BILL ANALYSIS Ó
AB 894
Page 1
ASSEMBLY THIRD READING
AB 894 (V. Manuel Pérez)
As Amended April 25, 2011
Majority vote
ECONOMIC DEVELOPMENT 5-0 APPROPRIATIONS 17-0
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|Ayes:|V. Manuel Pérez, Grove, |Ayes:|Fuentes, Harkey, |
| |Block, Hueso, Morrell | |Blumenfield, Bradford, |
| | | |Charles Calderon, Campos, |
| | | |Davis, Donnelly, Gatto, |
| | | |Hall, Hill, Lara, |
| | | |Mitchell, Nielsen, Norby, |
| | | |Solorio, Wagner |
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SUMMARY : Establishes the California Manufacturing
Competitiveness Act of 2011 for the purpose of supporting the
retooling and expansion of California's manufacturing
facilities, enhancing the state's logistics network, and
retaining and creating jobs. Specifically, this bill :
1)Authorizes the California Industrial Development Financing
Advisory Commission (CIDFAC) to establish the California
Manufacturing Competitiveness Loan and Loan Guarantee Program
(Program) for the purpose of attracting, retaining and
expanding manufacturing facilities. Authority for
implementing the Program expires January 1, 2017.
2)Requires CIDFAC to develop and administer the application,
review and evaluation process including the eligibility
standards, rating and ranking criteria and other appropriate
policies and procedures, as specified.
3)Requires CIDFAC, beginning October 1, 2013, to annually
provide specified information on the Program's activities and
impact on the manufacturing industry and on the state's
economy, including, at a minimum, the number of projects
funded, number of jobs created and retained, the amount of
private investments made by the manufacturer, and the amount
of federal, state, and local taxes paid by the businesses, in
aggregate.
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4)Prohibits CIDFAC from commencing operation of the Program
until there is sufficient moneys in the Manufacturing Program
Account to pay for the cost of implementation and oversight of
the Program.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)One-time costs of $200,000 for development of the program.
The bill requires application fees to cover all administrative
costs.
2)Major costs associated with providing loans and loan
guarantees, which are proposed to be covered through federal
funds, but could include funds from other public and private
sources. No General Fund moneys may be deposited in the
Manufacturing Program Account.
COMMENTS : The Obama Administration is continuing to move
forward on new manufacturing initiatives in 2011, following the
2009 release of the President's "Framework for Revitalizing
American Manufacturing." In 2010 the Administration initiated
the $130 million Energy Innovation Hubs for the purpose of
spurring regional economic growth through energy efficiency
upgrades. Similar announcements are expected for other
innovation-based technologies. The proposed 2012 federal budget
also continues to reflect the President's science and technology
priorities with key federal funding agencies receiving
increases.
AB 894 (V. Manuel Pérez) proposes to proactively design a
flexible state program in order to maximize the ability of
manufacturers and the state to access federal funds. The bill
precludes the establishment of the program prior to moneys
becoming available. Under the American Recovery and
Reinvestment Act, many of the state-level applications had only
a six-week turn around, which resulted in funding proposals that
were not necessarily reflective of the state's highest
priorities.
The California economy and manufacturing: Manufacturing is one
of the top five private industry sectors in the state,
responsible for employing 1.28 million workers (9.1%) and
contributing over $180 billion to the state's $1.9 trillion
AB 894
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gross domestic product (GDP). Manufacturing is California's
most export-intensive activity. Overall, manufacturing exports
represent 9.4% ($120 billion in goods) of California's GDP, and
computers and electronic products constitute 29.3% of the
state's total manufacturing exports. More than one-fifth
(21.9%) of all manufacturing workers in California directly
depend on exports for their jobs.
A robust manufacturing sector has many benefits, including high
wage jobs and a multiplier effect on other industries and
businesses. As an example, the Milken Institute estimates that
every job created in manufacturing supports 2.5 jobs in other
sectors. In some industry sectors, such as the electronic
computer manufacturing, the multiplier effect is 16 to one.
Manufacturing in California, however, even prior to the current
economic recession, faced many challenges maintaining global and
domestic competitiveness, including providing a skilled
workforce to support the changing needs of manufacturing and
goods movement and maintaining cost-effective productivity in
the face of lower safety and wage standards in emerging foreign
markets. According to the California Manufacturers and
Technology Association, California lost 633,000 manufacturing
jobs from its peak in January 2001 to November 2010. While part
of this reduction reflects the loss of high-tech jobs in 2001
and 2002 and the current recession, the industry as a whole is
suffering. California's loss of manufacturing jobs is not
unusual among Western states. It is, however, more severe. As
the chart below illustrates, California has lost the highest
percentage of manufacturing jobs among Western states.
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| Loss of Manufacturing Jobs - Comparison of Western States |
| (2001-2010 seasonally adjusted) |
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|------------+------------+------------+------------+------------|
| Arizona | California | Nevada | Oregon | Texas |
|------------+------------+------------+------------+------------|
| -30% | -34% | -12% | -29% | -21% |
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|Source: CMTA, based on data from US Bureau of Labor Statistics |
|and California Employment Development Department |
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| |
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Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916)
319-2090
FN: 0001112