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