BILL ANALYSIS �
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|Hearing Date:June 17, 2013 |Bill No:AB |
| |837 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Ted W. Lieu, Chair
Bill No: AB 837Author:Campos
As Amended:May 1, 2013 Fiscal: Yes
SUBJECT: Economic development programs: reporting.
SUMMARY: Requires annual reporting to the Governor's Office of
Business and Economic Development (GO-Biz) by the California Small
Business Development Center Leadership Council on its activities in
any year that the state contributes funds to the program and also
specifies the contents of the report.
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. Authorizes GO-Biz to support small businesses by providing
information about accessing capital, complying with regulations, and
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supporting state initiatives that support small business. (GC �
12096.3)
3)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 preserve free competitive enterprise and
maintain a healthy state economy. Establishes the Office of Small
Business Advocate (OSBA) within GO-Biz in order to advocate the
causes of small business and to provide small businesses with the
information they need to survive in the marketplace. (GC � 12098)
4)Requires OSBA to prepare and submit a written annual report to the
Governor and to the Legislature that describes the activities and
recommendations of OSBA, including an evaluation of the efforts of
state agencies and, where appropriate, specific departments, that
significantly regulate small businesses to assist minority and other
small business enterprises, and making recommendations that may be
appropriate to assist the development and strengthening of minority
and other small business enterprises. (GC � 12098.4 (b))
5)Establishes the California Economic Development Fund in the State
Treasury for the purpose of receiving federal, state, local, and
private economic development funds, and receiving repayment of loans
or grant proceeds and interest on those loans or grants. Provides
that upon appropriation by the Legislature, moneys in the fund may
be expended by GO-Biz to provide matching funds for loans or grants
to public agencies, nonprofit organizations, and private entities,
and for other economic development purposes, consistent with the
purposes for which the moneys were received. (GC � 13997.6)
This bill:
1) States the following findings and declarations:
a) The California Small Business Development Center Program
(California SBDC Program), as part of the federal Small Business
Development Center Program, plays a primary role in providing
technical assistance to the state's small businesses and provides
verified positive outcomes to the state's economy.
b) Within the state, the California SBDC Program is administered
through six Regional SBDC Networks, as follows: Northern
California, Northeastern California, Central California, Orange
County/Inland Empire, Los Angeles, and San Diego. Each regional
network is managed by an Administrative Lead Center (Lead
Center), designated by the federal Small Business Administration
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(SBA) through a cooperative agreement, and affiliated with one
public institution of higher education. The centers are
responsible for securing required one-to-one matching funds to
draw down federal appropriations, according to a population-based
formula determined by the United States Census, and the regional
networks are held accountable for their productivity and required
to submit regular performance reports to the Office of Small
Business Development Centers, within the federal SBA.
c) Throughout the six regional networks there are more than 30
full-time SBDCs, with multiple additional outreach locations
serving small businesses in this state. These centers provide
assistance to existing businesses in the areas of financing,
government contracting, business planning and management,
marketing, international trade, energy efficiency and
sustainability, and disaster preparedness. The centers also
provide expert advice to technology companies in the areas of
business and financial plan preparation, angel and venture
capital presentation preparation, funding strategies, product
positioning, market launch strategies, applications for federal
grants, technology transfers with research universities,
intellectual property issues, and strategic partnerships. The
centers work in collaboration with various partners to provide
these services, including, but not limited to, the federal SBA,
the United States Department of Commerce, the United States
Department of Agriculture, the Governor's Office of Business and
Economic Development (GO-Biz), the California Innovation Hub
Program (i-Hub), the California Community Colleges (CCC), the
California State University (CSU), the University of California
(UC), local workforce investment boards (WIBs), economic
developers, cities, counties, and chambers of commerce.
d) The California SBDC Leadership Council (Council) is comprised
of the directors of the six Lead Centers that coordinate the
regional networks of small business development centers. The
Council is the statewide entity tasked with negotiating
partnerships on behalf of the California SBDC Program, leveraging
operational and technical assistance for best practices across
the six regions, and working with the state government to
maximize the economic impact of the federal Small Business
Development Center Program within the state.
2)Provides that on or before August 30, following any year that state
funds are appropriated to a Lead Center for the support of the
California SBDC Program, the State Chair of the Council shall
provide a written report to GO-Biz.
