BILL ANALYSIS Ó
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|Hearing Date:July 2, 2012 |Bill No:AB |
| |2012 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Curren D. Price, Jr., Chair
Bill No: AB 2012Author:J. Perez
As Amended:June 25, 2012 Fiscal: Yes
SUBJECT: 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), including establishing any
international trade and investment office. 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. (Government
Code (GC) §§ 12096 - 12098.5)
2)Provides that the Governor shall appoint the Director of the GO-Biz
who shall perform all duties, exercise all powers, assume and
discharge all responsibilities, and carry out and effect all
purposes vested by law in the office, including contracting for
professional or consultant services in connection with the work of
the office. (GC § 12096.2)
3)Establishes BTH for the purpose, among other things, of overseeing
and coordinating the activities of various departments, offices, and
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Page 2
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, the safe and efficient flow of commerce, and
activities related to international trade and investment.
4)Provides that BTH shall be the primary state agency responsible for
trade and foreign investment activities and directs BTH, among other
things, to engage in the following as it relates to trade and
foreign investment: (GC §§ 13996.45)
a) Attract employment-producing foreign investment to the state.
b) Cooperate in international public infrastructure projects.
c) Provide support for California business in accessing
international markets, including but not limited to, export
assistance.
d) Engage in other trade or foreign investment related activities
specifically assigned by the Governor.
e) As a condition of that authority, directs the development and
implementation of a comprehensive international trade and
investment policy and strategies and plans to provide guidance to
other agencies and departments related to workforce and
infrastructure development. All international trade and foreign
investment activities and funding are required to be consistent
with this strategy.
5)Requires the Secretary of BTH, no later than February 1, 2008, to
provide to the Legislature a strategy for international trade and
investment that takes into consideration, at a minimum, on, policy,
goals and objectives to implement a comprehensive international
trade and investment program in California, measurable outcomes and
timelines, identification of key stakeholders, and other information
as specified. Requires the relevant policy and fiscal committees to
review and hold a hearing on the strategy presented by the
Secretary. (GC § 13996.55)
6)Requires the Secretary of BTH to convene a statewide business
partnership for international trade and investment no later than
March 1, 2007, as specified. (GC § 13996.6)
7)Prohibits the Secretary of BTH from establishing any international
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trade and investment office (ITI Office) unless specified conditions
are met including that it is consistent with the policies and the
recommendations and priorities established in the international
trade and investment strategy and that the strategy conform to
requirements, as specified. (GC § 13996.65)
8)Prohibits the Secretary of BTH from establishing any ITI Office
unless the Secretary submits a business plan, as specified, to the
Legislature and meets other requirements, as specified. (GC §
13996.7)
9)Provides that the Controller shall not allocate any state funds to
the BTH for international trade and investment activities unless the
strategy for international trade and investment has be submitted to
the Legislature by May 1, 2008, and a report as required submitted
to fiscal committees of the Legislature. (GC § 13996.75)
10)Authorizes the Secretary of BTH to accept private sector moneys in
an amount not in excess of ten thousand dollars ($10,000) per
donation made to the state for the purpose of promoting
international trade and investment, subject to the Political Reform
Act requirements, and not in excess of a total of ten thousand
dollars ($10,000) per quarter per donor, and specifies the purposes
for which moneys may be used. (GC § 13997)
11)Creates the California Economic Development Fund (Fund) in the
State Treasury for the purpose of receiving federal, state, local
and private economic development funds, and receiving repayment of
loans or grant proceeds and interest on those loans and grants, and
provides that upon appropriation by the Legislature, moneys in the
Fund may be expended by the Secretary of BTH to provide matching
funds for loans or grants to public agencies, nonprofit
organizations, and private entities, and for other economic
development purposes, consistent with the purposes for which moneys
were received. (GC § 13997.6)
12)Specifies that the Governor is the primary state officer
representing California's interest in international affairs and that
the Lieutenant Governor is the Chair of the California Commission
for Economic Development to improve trade opportunities for
California, and that the BTH is the primary state agency
responsible for international trade and investment activities in
areas other than those covered by the Department of Food and
Agriculture, and specifies other authorities of State Office holders
and agencies as it relates to international affairs. (GC 99500)
13)Requires the Secretary for the California Environmental Protection
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Agency (CalEPA) to establish an electronic online permit assistance
center, called the "California Government-On Line to Desktops"
(CALGOLD), through the Internet, and that the CALGOLD shall be
available for use by any business or other entity subject to a law
or regulation implemented by a board, department, or office within
the CalEPA, and shall provide a business or other entity with
assistance in complying with those laws and regulations, and to the
extent feasible, incorporate permit assistance activities of local
and federal entities and of other entities of the state into its
operations. (Public Resources Code § 71040)
This bill:
1)Transfers all authority for undertaking international trade and
foreign investment activities from the BTH to the GO-Biz.
2)Repeals the provisions in Item # 3) above, and instead recasts some
of these provisions and requirements for GO-Biz, and also provides
that the Director of GO-Biz may establish ITI Offices outside of the
Unites States if certain requirements and conditions are met, as
specified.
3)Requires the GO-Biz, no later than February 1, 2014, to provide to
the Legislature a strategy for international trade and investment
that takes into consideration, at a minimum, on, policy, goals and
objectives to implement a comprehensive international trade and
investment program in California, measurable outcomes and timelines,
identification of key stakeholders, and other information as
specified. However, removes the requirement that the relevant
policy and fiscal committees review and hold a hearing on the
strategy presented.
4)Repeals the obsolete provision in Item # 6) above that required the
Secretary of BTH to convene a statewide business partnership for
international trade and investment no later than March 1, 2007, as
specified.
