BILL ANALYSIS Ó
SENATE COMMITTEE ON
BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT
Senator Jerry Hill, Chair
2015 - 2016 Regular
Bill No: AB 2900 Hearing Date: June 20,
2016
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|Author: |Committee on Jobs, Economic Development, and the |
| |Economy |
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|Version: |May 27, 2016 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Nicole Billington |
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Subject: Small business technical assistance centers
SUMMARY: Requires a state department that awards state funds to a
federal small business technical assistance center to report
annually on the outcomes of those contracts.
Existing law:
1) Establishes the Office of Small Business Advocate (OSBA)
within the Governor's Office of Business and Economic
Development (GO-Biz) to advocate the causes of small business
and to provide small businesses with the information
necessary to survive in the marketplace. (Government Code
(GC) §§ 12098 - 12098.9)
This bill:
1)Requires a state department that awards state funds to a
federal small business technical assistance center to report
annually on the outcomes of the those contracts, including:
a) The purpose of the contract and contract metrics;
b) The amount of state funds awarded and expended during
the report year; and
AB 2900 (Committee on Jobs, Economic Development, and the
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c) Specific information about the businesses served and the
outcomes from that assistance provided by the federal small
business technical assistance center, including:
i) The amount of federal funds drawn down as a result
of funding through the state contract.
ii) The total number of businesses assisted.
iii) The number of businesses assisted by industry
sector, as reported by the businesses.
iv) The number of businesses assisted by city and
county. If the population of the county is less than
250,000, only the name of the county is required to be
reported.
v) The number of businesses assisted based on the
following categories: no employees, five or fewer
employees, 25 or fewer employees, 100 or fewer employees,
and between 101 and 500 employees, as reported by the
businesses.
vi) If job creation is one of the purposes of the
program, the total number of jobs created and the total
number of jobs retained, as reported by the business.
vii) Other program outcomes related to the purpose of the
program and contract metrics, as determined by the
reporting department.
2)Defines an "awarding department" as a department, board,
agency, or authority of the state, or an officer, agent, or
other authorized representative of such a state entity
AB 2900 (Committee on Jobs, Economic Development, and the
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awarding a contract for services, including technical
assistance to small businesses.
3)Defines a "federal small business technical assistance center"
to mean a Small Business Development Center (SBDC), a Women's
Business Center, a Veteran Business Outreach Center, or a
Procurement Technical Assistance Center operating in
California under a federal contract.
a) Defines a "Procurement Technical Assistance Center" as
the entity and individual, physical location, recognized by
the United States Department of Defense where a small
business owner can receive free training on a variety of
state and federal procurement issues, that is operated by
the Department of Defense pursuant to Chapter 142
(commencing with Section 2411) of Part IV of Subtitle A of
Title 10 of the United States Code.
b) Defines a "Small Business Development Center" as the
entity and individual, physical location, recognized by the
federal Small Business Administration where a small
business owner or an aspiring entrepreneur can receive free
one-on-one consulting and low at-cost training on a variety
of topics including starting, operating, and expanding a
small business, that is operated by the Small Business
Administration and is authorized by "The Small Business
Development Center Act of 1980" (Public Law 96-302).
c) Defines a "Veteran Business Outreach Center" as the
entity and individual, physical location, recognized by the
federal Small Business Administration where a small
business veteran owner or an aspiring veteran entrepreneur
can receive free one-on-one consulting and low at-cost
training on a variety of topics including starting,
operating, and expanding a small business, that is operated
by the Small Business Administration pursuant to Section
657b of Title 15 of the United States Code.
d) Defines a "Women's Business Center" as the entity and
AB 2900 (Committee on Jobs, Economic Development, and the
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individual, physical location, recognized by the federal
Small Business Administration where a small business owner
or an aspiring entrepreneur can receive free one-on-one
consulting and low at-cost training on a variety of topics
including starting, operating, and expanding a small
business, that is operated by the Small Business
Administration and is authorized by the "Women's Business
Ownership Act of 1988" (Public Law 100-533).
