BILL ANALYSIS Ó
Bill No: AB
894
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2011-2012 Regular Session
Bill Analysis
AB 894 Author: V. Manuel Perez
As Amended: April 25, 2011
Hearing Date: June 28, 2011
Consultant: Paul Donahue
SUBJECT : State government: Economic development
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.
Existing law : The California Industrial Development
Financing Act (CIDFAC) authorizes cities, counties and
redevelopment agencies to establish industrial development
authorities to issue industrial development bonds, the
proceeds of which may be used to fund capital projects of
private enterprise under specified terms.
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
AB 894 (V. Manuel Perez) continued
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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
aggregate amount of federal, state, and local taxes paid by
the businesses.
4) Prohibits CIDFAC from commencing operation of the
Program until there is sufficient money in the
Manufacturing Program Account to pay for the cost of
implementation and oversight of the Program.
COMMENTS :
1) Purpose of the bill : The author notes that the
manufacturing industry sector has struggled in recent
years. The California Manufacturers and technology
Association estimates that California lost 633,000
manufacturing jobs from 2001 through November 2010.
This bill proposes 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 author also notes that 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.
2) 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
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$1.9 trillion 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.
3) Manufacturing report : According to a June 2010 report
by the Milken Institute,<1> the challenges California faces
in its manufacturing industry serves as an early warning of
the challenges that facing the state's economy as a whole.
The report found that California's competitive position is
losing ground to other states because of its regulatory
climate, tax burden and reputation as a difficult and
costly place to do business. California lost nearly 400,000
manufacturing jobs between 2000 and 2007, according to the
report. Silicon Valley, for instance has 130,000 fewer jobs
now than it had a decade ago, with office vacancy above 20
percent.
4) Opposition : Opponents object to the provisions of this
bill that give priority to loan applications submitted
jointly with a labor union. Opponents instead support the
merit shop as a way of doing business in which companies
reward employees based on performance, which encourages
them to reach their highest level of achievement, and in
which contracts are awarded regardless of labor
affiliation.
5) Related legislation :
AB 2437 (V. Manuel Pérez, 2010) would have established 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.
(Vetoed)
AB 1420 (V. Manuel Pérez, 2010) directed the California
Council on Science and Technology and the California Space
Authority to seek funding to expand their inventory of the
state's innovation infrastructure including university
research facilities, private research parks, manufacturers
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<1> Manufacturing 2.0: A More Prosperous California
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and incubators. The current inventory covers innovation
resources in 13 of California's 58 counties, providing an
on-line interactive database that links researchers and
businesses to global innovation networks. Status: The
purposes of the bill were pursued through private
foundation funding. (Held in Senate)
AB 1009 (V. Manuel Perez) Chapter 648, Statutes of 2009
authorizes the California Debt Limit Allocation Committee
and CIDFAC to allocate, issue, and collect data on the
types of bonds authorized under the American Recovery &
Reinvestment Act of 2009.
AB 1107 (Arambula, 2008) would have required the California
Small Business Board within the Business, Transportation
and Housing Agency and in collaboration with the Labor and
Workforce Development Agency and the California Department
of Food and Agriculture to assess the goods movement needs
of small business and microenterprise in California, and to
make recommendations thereupon, for incorporation in the
California Economic Development Strategic Plan and in the
State Transportation Plan. (Vetoed)
SUPPORT:
California Labor Federation (sponsor)
California Manufacturers and Technology Association
California Conference Board of the Amalgamated Transit
Union
California Conference of Machinists
California Small Business Development Centers
California Teamsters Public Affairs Council
CDC Small Business Finance
Communications Workers of America, AFL-CIO, District 9
Engineers and Scientists of California
Inland Empire Economic Partnership
International Longshore and Warehouse Union
Professional and Technical Engineers, Local 21
UNITE HERE!
United Food and Commercial Workers Union, Western States
Council
Yuba Sutter Economic Development Corporation
OPPOSE:
Associated Builders and Contractors of California
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DUAL REFERRAL: Senate Governance and Finance Committee
FISCAL COMMITTEE: Senate Appropriations Committee