BILL ANALYSIS Ó
AB 29
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ASSEMBLY THIRD READING
AB 29 (John A. Pérez)
As Introduced December 6, 2010
Majority vote
ECONOMIC DEVELOPMENT 6-0 APPROPRIATIONS 17-0
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|Ayes:|V. Manuel Pérez, Grove, |Ayes:|Fuentes, Harkey, |
| |Beall, Block, Hueso, | |Blumenfield, Bradford, |
| |Morrell | |Charles Calderon, Campos, |
| | | |Davis, Donnelly, Gatto, |
| | | |Hall, Hill, Lara, |
| | | |Mitchell, Nielsen, Norby, |
| | | |Solorio, Wagner |
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SUMMARY : Establishes the Office of Economic Development within
the Governor's Office (GOED) 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)Codifies the existing California Business Investment Services
Program (CalBIS) within GOED as a program to serve employers,
corporate executives, business owners, and site location
consultants who are considering California for business
expansion and investment. In implementing the program, GOED
is required to establish a process for convening strike teams
on key business development situations including, but not
limited to, attracting new businesses, relocating large
manufacturers and closure of large businesses.
2)Transfers the existing Office of the Small Business Advocate
(OSBA) to GOED.
3)Requires that the Director of GOED be appointed by the
Governor, subject to confirmation by the Senate Rules
Committee.
4)Provides that funding for GOED in fiscal year (FY) 2011-12
shall be from existing resources and staffed by personnel
loaned from other state agencies and departments including,
but not limited to, Labor and Workforce Development Agency
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(LWD); Business, Transportation and Housing Agency (BTH);
California Environmental Protection Agency (CalEPA); the State
and Consumer Services Agency; Governor's Office of Planning
and Research (OPR); and, the Resources Agency. Each member of
Cabinet is required to identify a senior manager within his or
her agency who is to be responsible for coordinating business
support activities with GOED. Funding in subsequent years
will be through the regular budgeting process, including the
permanent transfer of associated positions.
EXISTING LAW establishes various state programs and services
related to economic development and growth at differing
agencies, departments, boards, and state entities including, but
not limited to, LWD, BTH, OPR, Department of Housing and
Community Development, and CalEPA.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)Ongoing costs in the range of $500,000 per year to maintain
and update the Web site, to advertise the required phone
number, and to provide staff to answer the dedicated telephone
line and assist callers.
2)Estimated $400,000 in General Fund costs to produce the
required strategic plan.
3)General Fund costs in excess of $200,000 for the director and
support staff.
4)According to the terms of the bill, these costs will be
financed through the redirection of funds from other state
government entities in 2011-12; presumably such a redirection
results in reduced production from the redirected entities.
COMMENTS : 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.
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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 29 (John A. Pérez) substantially codifies and provides
enhanced guidance to the framework detailed in EO S-05-10 by
statutorily forming GOED and assigning specific tasks and
duties. This bill also statutorily transfers the Office of the
Small Business Advocate and codifies CalBIS within the framework
of GOED.
Previous legislation: AB 29 (John A. Pérez) is a
re-introduction of AB 2734 (John A. Pérez) of 2010, which was
vetoed by the Governor, based, according to his veto message, on
the provision that the Director of GOED was subject to Senate
confirmation, which he stated inappropriately infringed on the
rights and powers of the Governor. AB 29 also includes the
Senate confirmation provision.
Governor's Office of Economic Development: GOED was created in
April 2010 through Executive Order (S-05-10). Since its
inception, it has served over 3,000 businesses, 95% of which are
small. The most frequent types of assistance include help with
permit streamlining, starting a businesses, relocation and
expansion of businesses, and regulatory challenges.
Under the auspices of GOED, a number of state programs and
services are administered, including programs related to
international trade, permit assistance, CalBIS, the OSBA, and
innovation. There are 23 positions assigned to GOED, which is
funded through existing state resources and staffed by personnel
loaned from state agencies and departments. AB 29 states that
this shall remain the funding and staffing structure for GOED
during FY 2011-12 and thereafter be subject to the regular state
budget process.
Among other programs, GOED administers the Innovation Hub (iHUB)
program in partnership with the statewide network of Small
Business Development Centers. There are currently 12 regional
iHUBs including iHUBs located in the following regions:
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Sacramento, San Jose, the Coachella Valley, and San Diego and
Imperial Counties. The iHUB program is designed to improve the
state's national and global competitiveness by stimulating
partnerships, economic development, and job creation around
specific research clusters. Key assets and partners of the
initiative include technology incubators, research parks,
universities, federal laboratories, economic development
organizations, business groups, and venture capitalists.
Another key initiative of GOED are the "strike teams" which can
be mobilized to help attract and/or retain specific businesses.
Strike teams are especially well suited to engage with major
employers and have been successfully activated to assist Bayer
Healthcare, Jazz Semiconductor, and Baxter Pharmaceutical locate
and/or expand in California.
GOED is also sponsoring a permit streamlining pilot project,
which will offer a One-Stop-Shop for state and local permits.
The pilot, launched in partnership with the City and County of
San Francisco, will allow a business owner to login to a single
Web site (day or night) and apply for and pay all necessary
city, county and state permits. AB 29 (John A. Pérez)
substantially implements the current activities of GOED as
outlined in the 2010 EO.
Differing models for the state's economic development
activities: While AB 29 substantially codifies the current
activities of GOED, at least one of the state economic
development stakeholders would prefer a different model. A
letter by the California Manufacturing and Technology
Association (CMTA) states that GOED's current structure has
resulted in an office of state employees that, while highly
qualified, lack sufficient direct authority to "work at the same
level of a CalEPA or BTH Secretary."
More specifically, the CMTA, recommends reorganizing the LWD
into two separate departments: a Department of Industrial
Relations that focuses on the enforcement and compliance with
the Labor Code and a Department of Workforce and Economic
Development. The second department would house many of the
divisions currently organized under the Employment Development
Department and would align workforce policy decisions within an
economic development plan.
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There has been extensive dialogue about the proper structure and
location of the state's lead economic development entity. Most
recently, the Governor has indicated to a number of stakeholder
groups that he is interested in a broad reorganization
discussion of many of the state's current programs and services
(including the economic development programs) for the purpose of
creating leaner, less duplicative, and improved program
outcomes. The author of AB 29 (John A. Pérez) has stated that
he is ready to engage in these discussions.
Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916)
319-2090
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