BILL ANALYSIS �
AB 1081
Page 1
Date of Hearing: April 9, 2013
ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT AND THE ECONOMY
Jose Medina, Chair
AB 1081 (Medina) - As Amended: April 3, 2013
SUBJECT : Economic development: goods-movement-related infrastructure
SUMMARY : Requires goods movement-related infrastructure to be
included within the state five-year infrastructure plan and
international trade and foreign investment strategy. Specifically,
this bill :
1)Makes findings and declarations that California's:
a) Significance in the global marketplace is the result of many
factors including its strategic west coast location which
provides direct access to Asian markets;
b) Largest industry sector is trade, transportation, and
utilities and the state leads the nation in export-related jobs;
and
c) Infrastructure is aging and requires maintenance, as well as
improvements and expansion.
2)Require the state's five-year infrastructure plan to include
identification of goods movement related infrastructure including
the need for new, rehabilitated, modernized, improved, or renovated
infrastructure that has been identified by state and federal
agencies and regional transportation agencies.
3)Requires the five-year infrastructure plan to additionally include
recommendations for private sector financing of goods
movement-related infrastructure including, but not limited to,
public pension funds, private sector investors, and commercial and
industrial users who would benefit from the enhanced logistical
network.
4)Requires that the state international trade and investment strategy
(ITI Strategy) include the identification of trade-related
infrastructure enhancements to support the state's international
trade policies, programs, and services.
EXISTING LAW :
1)Requires the Governor to submit annually a proposed five-year
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infrastructure plan which includes the identification of new,
rehabilitated, modernized, improved, or renovated infrastructure,
which is requested by state agencies including the estimated cost
and funding options. Infrastructure needs include:
a) Those identified in the State Transportation Improvement
Program;
b) Those necessary to accommodate kindergarten through 12th grade
in public schools; and
c) Instructional and instructional support facilities for the
University of California, California State University, and the
California Community College System.
2)Requires the Governor's Office of Business and Economic Development
(GO-Biz) to provide the Legislature with an ITI Strategy by February
2014, which contains:
a) Policy, goals and objectives;
b) Measurable outcomes and timelines for meeting the goals and
objectives;
c) Identification of key stakeholder partnerships that will be
used to implement the goals and objectives;
d) Identification of impediments for achieving the goals and
objectives;
e) Identification of options for funding recommended action; and
f) Identification of an international trade and investment
organizational structure.
FISCAL EFFECT : Unknown
COMMENTS :
1)Author's Purpose : According to the author, "When transportation
function is efficient, manufacturing and retail firms can carry less
inventory because they can rely on goods being delivered when and
where they are needed. But if the transportation system is congested
and unreliable, a firm must carry more inventory to ensure
production processes are uninterrupted and the availability of goods
is maintained.
In order to improve our current transportation system we need to
stop a piecemeal system and develop a plan that includes a national
and international approach to how we move goods. It is crucial that
we develop this into our plan now because the amount of freight will
increase drastically in the next 20 years. In southern California,
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it is expected to triple.
In addition, the federal government wants to double the exports by
2014. The need to have an efficient system to export our products
overseas will also provide opportunities for our small businesses.
And we need to prepare for that increase. According to the Federal
Highway Administration, the United States surface transportation
network, which includes rail and highway, is reaching or has reached
capacity in many areas. The congestion largely stems from the lack
of capacity to meet traffic demand and lack of infrastructure. "
2)Framing the Policy Issue : This measure requires the consideration
of goods movement within two key state planning documents including
the state infrastructure plan and international trade strategy.
Given the significance of global logistical networks to efficiently
support expanded supply chains, California is potentially at an
infrastructure disadvantage.
In proposing a heightened priority for planning and funding goods
movement infrastructure, the author notes the changing global
economy and the expanding investment opportunities with public
pension funds, among others. Both of these issues are discussed in
greater depth below.
