BILL ANALYSIS
Bill No: SB
1259
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2009-2010 Regular Session
Staff Analysis
SB 1259 Author: DeSaulnier
As Amended: March 23, 2010
Hearing Date: April 13, 2010
Consultant: Chris Lindstrom
SUBJECT
State government: Economic Development and Job Creation
Agency.
DESCRIPTION
SB 1259 creates the Economic Development and Job Creation
Agency and requires the new agency to perform duties
relating to economic development and job creation. It
requires the secretary to develop a reorganization plan and
propose a structure for the agency.
Specifically, the bill:
1)Creates the Economic Development and Job Creation Agency
in state government, and would require that the Secretary
of Economic Development and Job Creation serve as the
executive officer of the agency.
2)Provides for the appointment of the secretary and
specifies that the secretary serves at the pleasure of
the Governor subject to confirmation by the Senate
3)Require the secretary to develop a reorganization plan
and to propose a structure for the agency, and would also
require the agency to perform duties relating to economic
development and job creation.
4)Specifies that the agency is required to do the
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following:
a) Develop a statewide strategy that identifies the
state's goals and objectives for job creation and
specify performance measures to assess the state's
progress towards attaining those goals and objectives.
b) Ensure that there is a cabinet-level official
within the Governor's administration responsible for
presenting and addressing economic development and job
creation issues.
c) Create a clearinghouse of accurate data on the
state's economic development activities and their
effectiveness.
d) Simplify, strengthen, and improve the operation and
management of economic development programs that
provide services to California's workers and
employers.
e) Eliminate duplicative duties, achieve cost
efficiencies, and promote accountability for the
attainment of economic development goals and
objectives.
f) Allow the state to marshal all of its resources to
systematically target new industries to site within
the state.
g) Build on our state's educational, workforce, and
geographic assets to seed innovation.
h) Attract new and sustainable industries that will
create high-wage, middle-class jobs.
i) Provide a better understanding of federal and state
laws that protect workers.
5)Makes a variety of findings and declarations.
EXISTING LAW
Existing law provides for the California Commission on
Industrial Innovation which is composed of 25 members, five
from the public sector, four from academia, six from labor,
and 10 from firms characterized by industrial innovation.
Existing law provides for the California Economic Strategy
Panel within the Labor and Workforce Development Agency to
provide recommendations regarding an economic development
strategic plan and charges the panel with the new
responsibility of addressing the development of a system of
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accountability for use in the annual state budget process.
Existing law, the California Small Business Financial
Development Corporation Law, creates the Office of the
California Small Business Board and imposes numerous duties
on the Secretary of Business, Transportation and Housing.
Existing law, the Enterprise Zone Act, imposes numerous
duties on the Employment Development Department and other
state entities to promote economic development within
specified geographic areas.
Existing law creates the Office of Small Business Advocate
within the Office of Planning and Research, and imposes
various duties and requires the Governor to appoint the
director of the Office of Small Business Advocate.
Existing law provides for the State Job Training
Coordinating Council, Employment Development Department,
the Business, Transportation and Housing Agency, and its
secretary.
Existing law provides for the California Business
Investment Services program, which is currently operated by
the Labor and Workforce Development Agency.
BACKGROUND
Purpose of the bill. According to the author's office,
"California is facing a jobs crisis of a magnitude not seen
since the Great Depression. California has one of the
highest unemployment rates in the country at 12.3% and in
2009 over 2 million Californians were looking for work.
"Not only is unemployment at an all-time high in
California, but people are staying unemployed longer as the
economy continues to falter. Thirty-four percent of
unemployed Californians have been looking for work for over
6 months and that number has increased by 170.4% since
2008.
"California lost 952,800 jobs over the last two years (July
2007 to July 2009) and the state is projected to lose over
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a million jobs by 2013. The construction industry has been
particularly hard hit, with employment down by 29% since
2007.
"The jobs crisis in California requires concerted and
strategic efforts to bring business to the state, spur the
economy and create jobs. Businesses that are struggling to
retain jobs, want to expand or are considering relocating
to California could all benefit from the resources that the
state has to offer.
"However, the state currently lacks a single point of entry
for employers to access state services and benefits that
can save and create jobs. There are nearly 100 agencies,
departments, commissions, and task forces scattered
throughout state government geared toward job creation.
This dispersal of resources leads to inefficiencies,
confusion, and lack of accountability.