5)Repeals the provisions in Item # 7) above which prohibited the
Secretary of BTH from establishing any international trade and
investment office (ITI Office) unless specified conditions are met
including that it is consistent with the policies and the
recommendations and priorities established in the international
trade and investment strategy and that the strategy conform to
requirements, as specified. ( Note : To keep this provision would be
inconsistent with the new authority granted to the Director of
GO-Biz to establish ITI Offices outside of the Unites States if
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certain requirements and conditions are met, as specified.)
6)Repeals the provisions in Item # 8) above which prohibited the
Secretary of BTH from establishing any international trade and
investment office (ITI Office) unless the Secretary submits a
business plan, as specified, to the Legislature and meets other
requirements, as specified. ( Note : This provision would also be
inconsistent with the new authority granted to the Director of
GO-Biz to establish ITI Offices outside of the Unites States if
certain requirements and conditions are met, as specified.)
7)Requires the Director of GO-Biz to prepare the following:
a) A budget for the International Trade and Investment Program
(Program) and a separately stated budget for each ITI Office and
specifies what information each of the budgets prepared shall
include.
b) A strategy and business plan for the Program, developed with
input from California businesses that shall include, but not be
limited to, measurable goals, objectives, and outcomes and
timelines necessary to attract employment-producing direct
foreign investment to the state and increase California exports.
Specifies what the strategy and business plan shall include.
c) A written review of the implementation of the prior year's
strategy and business plan for the Program that addresses the
performance of the program and each ITI Office.
d) Submit all of the above to the Legislature and policy
committees, as specified.
8)Provides that the Controller shall not allocate any state funds to
the GO-Biz for international trade and investment activities unless
the strategy for international trade and investment has been
submitted to the Legislature by May 1, 2014.
9)Authorizes GO-Biz to accept private sector moneys in an amount not
in excess of ten thousand dollars ($10,000) per donation made to the
state for the purpose of promoting international trade and
investment, subject to the Political Reform Act requirements, and
not in excess of a total of ten thousand dollars ($10,000) per
quarter per donor, and specifies the purposes for which moneys may
be used.
10)Creates the California Economic Development Fund (Fund) in the
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State Treasury for the purpose of receiving federal, state, local
and private economic development funds, and receiving repayment of
loans or grant proceeds and interest on those loans and grants, and
provides that upon appropriation by the Legislature, moneys in the
Fund may be expended by the GO-Biz to provide matching funds for
loans or grants to public agencies, nonprofit organizations, and
private entities, and for other economic development purposes,
consistent with the purposes for which moneys were received.
11)Specifies that GO-Biz is the primary state agency responsible for
international trade and investment activities in areas other than
those covered by the Department of Food and Agriculture.
12)Requires the GO-Biz to establish an electronic online permit
assistance center, called the "California Government-On Line to
Desktops" (CALGOLD), through the Internet, and that the CALGOLD
shall be available for use by any business or other entity subject
to a law or regulation implemented by an agency, authority, bureau,
board, commission, conservancy, council, department, state district
or office, and shall provide a business or other entity with
assistance in complying with those laws and regulations, and to the
extent feasible, incorporate permit assistance activities of local
and federal entities and of other entities of the state into its
operations.
FISCAL EFFECT: According to the Assembly Committee on Appropriations
analysis dated April 25, 2012, negligible fiscal impact.
COMMENTS:
1. Purpose. The Author is the sponsor of this measure. 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
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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.Background.
a) Governor's Office of Business and Economic Development
(GO-Biz).
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 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
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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.
b) 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
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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 had 30 days to analyze the Plan and
submit its recommendations to the Governor and Legislature. The
Legislature has until July 3, 2012 (60 days) to consider the
Plan. The Plan will go into effect on July 3rd unless the
Legislature takes an action pursuant to a resolution to
disapprove the Plan with a majority of the Members in each house
voting.
On April 23 to April 25, 2012, the Commission held a series of
public hearings and received written testimony, interviewed
experts and reviewed analyses of the departments involved,
including its own previous work when relevant. On April 25, May
11 and May 22, 2012, the Commission also held three public
hearings to develop and discuss its report and recommendation to
the Legislature. In regards to the changes as mentioned, the
Commission stated, "These moves are consistent with the
Commission's previous recommendations, and the Commission
endorses them as they should bolster the state's economic
development efforts." As further stated by the Commission: "The
functions of the entities that would become part of GO-Biz are a
natural fit for economic and business development. They are not
physically relocating but are virtually becoming a part of
GO-Biz, similar to what the Commission envisioned."
1.Transfer of the State's Trade Program within BTH. 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 with SB 1513
(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
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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 required in February 1, 2013.
2.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.
5. Related Legislation. AB 29 (John A. Pérez, Chapter 475, Statutes
of 2011) 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.
AB 1137 (V. Manuel Pérez) of 2011, would have facilitated 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. This
measure was held in the Senate Committee on Appropriations.
SB 1513 (Romero, Chapter 663, Statutes of 2006) provides 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.
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AB 2582 (Mullin, Chapter 283, Statutes of 2006) 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.
6. Arguments in Support. The California Workforce Association writes
that it strongly supports efforts to facilitate bringing businesses
to California in order to generate much needed jobs in the state
and establishing a central location for business information and
permitting is an important step in helping California as it
continues to climb out of the Great Recession.
7. Technical Amendment. With changes to Section 13996.65, a reference
to a subdivision which is no longer part of that Section was left
in and referred inadvertently in Section 13996.75. Suggest the
following technical amendment:
On page 17, line 8, strike after 2014, "or the strategy update
required by subdivision" and strike lines 9 through 11, inclusive.
SUPPORT AND OPPOSITION:
Support:
California Workforce Association
California Council for Environmental and Economic Balance
Opposition:
None on file as of June 27, 2012.
Consultant:Bill Gage