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3)Provides that as a condition for receiving state funds, each Lead
Center accepts the reporting requirement. Provides that as a
further condition for receiving state funds, the State Chair of the
Council shall arrange to provide GO-Biz with access to similar
information, in both a similar timeframe and format, that a Lead
Center may provide to the federal SBA with regards to client
services and the economic impact of the California SBDC Program.
Provides that information provided to the GO-Biz shall meet
applicable privacy standards and shall not disclose the name of an
individual business.
4)Requires the report submitted to GO-Biz to include, but not be
limited to, the following:
a) The number of businesses assisted.
b) The number of employees employed by those businesses at the
time those businesses were assisted.
c) The number of jobs created.
d) The number of jobs retained.
e) The estimated amount of state tax dollars generated from those
businesses.
f) Industry sectors of the businesses assisted, as reported by
the assisted businesses.
g) The increase in sales reported by businesses assisted as a
result of the program.
h) The amount of capitol infusion, in both debt and equity,
obtained by assisted businesses.
i) The total amount of federal funds allocated to the region
during the reporting period.
1) Requires the Director of GO-Biz to submit a copy of the report to
the Legislature and post the report on the GO-Biz Web site no later
than 30 days after GO-Biz receives the report.
FISCAL EFFECT: This bill is keyed "fiscal" by Legislative Counsel.
According to the Assembly Committee on Appropriations analysis dated
May 15, 2013, this bill will result in "negligible fiscal impact."
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COMMENTS:
1. Purpose. The Author is the Sponsor of this bill. According to the
Author, the SBDC Program is not recognized in statute and this bill
is necessary to help ensure that when state dollars are invested in
the SBDC Program, the state can understand how those public funds
are being used. The Author states that this bill introduces
accountability standards and reporting requirements if state
matching funds are provided to California SBDCs. According to the
Author, California is one of only five states that does not provide
monies to allow SBDCs to obtain full federal matching funds.
2. Small Businesses in California. 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. These non-employer and small employer firms create jobs,
generate taxes, and revitalize communities.
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. California's network of SBDCs provide
small size businesses, including business start-ups, with access to
quality education, one-on-one counseling, and other business
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development resources.
3. The SBDC Program. According to information provided by the Author,
California's SBDCs serve over 50,000 small business owners and
entrepreneurs each year. SBDC services include consulting,
mentoring and training related to business management and planning,
financing business growth and accessing capital, international
trade, government procurement and technology commercialization.
The SBDC program is sponsored by the federal SBA and functions as a
cooperative effort of the private sector, the educational community
and federal, state and local governments. In California, SBDCs are
administered through a partnership between CSU Chico, CSU Humboldt,
CSU Fullerton, UC Merced and Long Beach Community College and
Southwestern Community College.
Funding for California SBDCs is provided by the federal SBA through
a population-based grant and requires a dollar-for-dollar match in
non-federal funds. State matching funds for the program were
previously appropriated from the Technology, Trade and Commerce
Agency, however, the Agency was repealed in 2003 and since that
time the state has only received the full amount of eligible
federal funds one time. SBDCs have relied on municipalities,
individual educational institutions and foundations to provide the
matching funds required to receive federal monies.
In the 2010, the California Budget (AB 1632, Blumenfield, Chapter
731, Statutes of 2010) appropriated $6 million, allowing for a
matching $6 million in federal funds and creating the opportunity
for SBDCs to contribute another $6 million in in-kind
contributions, resulting in another $6 million in federal matching
funds. The state appropriation provided the potential of
generating 50,000 counseling and training cases and generating
5,500 jobs.
4. 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
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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
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.
According to GO-Biz, the Office of Small Business Advocate (OSBA)
advocates the causes of small business and provides small business
owners with the information needed to succeed in the California
marketplace. OSBA staff provides assistance to the state's small
business community on issues ranging from regulations to
procurement. Depending on the issue, staff can refer small
businesses to appropriate contacts in State government, business,
and service organizations. OSBA staff also serves on various State
interagency working groups and task forces to represent small
business interests in state legislation, policy, and procedures.
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.
5. Related Legislation This Session. AB 53 (John A. P�rez) requires
GO-Biz to lead the preparation of the California Economic
Development Strategic Plan, as specified. Requires a copy of the
Worker Adjustment and Retraining Notification Act (WARN) notice be
provided to GO-Biz and that it be posted on the Employment
Development Department (EDD) Web site. ( Status: This bill is
currently pending in the Senate.)
