BILL ANALYSIS
AB 2734
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 2734 (John A. Perez)
As Amended August 17, 2010
Majority vote
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|ASSEMBLY: |75-0 |(June 2, 2010) |SENATE: |28-6 |(August 31, |
| | | | | |2010) |
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Original Committee Reference: J., E.D. & E.
SUMMARY : Establishes the Office of Economic Development
(Office) within the Governor's Office for the purpose of serving
as the lead entity for economic strategy and marketing of
California on issues relating to business development, private
sector investment and economic growth.
The Senate amendments :
1)Make the Director of the Office subject to Senate
confirmation.
2)Remove the requirement that the Office assist the Department
of Finance in preparing a set of priority actions that are
designed to achieve statewide economic goals. These priority
actions would have been required to be submitted as part of
the annual state Budget.
3)Transfer the responsibility to have a Web site and
well-advertised telephone number from California Business
Investment Services Program (CalBIS) to the Office.
4)Limit the role of CalBIS to convening strike teams on key
business development situations and transferring the
responsibility of serving as an economic development
information resource to the Office.
5)Establish other new duties for the office including:
a) Encouraging collaboration among research institutions,
startup companies, local governments, venture capitalists,
and economic development agencies to promote innovation;
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b) Fostering relationships with overseas entities, in
coordination with the federal government, to improve the
state's image as a destination for business investment and
expansion;
c) Conducting research on the state's business climate,
including, but not limited to, research on how the state
can remain on the leading edge of innovation and emerging
sectors; and,
d) Supporting small businesses by providing information
about accessing capital, complying with regulations, and
supporting state initiatives that support small business.
6)Make other technical and conforming changes.
AS PASSED BY THE ASSEMBLY , this bill established the Office of
Economic Development (Office) within the Governor's Office,
administered by a Director, for the purpose of serving as the
lead entity for economic strategy and marketing of California on
issues relating to business development, private sector
investment and economic growth. Specifically, this bill :
1)Codified the existing CalBIS within the Office as a program to
serve employers, corporate executives, business owners, and
site location consultants who are considering California for
business expansion and investment.
2)Transferred the existing Office of the Small Business Advocate
(OSBA) with the Office.
3)Specified that, among other duties, that the Office:
a) Prepare a five-year strategic economic development plan
to guide the state's activities and investments related to
economic and workforce development;
b) Make recommendations to the Governor and Legislature on
new state policies, programs and actions, as well as
amendments to existing programs, for the purpose of
advancing statewide economic goals, respond to emerging
issues, and ensure that all state policies and programs
conform to the adopted state economic and business
development goals;
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c) Assist the Department of Finance in preparing, as part
of the annual state budget, an integrated program of
priority actions to achieve statewide economic goals and
objectives;
d) Coordinate the development of policies and criterion to
ensure that federal grants administered or directly
expended by the state advance statewide economic goals and
objectives;
e) Market the business and investment opportunities
available in California by working in partnership with
local, regional, federal and other state public and private
institutions to encourage business development and
investment in the state; and,
f) Require a copy of the previously mandated state biennial
economic development strategy be provided to the Office.
FISCAL EFFECT : According to the Senate Appropriations
Committee, implementation of this bill will result in one-time
General Fund cost in excess of $750,000 to create the web site
and ongoing costs in the range of $500,000 per year to maintain
and update the website, to advertise the phone number, and staff
the phones.
Further, the bill provides that during the 2010-11 fiscal year,
the office shall be funded with existing resources and staffed
by personnel loaned from agencies and departments that address
economic development, including, but not limited to, the
promotion of small business. Each member of the Governor's
cabinet is required to identify a senior manager within his or
her agency who shall coordinate business support activities with
the office. For the 2011-12 fiscal year and subsequent fiscal
years, the office is required to develop a budget in
coordination with the Department of Finance pursuant to the
state budgeting process, which may include the permanent
transfer of associated positions.
COMMENTS : Since 2005, the Assembly Committee on Jobs, Economic
Development and the Economy (JEDE) has held more than a dozen
oversight hearings examining the effectiveness of the state's
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economic and workforce development program network. Based on
the testimony and related research, JEDE sponsored over a dozen
bills in the ensuing four years to address the state's failure
to produce a current economic development strategy, the
insufficient linkages between existing programs, and lack of
focus and measurement toward California's global
competitiveness.
In February 2010, the Little Hoover Commission (LHC) undertook
its own review of the state's economic and workforce development
programs. In its final report, Making up for Lost Ground:
Creating a Governor's Office of Economic Development , it
analyzed the status and effectiveness of current programs since
the 2003 demise the Technology, Trade and Commerce Agency and
recommended the creation of a new governmental entity to fill
the void left by the dismantled agency.
The report 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. In
April 2010, Governor Schwarzenegger issued Executive Order
S-05-10 (EO) as a means to operationalize the report
recommendations.
AB 2734 substantially codifies and provides enhanced guidance to
the framework detailed in EO S-05-10 by statutorily forming the
Office within the Governor's Office and assigning specific tasks
and duties. This bill also statutorily transfers the Small
Business Advocate into the framework of the new Office.
The one area where the bill differs from the LHC Report is in
placement of policy and strategy responsibility within the
Office. One of the key LHC findings was that the state had an
inability "to design and implement a statewide strategy that can
facilitate economic growth."
As the bill left the Assembly, the Office was required to
develop a five-year plan to guide the state's economic and
workforce development efforts, as well as requiring the Office
to assist DOF prepare, as part of the state budget, a list of
priority actions that would be necessary to achieve state
economic goals and objectives. These requirements were,
however, removed in the Senate Appropriations Committee.
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Without those provisions, the state's economic development
policy remains with Economic Strategy Panel who has failed to
produce an economic strategy since 2002.
The policy committee analysis includes an extended discussion on
this measure.
Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916)
319-2090
FN:
0006746