3)California's Trade Economy : California's $1.9 trillion economy
naturally functions as an independent nation and is highly dependent
on industry sectors that participate within the larger global
economy. In fact, compared to other nations, California has one of
the 10 largest economies in the world, due to it being a top-tier
trade partner, a best-in-class investment location, a high quality
producer of goods and services, and the home and key access point
for a massive consumer-base. In 2012, California exported $161
billion in products to over 220 foreign countries. While California
has been significantly impacted by the recession, exports continued
to increase in almost every quarter from 2010 through 2012. Below
is a chart of California's top exports in 2012.
------------------------------------------------------------------
| 2012 Exports From California to the World |
------------------------------------------------------------------
|-----------------------+-----------------+------------------------|
| Product | Value ($ | Percent |
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| | billions) | |
|-----------------------+-----------------+------------------------|
|334 Computers & | 44.5 | 27.6 % |
|Electronic Prod. | | |
|-----------------------+-----------------+------------------------|
|333 Machinery (except | 14.8| 9.2 % |
|electrical) | | |
|-----------------------+-----------------+------------------------|
|336 Transportation | 16.1| 10 % |
|Equipment | | |
|-----------------------+-----------------+------------------------|
|325 Chemical | 12.7 | 7.9 % |
|Manufactures | | |
|-----------------------+-----------------+------------------------|
|339 Misc. Manufacture | 13.8 | 8.6 % |
|Commodities | | |
|-----------------------+-----------------+------------------------|
|111 Agricultural | 11.9 | 7.4 % |
|Products | | |
|-----------------------+-----------------+------------------------|
|All Others | 47.2 | 29.3 % |
|-----------------------+-----------------+------------------------|
|Total | $161 | |
| | | 100 % |
------------------------------------------------------------------
------------------------------------------------------------------
|Source: |
|Tradestates.com |
------------------------------------------------------------------
It is estimated that one in five manufacturing jobs in California is
related to trade. Goods movement supports employment, business
profit, and state and local tax revenue. The logistics industry is
responsible for hiring 73,000 workers. California businesses rely
heavily on the state's ports and their related transportation
systems to move manufactured goods. Firms rely on fast, flexible,
and reliable shipping to link national and global supply chains and
bring products to the retail market. Transportation breakdowns and
congestion can idle entire global production networks.
Changes in U.S. and global trade patterns since the enactment of
NAFTA and the continuing development of foreign markets place
challenges on California's goods movement network. These challenges
are only expected to become greater as the rate of innovation within
manufacturing, transportation, the communication technologies gets
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faster and the ability of multiple geographic locations to
successfully use these technologies expands. California's historic
and singular dominance in high technology is diminishing as new and
more collaborative business models are emerging. California could
be competitive within this new global marketplace, but policies and
planning will need to change in order to embrace the new economy.
4)Infrastructure: A major challenge to California's competitiveness
World class infrastructure plays a key role in business attraction,
as multinational companies consistently rank the quality of
infrastructure among their top four criteria in making investment
decisions. Research shows that as U.S. infrastructure has been in
decline, infrastructure in other countries is rapidly increasing.
The 2010-11 Global Competitiveness Report by the World Economic
Forum places U.S. infrastructure 23rd in the world, a drop from its
rank of 7th in 2000.
California's infrastructure is in a similar state, according to the
American Society of Civil Engineers, California Infrastructure
Report Card 2012, with an estimated $65 billion a year investment
gap. The impact of this lack of investment is compounded by the
substantial new investments made in other states and nations,
including the expansion of the Panama Canal.
Institutional investors have responded to the U.S.'s infrastructure
shortfall and the lack of sufficient public finance opportunities by
adopting new investment mandates to privately finance public
infrastructure. Kearsarge Global Advisors reported that as of 2010
over $190 billion of global equity capital had been committed for
infrastructure investment - up from $60 billion in 2007. As an
example, CalPERS currently has over $525 million invested in a
combination of physical infrastructure investments,
infrastructure-targeted private equity funds, and credit enhancement
for infrastructure bonds. This is addition to the $800 million
available for project finance including transportation, energy,
natural resources, utilities, water, communications and other social
support services.