4)Requires the report to the Legislature be submitted in
compliance with state reporting and that a copy of the report
be posted on the Internet Web site of the awarding department.
5)Provides, that to the extent that any provision of this bill
conflicts with a federal regulation or law, the provision in
this bill will be inoperable.
6)Authorizes a department to include these reporting
requirements as part of any other annual report as an
alternative to submitting a separate report. If the agency
chooses to include the information within a separate report,
deadline for submission may be modified for up to three
months.
7)Specifies that this chapter applies to contracts awarded on or
after September 1, 2017 and before December 31, 2021.
8)Sunsets these reporting requirements on January 1, 2022.
FISCAL
EFFECT: According to an Assembly Appropriations Committee
analysis dated May 11, 2016, this bill will result in
administrative costs, ranging from minor to $40,000 per
contract, for each agency to report outcomes of state funds
provided to federal small business technical assistance centers.
The analysis notes that costs will depend on the existing
ability of these federal centers to track data and states that
departments and agencies that may be subject to requirements of
AB 2900 (Committee on Jobs, Economic Development, and the
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this bill include: High Speed Rail, CalTrans, the Employment
Development Department, Department of General Services, and
GO-Biz. The analysis states that the total amount of contracts
and agencies subject to this reporting requirement is unknown
but assuming one contract per agency, total costs across all
departments could be in the low hundreds of thousands.
COMMENTS:
1. Purpose. The Assembly Committee on Jobs, Economic
Development, and the Economy is the Author and sponsor of
this measure. According to the Author, "The federal small
business technical assistance centers are an important
resource for California entrepreneurs. A growing number of
state agencies are contracting with these centers to provide
valuable assistance in helping small businesses become ready
to compete for state contracts and comply with new state
laws. This measure ensures consistent reporting across
agencies and greater transparency as to which areas of the
state are being provided services."
2. Role of Small Business within the California Economy.
California's dominance in many economic areas is based, in
part, on the significant role small businesses play in the
state's $2.2 trillion economy. Among other advantages, small
businesses are crucial to the state's international
competitiveness and are an important means for dispersing the
positive economic impacts of trade within the California
economy.
According to a 2015 U.S. Small Business Administration
report, California has more than 3.6 million small
businesses, over 1.2 million more than any other state. The
report also noted that California's small businesses employed
half of the state's private workforce in 2012 (6.5 million
employees). According to the U.S. Census Bureau, small
businesses made up 99.2 percent of all employers in the state
for the same year.
In difficult economic times, smaller size businesses often
AB 2900 (Committee on Jobs, Economic Development, and the
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function as economic engines. The trend continued in the
recession with the number of non-employer firms increasing
from 2.6 million firms ($137 billion in revenues) in 2008 to
2.8 million firms ($138 billion in revenues) in 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, results in certain challenges in meeting
regulatory requirements, accessing capital, and marketing
their goods and services. California's network of technical
assistance providers assist businesses with a range of
services, including access to quality training, one-on-one
counseling, mentoring, marketing data, and other business
development resources.
3. Small Business Development Center Program. The SBDC program
is sponsored by the United States Small Business
Administration (SBA) and functions as a cooperative effort of
the private sector, the educational community, and federal,
state, and local governments. Formal management of the
partnership is provided through the six Administrative Lead
Centers that are designated by and responsible to the SBA.
Each Administrative Lead Center serves a specific geographic
area compromised of several SBDCs. The California SBDC
network serves businesses throughout California with over 40
permanent and satellite offices.