"SB 1259 creates the Economic Development and Job Creation
Agency and provides a single portal for economic
development and job creation in California. This bill
reorganizes the multiple and dispersed economic development
programs in the state to attract business and create good,
high-quality jobs and grow the economy."
Background . On April 8, 2010, Governor Schwarzenegger
signed Executive Order S-05-10, creating the Governor's
Office of Economic Development. The executive order
contains the same general thrust as SB 1259, however, it
creates an office that may only exist under this Governor's
administration. SB 1259 creates an agency, which may have
more permanency in government and exist under future
administrations.
Executive Order S-05-10 provides:
1)The purpose of the Office of Economic Development 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 shall exist within the Governor's
Office, and shall be headed by a director designated by
the Governor.
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2)The Office of Economic Development shall be the state's
lead entity for economic development coordination with
all public and private entities and shall perform the
following functions:
a) Leading the State's business-oriented outreach and
marketing efforts and promoting California as a place
for business investment and job creation, working with
private-sector, nonprofit and other government
entities;
b) Creating a Web portal that will provide one-stop
access to state-level information and resources for
businesses;
c) Serving employers, corporate real estate executives
and site location consultants who are considering
California for business investment and expansion;
d) Communicating the business advantages of California
locations for new business investment and expansion;
e) Providing site, workforce training and
infrastructure availability and cost information;
f) Providing permit and regulatory assistance;
g) Facilitating participation in state capital
financing, grants, loans, tax credits, and other
incentives;
h) Supporting the State's small businesses by
providing information about accessing capital,
regulatory compliance, state procurement and state
initiatives that support small businesses;
i) Encouraging collaboration among research
institutions, start-up companies, local governments,
venture capitalists and economic development
organizations to promote innovation;
j) Working with the federal government to leverage
economic development programs and to foster
relationships with international counterparts to help
address barriers to trade, find business partners and
promote California's strengths; and
aa) Conducting ongoing research about how California
can remain on the leading edge of innovation and
emerging sectors.
3)The Office of Economic Development shall be created with
existing resources and shall be staffed with personnel
from agencies and departments whose functions relate to
economic development, including small business promotion.
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These agencies shall include, but not be limited to, the
Labor and Workforce Development Agency, the Business,
Transportation and Housing Agency, the Environmental
Protection Agency, the Natural Resources Agency, the
State and Consumer Services Agency, the Department of
Food and Agriculture, the Office of the Chief Information
Officer, and the Office of Planning and Research.
4)Each member of the Cabinet shall identify a senior
manager within his or her agency to coordinate business
support activities with the Office of Economic
Development.
5)The Office of Economic Development shall operate a Web
portal, as described above in paragraph 2(b), and shall
be prepared to respond appropriately and promptly to all
requests for information and assistance from businesses
that need help interacting with California state
government.
a) The Web portal shall provide assistance with:
establishing or registering a business; license,
permitting and registration requirements; tax
requirements; and building codes and zoning.
b) The Office of Economic Development shall ensure all
state Web sites focused on economic development and
business support are user-friendly and provide
accurate, updated resources.
6)The Director shall seek advice and input from local
government officials, economic development agency
officials, and industry leaders.
IT IS FURTHER ORDERED that the agencies and departments
under my executive authority shall cooperate in the
implementation of this Order. Other entities of state
government not under my direct authority are requested to
assist in its implementation.
This Order does not and is not intended to create any
rights or benefits, substantive or procedural, enforceable
at law or in equity, against the State of California, its
agencies, departments, entities, officers, employees or any
other person.
Little Hoover Commission report. The Milton Marks "Little
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Hoover" Commission on California State Government
Organization and the Economy (LHC) released a report in
February 2010 entitled., Making up for Lost Ground:
Creating a Governor's Office of Economic Development.
LHC's report can be accessed through the following link:
http://www.lhc.ca.gov/studies/200/report200.html
The following are excerpts from LHC's report:
California's state government needs to nurture the business
innovation that creates jobs and sustains a quality of life
that has made it the envy of the world. California must do
so not just to weather the current downturn, but to ensure
that it remains a world-class economy that produces
opportunities for its own people as well as those who move
here to contribute their talent and energy
As the state struggles to generate jobs and regain its
economic momentum, increased attention has focused on how
the state manages and markets its economic development
programs since the state disbanded the Technology, Trade
and Commerce Agency in 2003. Currently, there is no single
location where the state's economic development programs
come together. Instead, the state's economic development
activities are spread out over several agencies, boards,
commissions, allocation committees and financing
authorities. More than 10 advisory panels, boards and
commissions, with more than 150 combined members from the
public and private sectors, provide guidance on how the
state should spend millions of dollars on economic and
workforce development programs. This fragmentation helps
explain why state government lacks a vision or voice for
California economic development.
