BILL ANALYSIS
AB 1420
Page 1
Date of Hearing: January 5, 2010
ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT AND THE ECONOMY
V. Manuel Perez, Chair
AB 1420 (V. Manuel Perez) - As Amended: January 4, 2010
SUBJECT : Innovation Based Economies
SUMMARY : Requests the California Council on Science and
Technology (CCST) and the California Spaceport Authority (CSA)
to seek funding to expand their assessment of the state's
innovation infrastructure capacity including university research
facilities, private research parks, manufacturers and
incubators.
Further, the bill authorizes the CCST and the CSA to collaborate
with public and private colleges and universities, corporations
with research capacity, economic development organizations,
investment and finance professionals, and the California
Community Colleges. The final assessment may include the
following:
1)A directory of public and private innovation facilities and
infrastructure in the state;
2)A list of innovation-related national and global alliances;
3)A comparison of the state's current resources to those that
would be necessary to remain globally competitive; and,
4)A list of recommendations on how to access public and private
resources to meet the state's innovation needs.
Additionally, the bill requests that the final assessment be
presented in a format that allows for its display on the
Internet and facilities its use by potential applicants for
green and other innovation-based federal funding.
EXISTING LAW
1)Establishes the CSA to, among other things, pursue grants from
the federal government or from private businesses,
foundations, or individuals, for California space enterprise
activities and to identify science and technology trends that
are significant to space enterprise and the state and act as a
AB 1420
Page 2
clearinghouse for space enterprise issues and information.
2)Recognizes the establishment of the CCST by California
academic research institutions, including the University of
California, the University of Southern California, the
California Institute of Technology, Stanford University, and
the California State University. The purpose of CCST is to,
among other things, report on science and technology-related
public policy issues, including identification of long-range
research needs for sustaining the state's economic
competitiveness, to assess private sector/university
technology transfer capacity; and to assess the research and
development capacity of the state to retain vital industries
and scientific talent.
FISCAL EFFECT : None
COMMENTS :
1)Purpose : The author states that an important element to
California's long-term economic growth is its continuing
investment in innovation-based industries. Historically, this
has been an area in which California has enjoyed a comparative
advantage, not only relative to other states but to other
regions of the world. In the last decade, however, other
states, such as Massachusetts, and other countries in the
world, such as Singapore, have begun to implement more
targeted economic development activities to attract
innovation-based industries.
These changes, the author states, are a cause for concern and
suggest that California cannot be passive or assume that what
was true in 1990 will continue to be true in the 21st century.
Over the last decade, significant changes have occurred in
the way new technologies are created and commercialized.
Traditional regional clusters are giving way to more globally
based "knowledge networks" formed and enabled by technology,
rather than geography.
The author states that this shift toward technology-based
networks requires that the state have a better understanding
of its own innovation assets. AB 1420 calls on the CSA and
the CCST to continue mapping the state's innovation resources
(as detailed below) and make recommendations on how to
strengthen the state's role as a leader in science and
AB 1420
Page 3
technology in the changing innovation economy.
2)The California Innovation Corridor and Asset Mapping : In
2007, the CSA in partnership with the California Labor and
Workforce Development Agency was awarded a $15 million/3-year
grant from the federal Department of Labor for the development
of the "California Innovation Corridor" (Corridor). The
purpose of the Corridor project is to "drive entrepreneurship,
global manufacturing competitiveness, and 21st century
workforce" within the 13 participating counties, including San
Diego, Orange, Los Angeles, San Bernardino, Riverside,
Ventura, Santa Barbara, San Luis Obispo, Kern, Monterey, Santa
Cruz, Santa Clara, and Alameda.
The Corridor project was designed and implemented through the
collaborative efforts of over 65 public and private
stakeholder groups including CCST, Stanford University,
Lockheed Martin Space Systems Company, and the San Bernardino
County Workforce Development Board. Here is the link to
California Innovation Corridor webpage:
http://www.innovatecalifornia.net/
One of several initiatives of the Corridor was the Innovation
Asset Mapping Inventory (Inventory) project. The purpose of
the project was to inventory key innovation assets in such a
way as to assist regional partners in gaining a greater
understanding of the organizational assets available to foster
innovation and entrepreneurship and guide workforce
development.
To this end, the project inventoried innovation-based assets
owned and/or managed by the private sector, academia, and
government, such as federal laboratories and industry
technology research resources. Information from the Inventory
was then developed as separate innovation asset profiles and
incorporated into a searchable online platform where they are
accessible to economic and workforce development
professionals, education stakeholders, and the public.
Through this online platform, known as the Innovation Asset
Mapping Portal
http://www.connectory.com/portal_home.aspx?portalid=5 , one can
access over 250 profiles.
According to CSA, the Innovation Asset Mapping Portal has
proven to be very useful for both public and private entities
AB 1420
Page 4
interested in engaging with entities within the Corridor.
