BILL ANALYSIS Ó AJR 14 Page 1 ASSEMBLY THIRD READING AJR 14 (Chu) As Introduced May 7, 2015 Majority vote ------------------------------------------------------------------- |Committee |Votes |Ayes |Noes | | | | | | | | | | | |----------------+------+--------------------+----------------------| |Jobs |8-0 |Eduardo Garcia, | | | | |Kim, Brown, Chau, | | | | |Chu, Gipson, Irwin, | | | | |Mathis | | | | | | | | | | | | ------------------------------------------------------------------- SUMMARY: Memorializes the Legislature's desire for the United States (U.S.) Congress to support legislation reauthorizing the Export-Import Bank of the United States (Ex-Im Bank). Specifically, this resolution: 1)Makes findings and declarations that, among other things, state: a) The Ex-Im Bank is the official export credit agency of the U.S. and exists for the purposes of financing and insuring foreign purchases of U.S. goods for customers unable or AJR 14 Page 2 unwilling to accept the credit risk; b) The Ex-Im Bank has supported more than $400 billion in U.S. exports in the past 70 years and helps to cover critical trade finance gaps by providing loan guarantees, export credit insurance, and direct loans for U.S. exports in developing markets where commercial bank financing is unavailable or insufficient. For federal fiscal year (FFY) 2014, the Ex-Im Bank provided $20.5 billion in loan guarantees which leveraged $27.5 billion in exports while supporting 164,000 U.S. jobs; c) The Ex-Im Bank is a self-sustaining agency, which operates at no cost to the taxpayer and over the last three fiscal years has generated more than $3 billion in fees from its foreign customers which were deposited in the U.S. Treasury to reduce the U.S. deficit and indebtedness; d) Over the past five years, the Ex-Im Bank has assisted more than 967 California companies to export their products. Nearly 200 of those companies are owned by women or minorities and over 700 are small businesses. These companies export their products and services around the globe totaling more than $21 billion in sales. Fifty-two of the 53 congressional districts in California had companies benefit from the Ex-Im Bank loans; and e) Legislation is pending before the 114th U.S. Congress that would continue the Ex-Im Bank's capacity for creating jobs while also making its practices more accountable and transparent, as well as making the bank more solvent and self-sufficient. 2)Resolves that the California Legislature desires the U.S. AJR 14 Page 3 Congress to support the reauthorizing of the Ex-Im Bank. FISCAL EFFECT: None COMMENTS: The Ex-Im Bank is operating on a short-term extension of its charter, which expires on June 30, 2015. The Ex-Im Bank's mission is to assist U.S. companies in exporting goods and services to international markets. California benefits through jobs, tax dollars, and related development associated with being a strategic business location within the global economy. Ex-Im Bank has shown over its 80 years of operations to be an important tool for U.S. companies interested in doing business in other countries. The Ex-Im Bank does not compete with private sector lenders but provides export financing products that fill gaps in trade financing. It assumes credit and country risks that the private sector is unable or unwilling to accept. It also helps to level the playing field for U.S. exporters by matching the financing that other governments provide to their exporting businesses. Although the Ex-Im Bank's charter has been extended numerous times, in the last several years its actions have come under criticism by conservative groups relative to the appropriateness of its role in aiding private businesses in their export activities. Supporters of the Ex-Im Bank, including the U.S. Chamber of Commerce, strongly advocate for its reauthorization because its ability to meet unmet business transaction needs, which serves to level the playing field for U.S. firms exporting into markets where their foreign competitors receive similar government supported assistance. This resolution seeks state legislative support for federal advocacy to support the reauthorization of the Ex-Im Bank. With California businesses being one of the largest users of Ex-Im Bank programs, California's opinion on reauthorization has particular merit in AJR 14 Page 4 the national debate. In deliberating the appropriateness of this resolution, Members may wish to consider the importance of trade within the California economy, the continuing need for programs to assist businesses in accessing capital and new markets, and the demonstrated ability of the federal government to operate the Ex-Im Bank without ongoing costs to the public. Background on Ex-Im Bank: The Ex-Im Bank is a wholly owned U.S. government corporation, which was established by the U.S. Congress to provide market-oriented public services and to produce revenues to meet its expenditures. The Ex-Im Bank provides a variety of financial and insurance products that are designed to fill gaps in private export financing. Its charter was last extended through a FFY 2015 continuing resolution which expires June 30, 2015. The Ex-Im Bank operates at no cost to American taxpayers and over the past two decades the Bank has generated nearly $7 billion more than the cost of its operations. In the FFY 2014, the Ex-Im Bank approved $20.5 billion in financial authorizations, which supported an estimated $27.5 billion in export sales and approximately 164,000 U.S. jobs. Of the total transactions in 2014, approximately 89% (3,347) were with small business for a total of $5.9 billion. Between 2012 and 2015, $7 billion in financial authorizations went to 704 California exporters, which supported $14 billion in exports. Of those exporters, 533 were small businesses, 90 were minority-owned businesses, 63 were women-owned businesses, 10 were businesses in renewable energy, and 34 were environmentally beneficial. AJR 14 Page 5 Analysis Prepared by: Toni Symonds / J., E.D., & E. / (916) 319-2090 FN: 0000510