The SBDCs facilitate the creation, expansion, and retention
of businesses. Each SBDC provides one-on-one counseling,
workshops, advisory services, and referrals to prospective
and existing business owners. The SBDCs assist with
financing, government contracting, business planning and
management, marketing, international trade, energy efficiency
and sustainability, disaster preparedness, and other business
issues. Each Administrative Lead Center has its own
resources and maintains links with other public and private
small business service providers in the region, such as
financial institutions, local workforce investment boards,
economic development corporations, as well as federal, state,
AB 2900 (Committee on Jobs, Economic Development, and the
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and local government entities.
There are also SBDCs which specialize in assisting
technology-based companies with advice and training on 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.
In 2014, the California SBDC network reported that they had
advised more than 60,000 clients and helped these small
businesses raised over $500 million in capital through its
core small business advising and training program, as well as
through its array of specialty programs.
-----------------------------------------------------------
| California SBDC Performance in 2015 |
-----------------------------------------------------------
|---------------+--------+------------------+--------------|
|Impact | 2015 |Impact Category | 2015 |
|Category | | | |
|---------------+--------+------------------+--------------|
|Counseling | 93,412 |Capital Infusion |$ |
|Hours | | | 633,756,877|
|---------------+--------+------------------+--------------|
|Clients | 16,958 | Debt |$ |
|Counseled | |Financing | 169,480,856|
|---------------+--------+------------------+--------------|
|Extended | 6,453 | Equity |$ |
|Engagement | |Financing | 464,276,020|
|---------------+--------+------------------+--------------|
|Long Term | 5,720 |Jobs Created | 5,464 |
|Clients | | | |
AB 2900 (Committee on Jobs, Economic Development, and the
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|---------------+--------+------------------+--------------|
|Training | 1,893 |Jobs Retained | 2,998 |
|Events | | | |
|---------------+--------+------------------+--------------|
|Attendees | 29,935 |Change in Sales |$ |
|Trained | | | 271,781,435|
|---------------+--------+------------------+--------------|
|Business | 1,039 | | |
|Startups | | | |
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Funding for the program is provided through a federal SBA
population-based grant. In order to draw down these funds,
each Administrative Lead Center must provide a
dollar-for-dollar match. The federal government sets aside
approximately
$13 million for California SBDCs annually, which represents
slightly more than 11 percent of the national program. Since
the demise of the Technology, Trade, and Commerce Agency in
2003, California has only received the full amount of
eligible federal funds once (FY 2010-11 after the passage of
the budget in AB 1632 [Assembly Committee on Budget, Chapter
731, Statutes of 2010] which included $6 million in state
monies for the SBDCs). That year, the fully funded
California SDBCs consulted with 50,000 business including 50
percent women, 48 percent minorities, and 12 percent
veterans, in addition to:
Creating and retaining 7,944 jobs, a 38 percent increase
over the prior year;
Assisting in the startup of 740 businesses a 23 percent
increase over the prior year;
Helping small business clients increase sales by
$220,000, a 71 percent increase over the prior year; and
AB 2900 (Committee on Jobs, Economic Development, and the
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Helping small business clients raise $176 million in new
capital, a 22 percent increase over the prior year.
The 2014-15 and the 2015-16 state budgets included $2 million
in General Fund assistance for contracts with the SBDCs to
assist small businesses in accessing capital. Grant
agreements were awarded to 34 SBDCs in September 2014,
covering activities beginning October 1, 2014 through
September 30, 2015. In the first year of the program, the
Capital Infusion Program resulted in $202,645,464 in
documented capital infusion, exceeding the capital infusion
goal for the program by more than 50 percent. The program
served 9,702 small business owners across the state.
