BILL ANALYSIS Ó
AB 2012
Page 1
Date of Hearing: April 17, 2012
ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT AND THE ECONOMY
V. Manuel Pérez, Chair
AB 2012 (John A. Pérez) - As Introduced: February 23, 2012
SUBJECT : Governor's Office of Business and Economic
Development
SUMMARY : Transfers the authority for undertaking international
trade and foreign investment activities from the Business,
Transportation and Housing Agency (BTH) to the Governor's Office
of Business and Economic Development (GO-Biz). In addition, the
bill transfers the responsibility for establishing an
Internet-based permit assistance center from the Secretary of
the California Environmental Protection Agency (CalEPA) to
GO-Biz.
EXISTING LAW :
1)Establishes GO-Biz within the Governor's Office for the
purpose of serving as the lead state entity for economic
strategy and marketing of California on issues relating to
business development, private sector investment and economic
growth. GO-Biz also serves as the administrative oversight
for the California Business Investment Service and the Office
of the Small Business Advocate.
2)Establishes BTH for the purpose, among other things, of
overseeing and coordinating the activities of various
departments, offices, and economic development programs, with
responsibility for maintaining the strength and efficiency of
California's infrastructure and financial markets. These
programs provide financial and programmatic regulation
important to the economic marketplace, community development,
and the safe and efficient flow of commerce.
3)Directs BTH to undertake international trade and investment
activities and, as a condition of that authority, directs the
development and implementation of a comprehensive
international trade and investment strategy. All
international trade and foreign investment activities and
funding are required to be consistent with this strategy.
4)Requires the Secretary of CalEPA to establish an electronic
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online permit assistance center for businesses. The center,
also known as CALGOLD, is required to have "hyperlinks" and
other online resources and tools that could be used by a
business to streamline and expedite compliance with specified
environmental laws and regulations.
FISCAL EFFECT : Unknown
COMMENTS :
1)Author's purpose : According to the author, "AB 2012 is a
continuation of work started since 2010, to create a single
point of contact for business in California. While the
foundation for both the inclusion of foreign trade and
permitting was included in prior legislation that was signed
into law, the details had not been worked out."
"There is currently an agreement between GO-Biz and CalEPA to
allow GO-Biz to be able to maintain the CALGOLD website. This
bill codifies that agreement."
"Additionally, prior legislation defined the powers and duties
assigned to GO-Biz as the following: "In cooperation with the
federal government, foster relationships with overseas
entities to improve the state's image as a destination for
business investment and expansion. This bill formally
transfers the responsibility for foreign trade to GO-Biz."
2)Governor's Office of Business and Economic Development : In
February 2010, the Little Hoover Commission (LHC) undertook a
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 of 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 entity that would promote
greater economic development, foster job creation, serve as a
policy advisor 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 as a means to
operationalize the report recommendations including the
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creation of the Governor's Office of Economic Development
(GOED).
Since its inception, GOED 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, the Office of the
Small Business Advocate, and innovation. There are 23
positions assigned to GOED in 2011-12 Budget, which are funded
through existing state resources and staffed by personnel
loaned from state agencies and departments. In October 2011,
the Governor signed AB 29 (cited and described below), which
effectively codified GOED and changed its name to GO-Biz,
effective January 1, 2012.
Among other programs, GO-Biz administers the Innovation Hub
(iHUB) program in partnership with the statewide network of
Small Business Development Centers. There are currently 12
regional iHUBs located throughout the state. 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 GO-Biz is 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 to locate and/or expand in California.
GO-Biz 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 (24x7) and apply for and pay all necessary
city, county and state permits.
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3)Expansion of GO-Biz and reorganization : In signing AB 29,
Governor Brown also issued a letter outlining his continued
interest in expanding the role of GO-Biz for the purpose of
better focusing the state's multiple economic development
activities. The Governor reiterated this policy when he
released his proposed 2012-13 budget.
On March 30, 2012, the Governor submitted a reorganization
plan to the Little Hoover Commission, which operationalized
his earlier statements. Key GO-Biz related elements within
the reorganization plan include:
Dismantling BTH and transferring the following programs
to GO-Biz:
o The Small Business Loan Guarantee Program;
o The California Travel and Tourism Commission;
o The California Film Commission;
o The Film California First Program; and
o The Infrastructure and Economic Development Bank
(I-Bank).
Locating a Small Business Center program with GO-Biz,
which is most likely, refers to the Small Business
Development Centers Program (SBDC). The SBDC is currently
co-located at GO-Biz.
Replacing the Secretary of BTH with the Director of
GO-Biz as Chair of the California Travel and Tourism
Commission and the I-Bank. A newly established Secretary
of Transportation replaces the Secretary of State and
Consumer Services on the I-Bank board.
The Little Hoover Commission has 30 days to analyze the
reorganization plan and submit its recommendations to the
Governor and Legislature. The Legislature then has 60 days to
consider the plan. The plan goes into effect unless the
Legislature takes an action to disapprove the plan with a
majority of the Members in each house voting.