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AB 250 (Holden) codifies and expands the California Innovation Hub
(iHub) Program at
GO-Biz for the purpose of stimulating economic development and job
creation through the coordination of federal, state and local
innovation-supporting resources.
( Status: This bill is currently pending in the Senate.)
AB 393 (Cooley) requires the Director of GO-Biz to ensure that the
office's Internet Web site contains information on the fee
requirements and fee schedules of state agencies.
( Status: This bill is currently pending in the Senate.)
AB 1098 (Quirk-Silva) requires OSBA to commission a study regarding
the costs of state regulations on small businesses, as specified.
The study is required to be completed by January 1, 2015, and
updated every five years. ( Status: This bill is currently pending
in the Senate.)
AB 1247 (Medina) transfers the administration of the small business
financial development corporation (FDC) managed programs from the
BTH to the California Infrastructure and Economic Development Bank
(I-Bank) within GO-Biz and clarifies a number of administrative and
programmatic elements to improve program delivery. ( Status: This
bill is pending in the Senate.)
6. Prior Related Legislation. AB 32 (Lara) of 2012 would have
required OSBA to establish a program that supports entrepreneurship
as a form of economic development and job creation in communities
throughout this state. ( Status: The bill was never heard in its
first policy committee.)
AB 29 (John A. P�rez, Chapter 475, Statutes of 2011) establishes
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 1632 (Blumenfield, Chapter 731, Statutes of 2010) includes
transfers of $32.4 million from the General Fund to support
small-business and jobs programs.
SB 66 (Price, Chapter 637, Statutes of 2009) restores $8.3 million
in loan guarantees available to small business owners seeking loans
through the Small Business Loan Guarantee Program.
AB 2714 (V. Manuel Perez) of 2010 would have transferred the OSBA
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from the Governor's Office of Planning and Research (OPR) to the
Business Transportation and Housing Agency (BTH). ( Status: The
bill was held in the Assembly Committee on Appropriations.)
AB 2734 (John A. Perez) of 2010 creates the Office of Economic
Development, which includes the California Business Investment
Services Program, within the Governor's Office. Requires the
Office to serve the Governor as the lead entity for economic
strategy and marketing of California and make recommendations to
the Governor and Legislature regarding polices, programs, and
actions to advance statewide economic goals.
( Status : This measure was vetoed by the Governor in 2010. In his
veto message, the Governor indicated that he was "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.")
SB 1259 (DeSaulnier) of 2010 would have created the Economic
Development and Job Creation Agency and require the new agency to
perform duties relating to economic development and job creation.
It requires the secretary to develop a reorganization plan and
propose a structure for the agency. The measure was held
AB 2206 (Price) Small Business Development Centers: This bill
would have re-established the California Small Business Development
Center Program through the auspices of the Business,
Transportation, and Housing Agency. ( Status: The bill was held in
the Assembly Committee on Appropriations in 2008.)
AB 2854 (Mendoza) of 2008 would have required, contingent upon
funding becoming available, the establishment of a one-stop web
site for small business-related announcements and funding
opportunities offered by state agencies. ( Status : This measure
was vetoed by the Governor in 2008. In his veto message, the
Governor indicated that the requirements in the bill were redundant
and unnecessary.)
SB 1436 (Figueroa, Chapter 234, Statutes of 2006) enhances the
state's technical assistance to small businesses by improving the
state's Internet information for small businesses and requiring the
designation of agency-level small business liaisons.
AB 2330 (Arambula, Chapter 232, Statutes of 2006) requires OSBA to
commission a study of the costs of state regulations on small
businesses that is parallel to the study on the impact of
regulatory costs on small firms conducted by the federal SBA. This
bill also convenes a small business advisory committee to provide
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advice based on the study and recommendations.
AB 3058 (Asm Committee on Jobs, Economic Development and the
Economy, Chapter 233, Statutes of 2006) enhances the duties of the
OSBA to include advocacy on disaster preparedness and recovery,
including the provision of technical assistance, requires the OSBA,
in cooperation with the Office of Emergency Services, to develop a
handbook for small businesses on emergency preparedness, responding
in an emergency, and recovery strategies and requires the OSBA,
with the assistance of Office of Emergency Services, to hold at
least three meetings, in different locations in California, to
share best practices on disaster preparedness for small businesses.