----------------------------------------------------------
| First Year Reported Outcomes from Capital Infusion |
| |
| Program |
| |
----------------------------------------------------------
|--------------------+---+----------+-----------+---------|
|Regional | |Funding |Capital |Clients |
| | | | | |
|Administrative Lead | |Received |Infusion |Served |
| | | | | |
|Center | | | | |
| | | | | |
|--------------------+---+----------+-----------+---------|
|Northern CA SBDC | |$382,124 |$30,128,694|2,312 |
AB 2900 (Committee on Jobs, Economic Development, and the
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| | | | | |
| | | | | |
| | | | | |
|--------------------+---+----------+-----------+---------|
|Northeastern CA | |$192,708 |$17,731,645|569 |
| | | | | |
|SBDC | | | | |
| | | | | |
|--------------------+---+----------+-----------+---------|
|UC Merced SBDC | |$208,795 |$12,536,699|1,141 |
| | | | | |
|(Central CA) | | | | |
| | | | | |
|--------------------+---+----------+-----------+---------|
|Los Angeles SBDC | |$540,000 |$33,933,198|3,147 |
| | | | | |
| | | | | |
| | | | | |
---------------------------------------------------------
----------------------------------------------------------
|Orange County/Inland |$393,665 |$101,257,66|1,003 |
| | | | |
|Empire SBDC | |7 | |
| | | | |
|-------------------------+----------+-----------+---------|
|San Diego/Imperial |$198,000 |$4,304,862 |1,051 |
| | | | |
|Valley SBDC | | | |
| | | | |
----------------------------------------------------------
---------------------------------------------------------
|Pasadena City | |$54,708 |$2,477,700 |344 |
| | | | | |
|College SBDC | | | | |
| | | | | |
---------------------------------------------------------
|University of La | |$30,000 |$275,000 |135 |
| | | | | |
|Verne SBDC | | | | |
| | | | | |
|--------------------+---+----------+-----------+---------|
| |Tot|$2,000,000|$202,645,46|9,702 |
| | | | | |
| |al | |5 | |
AB 2900 (Committee on Jobs, Economic Development, and the
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| | | | | |
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----------------------------------------------------------
| GO-Biz, March 2016|
| |
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AB 2900 requires more in-depth reporting on geographic
regions being served by the program, intended to capture
information that could, for example, allow a member of the
Legislature and the public to see whether businesses in a
certain part of the state were being served under the state
contract.
1. Women's Business Center Program. The Women's Business Center
program is sponsored by the federal SBA and was established
to provide in-depth, substantive, outcome-oriented business
services to women entrepreneurs, both emerging and
established businesses, including a representative number of
which are socially and economically disadvantaged. The
Women's Business Center program is administered through a
regional network of 11 nonprofit organizations that are
required to assist businesses in making a substantial
economic impact in their communities, as measured by
successful business startups, job creation and retention, and
increased company revenues.
In federal FY 2014, assistance from the Women's Business
Centers resulted in the creation of 63 new jobs, and the
retention of 80 retained jobs in California. The Women's
Business Centers assisted 80 business start-ups, and helped
clients access over $1 million in capital, which included
$67, 625 in SBA loans, $729,400 in non-SBA loans, and
$238,240 in equity.
2. Veteran Business Outreach Center Program. The Veteran
Business Outreach Center program in California is one of only
four in the U.S. The Veteran Business Outreach Center
AB 2900 (Committee on Jobs, Economic Development, and the
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program is designed to play a significant role in meeting the
unique needs of veterans in starting and operating
businesses. The program is funded by the federal SBA. The
Veteran Business Outreach Center program provides statewide
small business consulting and workshops for veteran owners of
small businesses, and veterans wishing to start a small
business.
According to information on its website, the Veteran Business
Outreach Center program offers outreach through its network
of related nonprofit veteran service centers in the
California Cities of Santa Rosa, Eureka, Menlo Park, and
Redding, and in Reno, Nevada. Below are 2014 outcomes for
all four Veteran Business Outreach Centers.