With this success, a question arises as to whether other areas
of the state may benefit from being included in the Inventory.
3)A look at California's historical economy : California is the
one of the largest and most diversified economies in the world
with a state gross domestic product (GDP) of over $1.8
trillion in 2008. If California were an independent nation it
would rank as the eighth largest economy in the world.
The state's significance in the global marketplace results
from a variety of historical factors, including: its
strategic west coast location that provides direct access to
the growing markets in Asia, Mexico and South America; its
economically diverse regional economies; its large, ethnically
diverse population, representing both a ready workforce and
significant consumer base; its access to a wide variety of
venture and other private capital; its broad base of small-
and medium-sized businesses; and its culture of innovation and
entrepreneurship, particularly in the area of high technology.
As the largest state in the U.S., California is home to 12.1%
of the nation's population and 11.6% of all jobs. Overall job
growth in the state from 2001 to 2006 was 6.1%. Growth in
California GDP outpaced the growth rate of the nation as a
whole, 33.9% for California as compared to the US at 30.4%.
Among other economic distinctions, the state leads the nation
in export-related jobs, small business development, and
business start-ups, in general. The chart below provides
additional details on California's industrial base by listing
the largest, fastest, most competitive, and highest-paid wages
by industry type.
------------------------------------------------------------
| California Industry Comparisons |
------------------------------------------------------------
|--+-------------+-------------+-------------+-------------|
| | Largest | Fastest | Industries | Industries |
| | Industries | Growing | with Higher |with Highest |
| | in | Industries |Concentration|Average Wage |
| | California | (2001-06) | of Jobs | (2007) |
| | Based on | | Relative to | |
| | Revenues | | the Nation | |
| | (2006) | | (2006) | |
AB 1420
Page 5
|--+-------------+-------------+-------------+-------------|
|1 | Food | Wholesale | Support | Securities, |
| | Services & | Electronic | Activities | Commodity |
| | Drinking | Markets, | for |Contracts, & |
| | Places | Agents, & | Agriculture | Other |
| | | Brokers | & Forestry | Investments |
|--+-------------+-------------+-------------+-------------|
|2 |Professional,| Private | Private | Oil & Gas |
| | Scientific | Households | Households | Extraction |
| | & Technical | (includes | (includes | |
| | Services | households | households | |
| | | that employ | that employ | |
| | |people, such |people, such | |
| | | as cooks, | as cooks, | |
| | | maids, | maids, | |
| | | gardeners, | gardeners, | |
| | | caretakers) | caretakers) | |
|--+-------------+-------------+-------------+-------------|
|3 |Administrativ| Other | Motion | Lessors of |
| | e Support | Information | Picture & |Nonfinancial |
| | Services | Services | Sound | Intangible |
| | | | Recording | Assets |
| | | | Industries | |
|--+-------------+-------------+-------------+-------------|
|4 | Specialty | Funds, | Apparel | Internet |
| | Trade | Trusts, & |Manufacturing| Service |
| | Contractors | Other | | Providers, |
| | | Financial | | Web Search |
| | | Vehicles | | Portals, & |
| | | | | Data |
| | | | | Processing |
| | | | | Services |
|--+-------------+-------------+-------------+-------------|
|5 | Ambulatory |Construction | Crop | Petroleum & |
| | Health Care |of Buildings | Production | Coal |
| | Services | | | Products |
|--+-------------+-------------+-------------+-------------|
|6 | Hospitals | Credit | Computer & | Performing |
| | |Intermediatio| Electronic | Arts, |
| | | n & Related | Product | Spectator |
| | | Activities |Manufacturing| Sports |
| | | | | |
|--+-------------+-------------+-------------+-------------|
|7 | Merchant | General | Beverage & | Computer & |
| |Wholesalers, | Merchandise | Tobacco | Electronic |
AB 1420
Page 6
| | Durable | Stores | Product | Product |
| | Goods | |Manufacturing|Manufacturing|
| | | | | |
|--+-------------+-------------+-------------+-------------|
|8 | Food & | Beverage & | Internet | Funds, |
| | Beverage | Tobacco |Publishing & | Trusts, & |
| | Stores | Product |Broadcasting | Other |
| | |Manufacturing| | Financial |
| | | | |Vehicles |
|--+-------------+-------------+-------------+-------------|
|9 | Credit | Specialty | Performing | Utilities |
| |Intermediatio| Trade | Arts, | |
| | n and | Contractors | Spectator | |
| | Related | | Sports | |
| | Activities | | | |
|--+-------------+-------------+-------------+-------------|
|10| Computer & | Motion | Electronics | Pipeline |
| | Electronic | Picture & | & Appliance |Transportatio|
| | Product | Sound | Stores | n |
| |Manufacturing| Recording | | |
| | | Industries | | |
----------------------------------------------------------
------------------------------------------------------------
| Source: California Economic Profile, Economic Strategy |
|Panel, August 2008 |
------------------------------------------------------------
4)Drivers in California's future economy : For decades,
California has been known as a place where innovation and
creativity flourishes. A 2007 study on California's global
competitiveness, prepared by the Bay Area Council Economic
Institute, identified eight key industry clusters, listed
below, and recommended that the state focus future investments
toward these industries in order to maximize the use of state
resources.