The Commission heard repeatedly from the economic
development community about the growing need for the state
to exert its leadership to guide and focus decision-making
about job and business retention, expansion and attraction.
What many stakeholders are demanding is not a new state
agency. The merit of a centralized approach - reassembling
under one roof many of the state's economic development
programs - is intuitive and compelling, and one that
deserves further discussion and consideration. The
Commission is not necessarily opposed to such a move, but
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building a new agency is not the right answer at this time.
The urgency of the current situation requires a more
immediate response to engage state leaders to define a
strategy for the state's economic growth, then to build an
appropriate structure around that vision.
Instead of a traditional, top-down bureaucracy, a more
agile entity is needed that can function as a convener and
coordinator, not a provider of economic development
services. Based on the input from state leaders and local
economic development professionals, the essential functions
should include:
Developing a vision for economic growth and a
strategic plan that leverages the state's economic
development programs with local, regional, federal
and private efforts.
Designating a visible, point-of-contact and
liaison for information about business growth
opportunities, economic development assistance, and
navigating permitting issues and regulations.
Marketing the state's economic development
programs and business opportunities.
To perform these functions, the Commission
recommends the immediate creation of a lean, nimble
economic development unit within the Governor's
Office. This high-level and high-profile office
would serve as the visible national and
international point of contact for existing
businesses, large and small, as well as local, state
and federal economic development leaders. It would
set policy for the state's economic development
activities, integrating them with other state growth
and infrastructure priorities.
Creating a pipeline to the governor is a first step,
through a Governor's Office of Economic Development, simply
named to make it obvious to outsiders and insiders that it
is the authoritative source for inquiries about business
growth opportunities. A well-publicized phone number and a
robust Web site are essential to elevating the office and
establishing its lead role in economic development. The
Business, Transportation and Housing Agency would no longer
function as the lead economic development entity, nor would
the Labor and Workforce Development Agency. The Economic
Development Partnership would no longer be necessary, as
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its role would be filled by the new Governor's Office of
Economic Development. The California Commission for Jobs
and Economic Growth also should be disbanded. Moving
forward, other economic development panels and advisory
groups may prove superfluous or obsolete and should be
considered for elimination.
The Governor's Office of Economic Development, by its
actions, must establish that it is not an additional
bureaucratic layer or a hollow gesture. It must be
invested with the imprint and influence of the governor.
It must be a credible networking operation, staffed with
experienced and capable professionals. It should be
opportunistic, serving as an ambassador, match-maker,
strike-team and portal that connects businesses and
economic development consultants with local, regional,
state, federal and private sector resources - be it the
coffeemaker manufacturer thinking about leaving the state,
a city manager putting an incentive package together to
lure an automaker to town, the state legislator whose field
office received an inquiry from a business interested in
moving to the district, or a small business trying to
resolve permit disputes. The state cannot always provide a
handout, but it must do a better job with the handoff.
PRIOR/RELATED LEGISLATION
AB 2734 (John Perez), 2009-2010 Legislative Session .
Declares the intent of the Legislature to enact legislation
that would codify the existence of, and establish
responsibilities for, the California Business Investment
Services program, which is currently operated by the Labor
and Workforce Development Agency. (Pending in Assembly
Jobs, Economic Development & the Economy Committee.)
AB 1558 (V. Manuel Perez), 2009-2010 Legislative Session .
Renames the Employment Development Department as the
"Economic and Employment Development Department" and
expands the duties of the department. (Pending in Senate
Business and Professions and Economic Development
Committee.)
SUPPORT : As of April 9, 2010:
California Manufacturers & Technology Association
California Aerospace Technology Association
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California Construction & Industrial Materials Association
California Grocers Association
California League of Food Processors
California Retailers Association
California Restaurant Association
California Taxpayers' Association
California Trucking Association
California Business Properties Association
Association of Financial Development Corporations
Engineering Contractors' Association
California Fence Contractors' Association
Marin Builders' Association
Flasher/Barricade Association
California Chapter of the American Fence Association
Independent Waste Oil Collectors
California Forestry Association
Service Employees International Union - California State
Council
American Federation of State, County and Municipal
Employees, AFL-CIO
California Labor Federation
OPPOSE : None on file as of April 9, 2010:
FISCAL COMMITTEE : Senate Appropriations Committee
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