic plan allows for the  
           identification of important issues and engaging appropriate  
           stakeholders for the purpose of prioritizing key state actions.   
           The last plan was prepared in 2002.  Until very recently, current  
           law established the Economic Strategy Panel (ESP) which was tasked  
           with preparing a California Economic Development Strategic Plan  
           (Plan).  The ESP was supported by the EDD and Department of  
           Industrial Relations under the Labor and Workforce Development  
           Agency (LWDA) budget.  As part of a larger Administration proposal  
           to reduce state government and achieve savings, the ESP was  
           eliminated in the 2011-12 Budget (AB 119, Committee on Budget,  
           Chapter 31, Statutes of 2011).  This bill tasks GO-Biz with similar  
           requirements of the former ESP. 

        3. Governor's Office of Business and Economic Development (GO-Biz).   
           In February 2010, the Little Hoover Commission 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).

           In October 2011, the Governor signed AB 29 (cited and described  
           below), which effectively codified GOED and changed its name to  





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           GO-Biz, effective January 1, 2012.  Since its inception, the office  
           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. 

           In March 2012, the Governor initiated a reorganization process to  
           realign the state's administrative structure.  Key changes include  
           dismantling of the Business, Transportation and Housing Agency  
           (BTH) and the shifting of a number of key programs and services to  
           GO-Biz including the Small Business Loan Guarantee Program, the  
           California Travel and Tourism Commission, the California Film  
           Commission, the Film California First Program and the  
           Infrastructure and Economic Development Bank (I-Bank).  In  
           addition, the Governor called for the placement of the California  
           SBDC Program within GO-Biz.  

        4. Related Legislation This Session.   SB 592  (Price) is an urgency  
           measure that requires GO-Biz to provide a port trade promotion  
           strategy to the Legislature on or before April 1, 2014.  The bill  
           also requires GO-Biz to convene a statewide business partnership  
           for port trade promotion and makes various findings and  
           declarations about the economic impact of California's ports and  
           possible threats to ports from the expansion of the Panama Canal.   
           (  Status:   The bill is currently pending in the Assembly Committee  
           on Jobs, Economic Development and the Economy.)  

        5.Prior Related Legislation.  AB 29  (John A. Pérez, Chapter 475,  
          Statutes of 2011) established GO-Biz within the Governor's Office  
          for the purpose of serving as the lead entity for economic strategy  
          and marketing of California on issues relating to business  
          development, private sector investment and economic growth.
          
           AB 1233  (V. Manuel Perez, 2011) aimed to modernize California's  
          economic development activities and promote the state's  
          competitiveness by requiring an integrated economic and workforce  
          development strategy consistent with the needs of all Californians.   
          (  Status:   The bill was held in the Assembly Committee on  
          Appropriations.) 
          
           AB 1409  (Assembly Committee on Jobs, Economic Development and the  
          Economy, 2011) would have required that the next update of the  
          international trade and investment strategy by BTH include policy  
          goals, objectives and recommendations from the state Goods Movement  
          Action Plan (GMAP), as well as related measurable outcomes and  
          timelines.  (  Status:   The bill was amended to deal with the  





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          regulatory process and held in the Senate Committee on Rules.)  

           SB 1259  (DeSaulnier, 2010) would have created the Economic  
          Development and Job Creation Agency and require the appointed  
          Secretary of the Agency to develop a reorganization plan, propose a  
          structure for the agency, and perform specified duties relating to  
          economic development and job creation.  (  Status:  The bill was held  
          in the Senate Committee on Appropriations.)
           
          AB 2287  (Bass, 2010) would have established the Office of Economic  
          Development, which includes the California Business Investment  
          Services Program, within the then-GOED.  (  Status:   The bill was held  
          in the Assembly Committee on Jobs, Economic Development and the  
          Economy.)

           AB 2734  (John A. Pérez, 2010) would have established the Office of  
          Economic Development within the Governor's Office for the purpose of  
          serving as the lead entity for economic strategy and marketing of  
          California on issues relating to business development, private  
          sector investment and economic growth.  (  Status:   The bill was  
          vetoed by the Governor who stated that he "purposefully placed this  
          entity within the Governor's office to underscore the importance of  
          this mission to the state. Therefore, I am disappointed at the  
          insistence of the State Senate to make the director of this office  
          subject to confirmation, which inappropriately infringes on the  
          rights and powers of my office.")

           AB 699  (Portantino and V. Manuel Pérez, 2009) would have updated the  
          requirements for the development of a State Economic Development  
          Strategy, especially in the areas of technology and innovation, and  
          required it be submitted to the Legislature by May 1, 2010.   
          (  Status:   The bill was held in the Assembly Committee on  
          Appropriations.) 
           
          AB 1558  (V. Manuel Perez, 2009) would have reorganized the state's  
          economic development efforts by eliminating the duties of the  
          Secretary of BTH and transferring modified duties to a Director and  
          Executive Director of a renamed Economic and Employment Development  
          Department, which would succeed to some of the duties of the  
          existing EDD.  (  Status:   The bill was held by the Senate Committee  
          on Appropriations.)
           