---------------------------------------------------------
| Activities at all Veteran Business | 1/1/2014 to |
| Outreach Centers | 12/31/2014 |
|-------------------------------------+-------------------|
|(1) Number of Clients Counseled | 2,395|
|-------------------------------------+-------------------|
| (a) Small Businesses Counseled | 1,636|
|-------------------------------------+-------------------|
| (b) Large Businesses Counseled | 759|
|-------------------------------------+-------------------|
|(2) Number of Initial/Follow-up | 5,433|
|Counseling Sessions | |
|-------------------------------------+-------------------|
| (a) Small Business Sessions | 3,482|
|-------------------------------------+-------------------|
| (b) Large Business Sessions | 1,951|
|-------------------------------------+-------------------|
|(3) Number of Training Events | 201|
|-------------------------------------+-------------------|
| (a) Sponsored Training Events | 198|
|-------------------------------------+-------------------|
| (b) Non-sponsored Training Events | 3|
|-------------------------------------+-------------------|
AB 2900 (Committee on Jobs, Economic Development, and the
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|(4) Number of Training Event | 10672|
|Attendees | |
|-------------------------------------+-------------------|
| (a) Sponsored Training Event | 10656|
|Attendees | |
|-------------------------------------+-------------------|
| (b) Non-sponsored Training Event | 16|
|Attendees | |
|-------------------------------------+-------------------|
|(5) Number of Awards (Fed+DoD+State) | 13|
|-------------------------------------+-------------------|
| (a) Small Business Awards | 13|
|(Fed+DoD+State) | |
|-------------------------------------+-------------------|
| (b) Large Business Awards | 0|
|(Fed+DoD+State) | |
|-------------------------------------+-------------------|
|(6) Dollar Value of Awards | $38,782.69 |
|(Fed+DoD+State) | |
|-------------------------------------+-------------------|
| (a) Small Business Dollars | $38,782.69 |
|(Fed+DoD+State) | |
|-------------------------------------+-------------------|
| (b) Large Business Dollars | $0.00 |
|(Fed+DoD+State) | |
|-------------------------------------+-------------------|
|(7) Number of Prime Contract Awards | 11|
|(Fed+DoD+State) | |
|-------------------------------------+-------------------|
| (a) Small Business Prime | 11|
|Contracts (Fed+DoD+State) | |
|-------------------------------------+-------------------|
| (b) Large Business Prime | 0|
|Contracts (Fed+DoD+State) | |
|-------------------------------------+-------------------|
|(8) Dollar Value of Prime Contract | $22,455.00 |
|Awards (Fed+DoD+State) | |
|-------------------------------------+-------------------|
| (a) Small Business Prime Contract | $22,455.00 |
|Dollars (Fed+DoD+State) | |
|-------------------------------------+-------------------|
| (b) Large Business Prime Contract | $0.00 |
|Dollars (Fed+DoD+State) | |
|-------------------------------------+-------------------|
AB 2900 (Committee on Jobs, Economic Development, and the
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|(9) Number of Sub-Contract Awards | 2|
|(Fed+DoD+State) | |
|-------------------------------------+-------------------|
| (a) Small Business Sub-Contracts | 2|
|(Fed+DoD+State) | |
|-------------------------------------+-------------------|
| (b) Large Business Sub-Contracts | 0|
|(Fed+DoD+State) | |
|-------------------------------------+-------------------|
|(10) Dollar Value of Sub-Contract | $16,327.69 |
|Awards (Fed+DoD+State) | |
|-------------------------------------+-------------------|
| (a) Small Business Sub-Contract | $16,327.69 |
|Dollars (Fed+DoD+State) | |
|-------------------------------------+-------------------|
| (b) Large Business Sub-Contract | $0.00 |
|Dollars (Fed+DoD+State) | |
---------------------------------------------------------
---------------------------------------------------------
| Source: SBA tracking system, 2014|
| |
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3. Procurement Technical Assistance Cooperative Agreement. The
Procurement Technical Assistance Cooperative Agreement
program is administered by the Department of Defense for the
purpose of helping small businesses access public contracts
at the federal, state, and local levels. The program
provides matching funds through cooperative agreements with
state and local governments and nonprofit organizations for
the establishment of procurement technical assistance
centers.