Successfully attracting private capital for priority public
infrastructure projects can, however, be challenging. AB 1081 would
provide greater certainty and strategic direction to the deployment
of state infrastructure expenditures within the broader context of
public and private sector infrastructure investments.
5)State Planning and Funding : California's community and economic
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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 ITI Strategy sets measureable economic objectives
relative to the state's position within the global economy.
Finally, the development of the state Economic Development Strategic
Plan 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 was removed
in a 2010 budget action. Governor Brown has, however, committed to
preparing a Strategic Growth Plan in 2013, which could serve as a
partial Infrastructure Plan. Speaker John A. P�rez introduced AB
53, which would reinstate the Economic Development Strategy.
AB 1081 builds upon these existing policy and funding documents by
ensuring that goods movement needs are considered and that
appropriate funding options are explored.
6)Related Legislation: Below is a list of related legislation
a) AB 311 (V. Manuel Perez) Bi-National Infrastructure and
Economic Development Bank : This bill expands the role of the
I-Bank to include facilitating infrastructure and economic
development financing activities within the California and Mexico
border region. Status: Scheduled to be heard in the Assembly
Committee on Jobs, Economic Development and the Economy on April
9, 2013.
b) AB 886 (Allen) Export and Import Credit : This bill
establishes a capped and allocated tax credit for importers and
exporters that increase cargo through California air and sea
ports, hire additional staff, or incur capital costs at a
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California cargo facility. Status: Scheduled to be heard in the
Assembly Committee on Jobs, Economic Development and the Economy
on April 9, 2013.
c) AB 1137 (V. Manuel P�rez) Small Business Assistance and
Attracting Private Investment: This bill would have facilitated
local economic development and job creation by assisting small
businesses to access new export markets for their goods and
services, updating the law relating to free trade zones, and
authorizing the use of new federal funds under the Small Business
Jobs Act of 2010. Status: Held in Senate Committee on
Appropriations in 2012.
d) AB 1272 (Medina) Infrastructure Consortiums : This bill
authorizes the California Infrastructure and Economic Development
Bank (I-Bank) to formally participate in regional, national and
international organizations related to infrastructure financing.
Status: Scheduled to be heard in the Assembly Committee on Jobs,
Economic Development and the Economy on April 9, 2013.
e) AB 1409 (Jobs, Economic Development and the Economy Committee)
International Trade and Investment Strategy : This bill, as it
passed JEDE, would have required that the next update by
Business, Transportation and Housing Agency, of the international
trade and investment strategy to include policy goals, objectives
and recommendations from the state Goods Movement Action Plan.
The measure was amended in the Senate related another subject
matter. Status: Held in Senate Rules Committee in 2012.
f) SB 822 (Evans) Five-Year Infrastructure Plan : Existing law
would have required the Governor, in conjunction with the
Governor's Budget, to submit annually to the Legislature a
proposed 5-year infrastructure plan containing specified
information concerning infrastructure needed by state agencies,
public schools, and public postsecondary educational institutions
and a proposal for funding the needed infrastructure. This bill
makes technical, nonsubstantive changes to this provision.
Status: Held in the Assembly Committee on Budget in 2012.
g) SB 907 (Evans) 20-Year Infrastructure Master Plan : This bill
would have established an 11-member Master Plan for
Infrastructure Financing and Development Commission. The
Commission is required to submit to the Governor and Legislature,
by December 1, 2013, a long-term plan and strategy for the
state's infrastructure needs and a prioritized plan to meet those
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needs. The Commission would have been required to submit
periodic progress reports. Status: Held in the Assembly
Committee on Jobs, Economic Development and the Economy in 2012.
7)Double Referral : This measure has been assigned to two policy
committees for review by the Assembly Rules Committee. Should AB
1081 pass the JEDE Committee, it will be referred to the Assembly
Committee on Transportation for further consideration.
REGISTERED SUPPORT / OPPOSITION :
Support
None received
Opposition
None received
Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916) 319-2090