7. Arguments in Support. Supporters of this bill, including
businesses, business organizations educational institutions and the
state's SBDCs, among others, note that the California SBDC Program
is the state's premier technical assistance provider for small
businesses and state that SBDCs have a proven record in supporting
the growth of new enterprises, jobs and capital for California's
business community. Supporters cite the SBDCs as an excellent
resource for small businesses that provide free or low-cost
valuable services to some 60,000 businesses owners in 2012, and
assisted in creating and saving over 10,000 jobs.
SUPPORT AND OPPOSITION:
Support:
Businesses
Advanced Beauty College
Ambryx Biotechnology
Allen Kornenstein Law Office
American Pacific Mortgage Optimum Zendejas Home Loans
Blanca Zarazua Attorney at Law
Blueray Concepts
Bouchard Business Services
Camino Brewing Company
The CPR Lady
DonationPay
Henry Buder's Landscape Restoration
J Style at Home
Jamber
King Knish
Marysville Van & Storage
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Masako's Music Studio
Newport Home Care
Real Property Management
Saafara West African Herbal Teas
SoberLink
Shorter's Rib Pit & Catering
State Farm Insurance Jim Hilliard
Tim Wright Transportation
Times Delta Media Group
Vivas Banners & Signs
Business Associations and Organizations
101MFG
Brand Source Pacific Rim
California Asian Pacific Chamber of Commerce
California Association for Microenterprise Opportunity
California Associate of Competitive Telecommunications Companies
California Chapter of American Fence Association
California Hispanic Chamber of Commerce
California Metals Association Coalition
Coalition of Small and Disabled Veteran Businesses
East Bay Green Corridor
Economic Development Collaborative, Ventura County
Flasher Barricade
Golden Gate Restaurant Association
Inland Valley Business Alliance
Los Angeles Chamber of Commerce
National Federation of Independent Businesses (NFIB)
Main Street Chamber Rancho Cucamonga
Main Street Chamber Upland
Monterey Business Council
National Association of Women Business Owners
Oakland Metropolitan Chamber of Commerce
San Francisco Council of District Merchants Associations
San Francisco Locally Owned Merchants Alliance
San Francisco Chamber of Commerce
Small Business California
Small Business Majority
Small Manufacturers Association of California
TMC Development Working Solutions
West Company Business Assistance
Educational Institutions
Cabrillo College
California State University, Fresno Office of Community and Economic
Development
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California State University, Humboldt
California State University, Los Angeles College of Engineering,
Computer Science and
Technology
Cal Poly San Luis Obispo Center for Innovation & Entrepreneurship
City College of San Francisco School of Business
El Camino Community College District
Fresno State Foundation
Long Beach Community College District
Los Rios Community College District
Mira Costa College District
Napa Valley College
Rancho Santiago Community College District
San Joaquin Delta College
Santa Monica Community College District
Solano Community College
Financial Institutions
Arcata Economic Development Corporation
Bay Area Development Company
The Headwaters Fund (County of Humboldt)
OCTANe
Local Government
City of Huron
City of Pasadena
Small Business Development Centers and Economic Development
Organizations
Alliance Small Business Development Center (Modesto/Merced)
Alameda County Small Business Development Center
Associated Builders and Contractors
California State University, Los Angeles Small Business Development
Center
California State University, Monterey Bay Small Business Development
Center
Cal Poly San Luis Obispo Small Business Development Center
Central Coast Small Business Development Center
Central Valley Business Incubator Small Business Development Center
Contra Costa Small Business Development Center
El Camino College Small Business Development Center
Fresno Regional Workforce Investment Board
Greater Sacramento/Sierra Small Business Development Center
Inland Empire Small Business Development Center
Los Angeles Regional Small Business Development Center
Mendocino Small Business Development Center
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North Coast Small Business Development Center
North San Diego County Small Business Development Center
Northeastern California Small Business Development Center
Northern California Region Small Business Development Center
Orange County Small Business Development Center
Orange County/Inland Empire Network Small Business Development Center
Launchpad
Pacific Coast Regional Small Business Development Center
Redwood Region Economic Development Commission
San Francisco Small Business Development Center
Santa Monica Small Business Development Center
Solano County Small Business Development Center
Stanislaus Economic Development and Workforce Alliance-Alliance Small
Business Development
Center
UC Merced Small Business Development Center
Opposition:
None on file as of June 12, 2013.
Consultant: Sarah Mason