Dominant industry clusters include :
a) Professional business and information services
b) Diversified manufacturing
c) Wholesale trade and transportation
d) High-tech manufacturing
Emerging industry clusters include :
AB 1420
Page 7
a) Life science and services
b) Value-added supply chain manufacturing and logistics
c) Cleantech and renewable energy
d) Nanotechnology
The study also found that, based on the state's historical
strengths identified above, that the state was also uniquely
positioned to be a preferred global partner of certain regions
of the world, particularly those interested in innovation,
science, and technology. The study, however, also stated that
California was facing significant challenges from the global
redistribution of manufacturing and services and the growing
talent pools in other countries.
While the global recession may have slowed down growth, the
newly emerging economies of China, India, and Singapore have
already made considerable investments in research and
development. Emerging economies around the world have strived
to become leaders in innovation and not merely "copycat"
economies of the United States. As one Massachusetts
Institute of Technology report states, "It is not out of the
question that they may soon be able to 'leapfrog' developed
centers of innovation with new innovations of their own."
While these dynamics pose challenges to current leading
technology centers, they also offer California new
opportunities for collaboration and cooperation. The state is
already engaged in academic and research partnerships with
Canada and Iceland on renewable energy and other technologies.
The University of California at San Diego has a multi-year
manufacturing initiative with Mexico, supporting economic
growth on both sides of the border.
These types of partnership efforts, however, have not yet been
brought forward into a broader economic development framework
and are too often treated as one-off initiatives. AB 1420
will assist the state in examining its innovation-based
infrastructure assets from a statewide perspective. Enormous
potential exists in research, development, and product
manufacturing by capitalizing on cross-border initiatives, if
California can successfully transition to the new and more
highly connected economic world of the 21st Century.
5)Related Legislation :
AB 1420
Page 8
a) ACR 162 (Farr) : This resolution encouraged the
establishment of the CCST by California academic research
institutions, including the University of California, the
University of Southern California, the California Institute
of Technology, Stanford University, and the California
State University. Status: Approved by both Houses, Res
Chapter 148, Statutes of 1988
a) AB 699 (Portantino and V. Manuel Perez) : This bill
would have updated the requirements for the development of
a State Economic Development Strategy, including key
elements related to innovation-based industries. Status:
Held in the Assembly Appropriations Committee in May of
2009.
b) AB 1606 (Arambula and Lieu ): This bill would have
required the development of a strategy to increase private
investment in California's historically underserved
communities, also known as emerging domestic markets. The
bill also centralized the state's existing economic
development programs with the Economic Strategy Panel, in
order to improve their coordination and impact on
California communities. Status: Vetoed by the Governor in
2007.
c) AB 1916 (Portantino, Arambula, Price, Salas, and
Caballero): This bill would have updated the membership
and requirements of the California Economic Strategy Panel
and required that the next State Economic Development
Strategy be submitted to the Legislature by January 1,
2010. Status: Vetoed by the Governor in 2008.
d) AB 2595 (Arambula) : This bill would have required the
Secretary of Labor and Workforce Development and the
California Workforce Investment Board to establish a
Logistics Worker Training Initiative for the purpose of
increasing California workers' competitiveness within the
global manufacturing value chain. The outcome of this
initiative was to have a state strategy to support
regionally based workforce intermediaries that provide
training in advanced logistical systems, especially in the
transportation and goods movement sectors. Status: Vetoed
by the Governor in 2007.
e) AB 2711 (Portantino, Arambula, Price and Salas): This
AB 1420
Page 9
bill would have required the Secretary of the Business,
Transportation and Housing Agency to develop a
comprehensive state technology and innovation strategy to
guide future state expenditures and activities. Status:
Held in the Assembly Committee on Appropriations in 2008.
f) AB 2860 (Lieu) : This bill would have renamed the
California Commission on Industrial Innovation (Commission)
the California Commission on Manufacturing Competitiveness
and Innovation, specified the Commission should avoid
recommendations that could diminish certain worker
protections, and made conforming changes to the enabling
statute. Status: Held in the Senate Appropriations
Committee in 2007.
6)Double Referral : The Assembly Committee on Rules referred
this measure to JEDE and the Assembly Committee on Higher
Education (HE). Should this measure receive a favorable vote
recommendation at the JEDE hearing, it will be referred to HE
for further action.
REGISTERED SUPPORT / OPPOSITION :
Support
Assembly Committee on Jobs, Economic Development and the Economy
(Sponsor)
Opposition
None received
Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916)
319-2090