Given that the reorganization plan has only been released a
few short weeks ago, it is too soon to hear of any issues or
concerns. Further, the reorganization plan substantially lays
out a new administrative structure consistent with the
Governor's proposed budget. Should the reorganization plan be
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implemented, AB 2012 could be a useful vehicle for making
technical and conforming changes.
1)Transfer of CalGOLD Program : Existing law requires businesses
to obtain various environmental permits prior to undertaking
any project with potential environmental impacts. In 1997,
the state established a "smart" permit system to aid
businesses in complying with these laws and regulations. The
system, also known as the CalGOLD, provides "hyperlinks: and
other online resources that business can use to identify
permit requirements. While statutorily, CalGOLD is directed
to be operated through the Secretary of the Environmental
Protection Agency, the site and its related permit assistance
activities are being undertaken by GO-Biz through a memorandum
of understanding.
2)Transfer of the state's trade program : Between 1986 and 2004,
the Technology, Trade and Commerce Agency (TTCA) was the
responsible government entity for promoting economic
development, international trade, and foreign investment in
California. When the agency was eliminated due to its poor
administrative performance, the authority for all state trade
activity was also struck from statute.
Beginning in the 2005-06 session, several legislative measures
were introduced to reinstate the state's trade authority. No
measures were successful until a compromise was negotiated by
the JEDE, SB 1513 Ý(Romero), Chapter 663, Statutes of 2006].
During deliberations on the re-establishment of the state's
trade authority, concerns were repeatedly raised that the
state lacked a comprehensive, or even generally
understandable, statutory scheme related to trade and foreign
relations.
SB 1513 addressed these concerns by first requiring the
Business, Transportation and Housing Agency (BTH) to undertake
a trade study to determine what role, if any, the state should
play in international trade and foreign investment activities.
Second, the bill required BTH to establish a business
advisory committee to provide California businesses with
direct access to the policy making process. Third, the bill
required the development of a trade strategy that is
consistent with the trade study and acts as the vehicle for
implementing the state's trade policy. The first five-year
strategy was published in February 2008. The next update is
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required in February 1, 2013.
3)California's trade program : The foundation of the state's
overall trade program is the economic assessment that is
provided by the international trade study. This approach
allows the state to take not only a regional approach, but
also an industry sector approach based on the state's core and
emerging industries.
By emphasizing the development of deeper economic
relationships within core and emerging industry sectors and
their trade associations, the strategy better aligns with
economic development activities at the local and regional
levels. This tighter alignment should result in increasing
the impact of the state activities and investments. Dominant
and emerging industries from the 2008 study include the
following:
Dominant industry clusters include:
a) Professional business and information services
b) Diversified manufacturing
c) Wholesale trade and transportation
d) High-tech manufacturing
Emerging industry clusters include:
a) Life science and services
b) Value-added supply chain manufacturing and logistics
c) Cleantech and renewable energy
d) Nanotechnology
Based on these industry clusters, the International Trade and
Investment Strategy identified the following five program
objectives:
Leverage existing services to provide export assistance
to companies by the state's primary and emerging clusters;
Develop a foreign direct investment program prioritized
by the state's primary and emerging clusters;
Promote and leverage the California brand;
Monitor and engage the federal government in regard to
U.S. trade policy; and
Integrate international trade and investment into the
state's overall economic development strategy.
The strategy includes a set of specific actions, including
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timelines, priority levels, and measurable outcomes under each
of the program objectives. One example of a recommended
action includes facilitating export trade promotion through
participation in key industry trade shows and encouraging
business match-making activities during visits of foreign
trade delegations. The ITI Strategy also strongly relies on
coordinated efforts with existing federal and local public and
private stakeholders.
AB 2012 proposes to transfer the responsibilities for
implementing the International Trade and Investment Strategy
to Go-Biz including convening the international trade
partnership and updating the strategy prior to February 2013.
1)The California economy : Historically, the state's
significance in the global marketplace resulted from a variety
of factors, including: its strategic west coast location that
provides direct access to the growing markets in Asia; its
economically diverse regional economies; its large, ethnically
diverse population, representing both a ready workforce and
significant consumer base; its access to a wide variety of
venture and other private capital; its broad base of small-
and medium-sized businesses; and its culture of innovation and
entrepreneurship, particularly in the area of high technology.
A key driver of the state's $1.9 trillion economy is
international trade and its related goods movement activities.
In 2011, exports out of California were valued at $159
billion while imports into California were valued at $351
billion. Among the seven major industry sectors,
manufacturing is the most closely dependent on international
trade, where nearly one-fourth (24%) of the workers directly
depend on exports for their jobs. Manufacturing employment is
sometimes referred to as the gold standard because it pays
high wages (usually with benefits), supports the state's
access to the broader global market and provides a key link in
the extended network of small and medium sized businesses that
participate in the production, distribution and retail supply
chain. Overall, manufacturing contributed to 9.3% of the
state's GDP in 2010, employing 1.24 million workers (8.9%) and
providing an average annual salary of over $65,000.