          SB 732  (Steinberg, Chapter 729, Statutes of 2008) creates the  
          Strategic Growth Council and requires the Council to take certain  
          actions with regard to coordinating specified programs of member  
          state agencies, and requires the Council to manage and award grants  





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          and loans to support the planning and development of sustainable  
          communities.
           
          AB 1722  (Assembly Committee on Jobs, 2008) would have required BTH  
          to provide the Legislature with a copy of the international trade  
          and investment policy it developed pursuant to existing law.   
          (  Status:   The bill was vetoed by the Governor as part of the larger  
          swath of Legislative efforts vetoed that year due to "the historic  
          delay in passing the 2008-2009 State Budget" which "forced" the  
          Governor to "prioritize the bills sent to my desk at the end of the  
          year's legislative session.  Given the delay, I am only signing  
          bills that are the highest priority for California.  This bill does  
          not meet that standard and I cannot sign it at this time.") 

           AB 1916  (Portantino, 2008) would have changed the membership of the  
          California Economic Strategy Panel and the requirements of the  
          California Economic Development Strategic Plan to include a global  
          competitiveness focus.  (  Status:   The bill was vetoed by the  
          Governor for the same reason as AB 1722 above.)  
         
          AB 1606  (Arambula, 2007) attempted to require the development of a  
          state private investment strategy and updated the state's economic  
          development statutory framework for the purpose of streamlining and  
          improving coordination of existing policies and programs.  (  Status:    
          The bill was vetoed by the Governor who stated that California needs  
          a new overall strategy for its role in promoting economic  
          development, not a piecemeal approach.)

           AB 1721  (Arambula, Chapter 631, Statutes of 2007) designates BTH as  
          the state's primary agency responsible for the facilitation of  
          economic development activities.  The bill also establishes a fund  
          for receiving federal, state, local, and private economic  
          development moneys that can be used to further state economic  
          development activities.

           AB 2711  (Portantino, 2007) would have required the Secretary of  
          Business, Transportation and Housing Agency (BT&H) to develop a  
          comprehensive state technology and innovation plan.  (  Status:   The  
          bill was held in the Assembly Committee on Appropriations.)
           
          AB 1516  (Arambula, 2006) would have required at least two appointees  
          to the ESP to be local economic development practitioners.  (  Status:   
           The bill was vetoed by the Governor who stated that the bill  
          unnecessarily limited the diversity of the ESP by requiring  
          appointments from a specific organization whose purpose is not  
          necessarily reflective of the ESP's broader goals.)





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           AB 2570  (Arambula, 2006) would have required BTH to develop a  
          strategy to attract new private investment to the state and require  
          public pension funds with assets over $4 billion to report annually  
          on the value of their investments in California and historically  
          underserved areas of the state. (  Status:   The bill was vetoed by the  
          Governor who stated that it would impose new administrative costs on  
          city and county pension systems at a time when those systems are  
          fighting to contain administrative costs and obtain a reasonable  
          rate of return for their pensioners.)

        1. Arguments in Support.  The  California Forward Action Fund (CFAF)   
           writes in support of this bill, stating that the group is  
           passionate about the economic development of our state and believes  
           that a strategy has the potential to ensure the state's continued  
           competitiveness and will contribute to the prosperity of all  
           Californians.  CFAF also notes that California needs an economic  
           development strategy that works for everyone and this bill will  
           provide the blueprint for continued economic vitality.

           According to the  California Retailers Association  (CRA) and  The  
           California Business Roundtable  , in today's fast paced global  
           economy, an economic development strategy is critically important  
           to guide state and local public policy decisions and actions that  
           strengthen not only California's economic growth but also our  
           competitiveness against other states who continuously seek to raid  
           California's businesses, future investment and jobs.  CRA notes  
           that approval of this bill will not only allow for a comprehensive  
           strategic strategy to modernize our economic development efforts,  
           but it will also help to ensure that our state remains a leader in  
           the global economy. 

        2. Possible Technical, Clarifying Amendments.  

           a)   This bill adds a paragraph to the permissive authority of  
             GO-Biz by stating that GO-Biz "may lead the preparation of a  
             California Economic Development Strategic Plan".  Subsequently,  
             the bill requires GO-Biz to lead the preparation of a California  
             Economic Development Strategic Plan under the new section  
             12096.35.  If the Author's goal is for GO-Biz to lead preparation  
             of the Plan, the Author may wish to consider amending the bill to  
             clarify permissive authority, while still ensuring that GO-Biz  
             actually does prepare the plan.

             On page 3, line 21, strike "lead" and replace with "coordinate" 






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           b)   This bill refers to a California Economic Development  
             Strategic Plan and a California Economic Development Strategy.   
             The Author may wish to clarify these references on page 3, where  
             reference is made twice to a "California Economic Development  
             Strategic Plan" and page 5, where reference is made to a  
             "California Economic Development Strategy" and again on page 5,  
             where reference is made to a "California economic development  
             strategic plan".   

        SUPPORT AND OPPOSITION:
        
         Support:  
                                                                            
        California Forward Action Fund
        California Retailers Association

         Opposition:  

        None on file as of June 25, 2013.


        Consultant:Sarah Mason