BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Kevin de León, Chair AB 53 (Perez) - Governor's Office of Business and Economic Development: Biennial California Economic Development Strategic Plan Amended: July 3, 2013 Policy Vote: BP&ED 8-1 Urgency: No Mandate: No Hearing Date: August 12, 2013 Consultant: Robert Ingenito This bill meets the criteria for referral to the Suspense File. Bill Summary: AB 53 would require the Governor's Office of Business and Economic Development (GO-Biz) to lead the preparation of a biennial California Economic Development Strategic Plan, as specified. Additionally, the Employment Development Department (EDD) would be required to post a copy of any notice provided by an employer of a mass layoff, relocation or termination. Fiscal Impact: GO-Biz estimates that it would incur a cost of $500,000 (General Fund) to implement the provisions of the bill. EDD would incur minor and absorbable costs. Background: 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. 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. AB 53 (Perez) Page 1 In 2012, a comprehensive reorganization of the state's administrative structure was undertaken. Key changes included the dismantling of the Business, Transportation and Housing Agency (BTH) and further consolidating of 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. Proposed Law: This bill would require GO-Biz to commission a study as part of the California Economic Development Strategic Plan. The study shall include, but not be limited to, all of the following: Recommendations regarding an economic development strategic plan for the state, covering a two-year period for the first report and a three-year time period for subsequent reports and containing a statement of economic goals for the state. 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. An evaluation of the effectiveness of the state's economic development programs. A list of key industries in which the state shall focus its economic development efforts, and strategies to foster job growth and economic development covering all state agencies, offices, boards, and commissions that have economic development responsibilities. An evaluation of policies and goals developed at the regional level. Strengths and weaknesses of the California economy and the state's prospects for future economic prosperity. Existing, emerging, and declining industries in AB 53 (Perez) Page 2 California and elsewhere. Effectiveness of California's economic development programs in creating and retaining jobs and attracting industries. Adequacy of state and local physical and economic infrastructure. Opportunities to leverage federal resources for state priorities. Tactics for attracting private capital to the state and investment in state priority areas. Additionally, the bill would do all of the following: Provide 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. Require 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. Add GO-Biz to the list of entities that an employer must provide notice of any mass layoff, relocation, or termination. Related Legislation: AB 1233 (V. Manuel Pérez) of 2012, would have required the Director of GO-Biz to prepare a five-year economic and workforce development strategy. This bill was held in the Assembly Appropriations Committee. AB 699 (Portantino and V. Manuel Pérez) of 2009, would have updated the requirements for the development of a State Economic AB 53 (Perez) Page 3 Development Strategy. This bill was held in Assembly Appropriations Committee. Staff Comments: 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. Previously, current law established the Economic Strategy Panel (ESP) which was tasked with preparing a California Economic Development Strategic Plan. The ESP was supported by the EDD and Department of Industrial Relations. 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. GO-Biz estimates costs to be $500,000, to contract out for the study. Go-Biz would use existing resources for convening the advisory group, compiling the report's information, and disseminating to the various recipients.