BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 2900| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 2900 Author: Committee on Jobs, Economic Development, and the Economy Amended: 8/15/16 in Senate Vote: 21 SENATE BUS., PROF. & ECON. DEV. COMMITTEE: 9-0, 6/20/16 AYES: Hill, Bates, Block, Gaines, Galgiani, Hernandez, Jackson, Mendoza, Wieckowski SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/11/16 AYES: Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen ASSEMBLY FLOOR: 79-0, 6/1/16 - See last page for vote SUBJECT: Small business technical assistance centers SOURCE: Author DIGEST: This bill 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. The bill also creates three additional disclosure requirements for the California Competes Tax Credit Program (CCTC Program) under the Governor's Office of Business and Economic Development (GO-Biz). ANALYSIS: Existing law: AB 2900 Page 2 1)Establishes GO-Biz to serve as the lead state entity for economic strategy and marketing of California on issues relating to business development, private sector investment, and economic growth. (Government Code (GC) §§ 12096 - 12098.5) 2)Establishes the Office of Small Business Advocate (OSBA) within the GO-Biz to advocate the causes of small business and to provide small businesses with the information necessary to survive in the marketplace. (GC §§ 12098 - 12098.9) 3)Requires GO-Biz to post information on its website relating to the CCTC Program including: (Revenue and Taxation Code (RTC) § 17059.2 and § 23689) a) The name of each taxpayer allocated a credit pursuant to this section b) The estimated amount of the investment by each taxpayer; c) The estimated number of jobs created or retained; d) The amount of the credit allocated to the taxpayer; and e) The amount of the credit recaptured from the taxpayer, if applicable. 1)Requires that priority for the CCTC Program be given to applications from taxpayers with projects or businesses located in high unemployment or high poverty areas. (RTC § 17059.2(c)(1) and § 23689(c)(1)) 2)Requires that at least 25 percent of the CCTC Program's tax credits be awarded to small businesses annually. (RTC § 17059.2(g)(2)(3) and § 23689(g)(2)(3)) 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: AB 2900 Page 3 a) The purpose of the contract and contract metrics; b) The amount of state funds awarded and expended during the report year; and 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 total number of businesses assisted. ii) The industry sectors of the businesses assisted, number of businesses assisted by industry sector, as reported by the businesses. iii) 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. iv) 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. v) 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. 1)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 awarding a contract for services, including technical assistance to small businesses. 2)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. AB 2900 Page 4 3)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. 4)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. 5)Specifies that this chapter applies to contracts awarded on or after September 1, 2017 and before December 31, 2021. 6)Sunsets these reporting requirements on January 1, 2022. 7)Expands the reporting requirements of the CCTC Program to include, on its Web site, the following information: a) The primary location of the facility(s) for which the taxpayer is applying for credits listed by city or, in the case of unincorporated areas, by county; b) Information that identifies each tax credit award that was given a priority for being located in a high unemployment or poverty area, as specified; and c) Information that identifies each tax credit award that is being counted toward the requirement that, each fiscal year, 25 percent of the aggregate amount of credits allocated are required to be reserved for small business, as defined. Background AB 2900 Page 5 The Assembly Committee on Jobs, Economic Development, and the Economy (JEDE) is the Author and sponsor of this bill. According to the JEDE, "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." Originally, only the provisions relating to the small business technical assistance centers were included in this bill; the provisions relating to the CCTC Program were housed in a separate measure. However, that measure was vetoed by the Governor because of chaptering conflicts with a budget trailer bill. After resolving the chaptering conflicts, AB 2900 was amended in Senate Appropriations to include the CCTC Program revisions. According to the JEDE, these provisions "codify the reporting of key elements of the tax credit program, including the identification of business or project location, credits awarded to small businesses, and credit awards that received priority consideration. Each of these new reporting requirements represents a key element of the tax credit program and is essential to providing appropriate oversight and program transparency. These elements include information to identify: areas that are not currently being served; whether the requirements of the small business set aside are being met; and which areas of the state are benefiting from the priority application requirements for high unemployment and high poverty." FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: No According to the Senate Appropriations Committee analysis dated August 11, 2016, "The total fiscal impact of this bill is unknown, but could exceed $150,000 annually (General Fund and/or special funds). Administrative costs would likely total in the low tens of thousands of dollars per contract for agencies to report outcomes of state funds provided to federal small AB 2900 Page 6 business technical assistance centers. Actual costs would depend on the existing ability of these federal centers to track data. GO-Biz indicates that the reporting requirements included in the proposed amendments would be minor and absorbable. According to GO-Biz, information identifying the primary location of facilities is available in the full awardee list and small businesses are listed in meeting agenda's which are posted online." SUPPORT: (Verified8/11/16) Los Angeles Area Chamber of Commerce OPPOSITION: (Verified 8/11/16) None received ARGUMENTS IN SUPPORT: The Los Angeles Area Chamber of Commerce supports the bill. They state, "This bill ensures consistent reporting across agencies and greater transparency, making the government more responsible to small business." ASSEMBLY FLOOR: 79-0, 6/1/16 AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, AB 2900 Page 7 McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon NO VOTE RECORDED: Cooper Prepared by:Nicole Billington / B., P. & E.D. / (916) 651-4104 8/16/16 9:30:48 **** END ****