Among other advantages, small businesses are crucial to the
state's international competitiveness and are an important
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means for dispersing the positive economic impacts of trade
within the California economy. California small businesses
comprised 96% of the state's 60,000 exporters in 2009, which
accounted for over 44% of total exports in the state.
Nationally, small businesses represented only 31.9% of total
exports. These numbers include the export of only goods and
not services.
If California were a country, it would be the 11th largest
exporter in the world. Exports from California accounted for
nearly 11% of total U.S. exports in goods, shipping to over
226 foreign destinations in 2011. California's land, sea,
and air ports of entry serve as key international commercial
gateways for products entering and existing the country.
Chart 1 - 2011 Export from California to the World, provides
greater detail into the key components of California's
exports. Trade volume in exports continued to increase in
2011, over $143 billion in 2010 and $120 billion in 2009.
Computers and electronic products were California's top
exports valued at $46 billion (28%). California ranks second
among states in the U.S. with Texas exporting $249.6 billion
in exports.
-------------------------------------------------------------
| Chart 1 - 2011 Exports From California to the World |
-------------------------------------------------------------
|------------------------------------+--------------+--------|
| Product | Value ($ | |
| | billions) | |
| | | |
| | | Percen|
| | | t |
|------------------------------------+--------------+--------|
| 334 Computers & Electronic Prod. | $46.0 | 28.0 |
| | | % |
|------------------------------------+--------------+--------|
| 336 Transportation Equipment | $14.9 | 9.4% |
|------------------------------------+--------------+--------|
| 333 Machinery (except electrical) | $14.7 | 9.3 |
| | | % |
|------------------------------------+--------------+--------|
| 339 Misc. Manufactures | $13.0 | 8.2% |
|------------------------------------+--------------+--------|
| 325 Chemical Manufactures | $ 12.4 | 7.8 |
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| | | % |
|------------------------------------+--------------+--------|
| 111 Agricultural Products | $ 10.6 | 6.7% |
|------------------------------------+--------------+--------|
| All Others | $ 43.3 | 29.7% |
|------------------------------------+--------------+--------|
| Total | $159 | 100 |
| | |% |
| | | |
------------------------------------------------------------
Based on origin of movement, Mexico is California's top
trading partner, receiving $26 billion (16.3%) in goods in
2011. The state's second and third largest trading partners
are Canada and China with $17.1 billion (10.7%) and $14.1
billion (8.8%), respectively. Other top-ranking export
destinations include Japan, South Korea, Hong Kong, Taiwan,
Germany, Netherlands, and Singapore.
If California were a country it is estimated that it would be
the 12th largest importer in the world, with $351 billion in
products being imported to California in 2011. California's
top five imports in 2011 were: Computer & Electronic Products
($107 billion); Transportation Equipment ($48.8 billion); Oil
& Gas ($30 billion); Miscellaneous Manufactured Commodities
($19.1 billion); and Apparel & Accessories ($18.9 billion).
China is the largest source of imports into California; the
2011 value of Chinese imports was $120 billion. China is
followed by Japan ($39.7 billion); Mexico ($33.6 billion);
Canada ($20.4 billion); and South Korea ($11.7 billion).
2)Related legislation : The following is a list of bills related
to this measure from the current and prior legislative
sessions.
a) AB 29 (John A. Pérez) - Codification of GO-Biz : This
bill establishes GO-Biz 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. Status: Signed by the Governor, Chapter
475, Statutes of 2011.
b) AB 1137 (V. Manuel Pérez) - Small Business Export
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Assistance and Attracting Private Investment : This bill
facilitates local economic development and job creation by
assisting small business to access new export markets for
their goods and services, updating the law relating to free
trade zones, and authorizing the use of new federal funds
under the Small Business Jobs Act of 2010. Status:
Pending in the Senate Committee on Appropriations.
c) AB 2582 (Mullin): Update of CALGOLD Program : This
bill requires the CALGOLD website to be updated
periodically to include permitting and regulatory
compliance information relevant to emerging and evolving
industries. The author was particularly interested in
adding online resources for the life sciences industry.
Status: Chaptered by Secretary of State - Chapter 283,
Statutes of 2006.
d) SB 1513 (Romero) - New International Trade Program :
This bill provided new authority for the BTH to undertake
international trade and investment activities, and as a
condition of that new authority, directs the development of
a comprehensive international trade and investment policy
for California. This bill reflects extended bi-partisan
discussions between the Senate and the Assembly. Status:
Signed by the Governor - Chapter 663, Statutes of 2006.
REGISTERED SUPPORT / OPPOSITION :
Support
None Received
Opposition
None Received
Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916)
319-2090