BILL ANALYSIS
AB 2734
Page 1
Date of Hearing: May 19, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2734 (John A. Perez) - As Amended: April 8, 2010
Policy Committee: Jobs, Econ.
Development and the Economy Vote: 6 - 0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill codifies the Governor's Office of Economic Development
(GOED) and establishes its powers and duties. Specifically, this
bill:
1)Codifies the Governor's Office of Economic Development (GOED).
2)Creates a cabinet-level Secretary of the Office of Economic
Development.
3)Creates the California Business Investment Services Program
(CalBIS) within the office and requires the program to
provide:
a) Economic and demographic data
b) Financial information
c) Workforce information
d) Transportation and infrastructure information
e) Assistance on obtaining permits
f) Regulatory information.
4)Requires that CalBIS have a well-advertised phone number,
interactive Internet Web site and an administrative structure
effective enough to support business development.
5)Abolishes the Economic Strategy Panel (ESP) at the Employment
Development Department (EDD) and creates a similar, though
less private-sector driven, Economic Development Council (EDC)
at GOED.
6)Requires the GOED secretary and the EDC to prepare an Economic
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Development Strategic Plan.
7)Codifies the Office of the Small Business Advocate within
GOED.
FISCAL EFFECT
1)One time GF costs in excess of $750,000 to create the CalBIS
website and to gather all of the required information.
On-going costs in the range of $500,000 per year to maintain
and update the website, to advertise the required phone
number, and to provide staff to answer the dedicated telephone
line and assist callers.
2)GF costs in the range of $400,000 for the Economic Development
Council to produce the required strategic plan.
3)GF costs in excess of $200,000 for the cabinet secretary
position and the necessary support staff.
COMMENTS
1)Rationale . AB 2734 creates the Office of Economic Development
within the Governor's Office, and establishes specific tasks
and duties for the office, including developing a statewide
strategic economic plan and reorganizing such entities as the
Small Business Advocate and CalBIS into this new office.
Ultimately, the author envisions this new office establishing
long-term economic goals and strategies as well as specific
and effective services to California's businesses both large
and small.
In February 2010, the Little Hoover Commission released a
report entitled Making up for Lost Ground: Creating a
Governor's Office of Economic Development. The report
analyzed the status and effectiveness of the various pieces of
the defunct Technology, Trade and Commerce Agency that had
been reorganized into other state entities.
The report recommended the creation of a new governmental
entity to fill the void left by the dismantled agency. It
called for a single agency that would promote greater economic
development, foster job creation, and deliver specific
services (i.e. permitting, tax, regulatory, and other
information) directly to the California business community.
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2)Placement of the Economic Strategy Panel . The author and the
Legislature may wish to reconsider abolishing the Economic
Strategy Penal currently housed at EDD. The mission of the ESP
is to examine changes in the state's economic base and
industry sectors to develop a statewide vision and strategic
initiatives to guide public policy decisions for economic
growth and competitiveness. In order to conduct that work, the
ESP needs to have access to confidential wage and employment
data that is collected by EDD. The federal government
restricts access to that data to EDD. It is unlikely that the
new EDC, if housed at GOED, would be granted clearance to work
with the data.
3)Executive Order S-05-10 , issued on April 8, 2010, creates the
Governor's Office of Economic Development. The governor states
that its purpose is to promote California as a place to do
business, to support those interested in starting, growing,
financing, expanding or relocating a business in California,
and to help, to the extent possible, those businesses facing
challenges to operating in California. The Office of Economic
Development was created within the Governor's Office, and is
headed by a director designated by the governor.
4)Related Legislation . Currently, AB 2714 (V.M. Perez) moves the
office of the Small Business Advocate from the governor's
Office of Planning and Research (OPR) to the Business,
Transportation, and Housing (BTH) agency. In addition, this
bill adds a representative of the Office of the Small Business
Advocate to the Small Business Board. That bill is currently
pending on this committee's Suspense File.
AB 2287 (Bass) codifies the Governor's Office of Economic
Development and locates the Small Business Advocate within
that office. In addition, that bill creates a California
Business Investment Services Program within that office. That
bill is currently pending in this committee.
In 2009, AB 699 (Portantino) proposed updating the
requirements for the development of a State Economic
Development Strategy (ED Strategy) and requires it be
submitted to the Legislature by May 1, 2010. That bill was
held on this committee's Suspense File.
In 2008, AB 2854 (Mendoza) required, upon available funding,
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the Office of the Small Business Advocate to create a one-stop
web site for small business-related announcements and funding
opportunities offered by state agencies. That bill was vetoed
by the governor. In his veto message he noted, that "this
bill does not offer any additional significant information to
these businesses that is not already provided on the existing
Small Business Advocate website." In addition, he stated, "The
report mandate in this bill would create additional workload
that would result in a General Fund cost pressure that is
unsustainable during our current budget situation."
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081