Some procurement technical assistance centers are
administered directly by state governments; others partner
with universities, community colleges, local economic
development corporations, or other local institutions. Some
operate within Bureau of Indian Affairs areas and serve
exclusively Native American-owned businesses. Many are
affiliated in some way with small business development
AB 2900 (Committee on Jobs, Economic Development, and the
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centers and other small business programs.
Procurement technical assistance centers are staffed with
counselors experienced in government contracting and provide
a wide range of services including classes and seminars,
individual counseling, and easy access to bid opportunities,
contract specifications, procurement histories, and other
information necessary to successfully compete for government
contracts.
There are 98 procurement technical assistance centers in the
U.S. including all 50 states, Washington D.C., Puerto Rico,
and Guam. Total funding for the program was $63.5 million in
federal FY 2014 (federal and nonfederal funds combined).
California's centers operate under contract by California
Capital CDFI (Sacramento), Los Angeles Office of Small
Business (Los Angeles), Monterey County Business Council
(Seaside), Northern California Small Business Development
Center (Arcata), Riverside Community College District
(Corona), and San Diego County (San Diego). The American
Indian Chamber of Commerce has a contract that serves Native
Americans throughout the state.
Centers are funded based on, among other things, the service
area's level of distress including having a median income at
or below 80 percent of the statewide average, an unemployment
rate higher than the national average for the most recent 24
months, or serving Native American Indian reservations.
4. Prior Related Legislation. AB 184 (E. Garcia) of 2015 would
have designated GO-Biz as the lead state entity for
overseeing the state's participation and collaboration with
the federal small business technical assistance programs.
( Status : The measure was held in the Assembly Committee on
Appropriations.)
AB 837 (Campos) of 2014 would have required annual reporting
to GO-Biz from the Small Business Development Center
Leadership Council on its activities in any year that the
AB 2900 (Committee on Jobs, Economic Development, and the
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state contributes funds. Amendments taken in the Senate
deleted the content of the bill and added language relating
to CalPERS with Assemblymember Wieckowski as the author.
( Status : The measure was vetoed by Governor Brown who stated
in his veto message that "This measure creates an exemption
to the California Public Employees' Pension Reform Act of
2013. I am unwilling to begin chipping away at these
reforms.")
AB 2670 (Medina) of 2014 would have designated GO-Biz as the
lead state entity for overseeing the state's participation
and collaboration with the federal small business technical
assistance programs. As a result of this bill and AB 2717,
$2 million dollars was provided in the budget to the SBDCs
for assisting small businesses access capital. ( Status : The
measure was held in the Assembly Committee on
Appropriations.)
AB 2717 (Bonta) of 2014 would have appropriated $6 million
for the purpose of assisting SBDC Administrative Lead Centers
to provide the mandatory match to draw down federal funds.
As a result of this bill and AB 2670, $2 million dollars was
provided in the budget to the SBDCs for assisting small
businesses access capital. ( Status : The measure was held in
the Assembly Committee on Appropriations.)
AB 1632 (Assembly Committee on Budget, Chapter 731, Statutes
of 2010) provided $32.35 million in funds for small business
finance and technical assistance, which leveraged $174
million in federal and in-kind funding. The $32.35 million
was allocated as follows: $20 million was appropriated for
use within the state Small Business Loan Guarantee Program;
$6 million to provide a federal match for California SBDCs to
draw-down federal dollars; $6 million for the California
Capital Access Program for loss reserve programs; and
$350,000 to the Federal Technology Program to draw-down
federal dollars.
AB 2206 (Price) of 2008 would have re-established the
California Small Business Development Center Program through
AB 2900 (Committee on Jobs, Economic Development, and the
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the auspices of the Business, Transportation and Housing
Agency. ( Status : The measure was held in the Assembly
Committee on Appropriations.)
SUPPORT AND OPPOSITION:
Support:
None on file as of June 14, 2016.
Opposition:
None on file as of June 14, 2016.
-- END --