BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 2012|
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THIRD READING
Bill No: AB 2012
Author: John A. Pérez (D), et al.
Amended: 8/24/12 in Senate
Vote: 27 - Urgency
SENATE BUSINESS, PROF. & ECON. DEV. COMM. : 8-0, 7/2/12
AYES: Price, Corbett, Correa, Hernandez, Negrete McLeod,
Strickland, Vargas, Wyland
NO VOTE RECORDED: Emmerson
SENATE APPROPRIATIONS COMMITTEE : 5-2, 8/16/12
AYES: Kehoe, Alquist, Lieu, Price, Steinberg
NOES: Walters, Dutton
ASSEMBLY FLOOR : 72-0, 5/3/12 (Consent) - See last page for
vote
SUBJECT : Economic development
SOURCE : Author
DIGEST : This bill transfers the authority for
undertaking international trade and foreign investment
activities from the Business, Transportation and Housing
Agency (BTH) to the Governors Office of Business and
Economic Development (GO-Biz), including establishing and
terminating any international trade and investment office.
In addition, this bill transfers the responsibility for
establishing an Internet-based permit assistance center
from the Secretary of the California Environmental
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Protection Agency (CalEPA) to GO-Biz.
Senate Floor Amendments of 8/24/12 add a coauthor and make
clarifying changes.
ANALYSIS :
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 (GOV) Section 12096-12098.5)
2. Provides that the Governor shall appoint the Director of
GO-Biz who shall perform all duties, exercise all
powers, assume and discharge all responsibilities, and
carry out and affect all purposes vested by law in the
office, including contracting for professional or
consultant services in connection with the work of the
office. (GOV Section 12096.2)
3. 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, 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:
(GOV Section 13996.45)
A. Attract employment-producing foreign investment to
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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. (GOV Section 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.
(GOV Section 13996.6)
7. Prohibits 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
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investment strategy and that the strategy conform to
requirements, as specified. (GOV Section 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. (GOV Section 13996.7)
9. Provides that the State 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. (GOV
Section 13996.75)
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 #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 United 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 of each house of the Legislature review and
hold a hearing on the strategy presented, and deletes
the requirement that the Director consult with other
agencies, boards, and commissions which have statutory
responsibilities related to workforce development,
infrastructure, business, and international trade and
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investment.
4. Repeals the obsolete provision in #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 #7 above which prohibited the
Secretary of BTH from establishing any 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 certain
requirements and conditions are met, as specified.)
6. Repeals the provisions in #8 above which prohibited 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. (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 United 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
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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 State 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. Recasts current law relative to acceptance of private
sector moneys for purposes of promoting international
trade and investment offices, and promoting
international trade and investment events as follows:
A. Prohibits a donor from donating more than 25% of
the annual budget of a trade office in any calendar
year, including trade offices operated under contract
with a nonprofit entity.
B. Requires GO-Biz post a report for each donation on
its Internet Web site within 30 days of receiving the
donation, as specified.
10.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 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
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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.
Background
(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
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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.
Expansion of GO-Biz and Reorganization . In signing AB 29
(J. Perez, Chapter 475, Statutes of 2011), 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
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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 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
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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."
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 TTCA 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
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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
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According to the Senate Appropriations Committee, $100,000
to $200,000 by May 1, 2014, to the General Fund for
workload and contracts to update the strategy for
international trade and investment.
Estimated $250,000 to $1,000,000 from private funds
annually depending on the location of the trade office.
SUPPORT : (Verified 8/21/12)
California Asian Chamber of Commerce
California Workforce Association
ASSEMBLY FLOOR : 72-0, 5/3/12
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bradford, Brownley,
Buchanan, Butler, Charles Calderon, Campos, Carter,
Cedillo, Chesbro, Conway, Cook, Davis, Dickinson,
Donnelly, Eng, Feuer, Fong, Fuentes, Beth Gaines,
Galgiani, Garrick, Gatto, Gordon, Gorell, Grove, Hagman,
Halderman, Harkey, Hayashi, Hill, Huber, Hueso, Huffman,
Jeffries, Knight, Lara, Logue, Bonnie Lowenthal, Ma,
Mansoor, Mendoza, Miller, Mitchell, Monning, Morrell,
Nestande, Nielsen, Norby, Olsen, Pan, Perea, V. Manuel
Pérez, Portantino, Silva, Skinner, Solorio, Swanson,
Torres, Valadao, Wagner, Wieckowski, Yamada, John A.
Pérez
NO VOTE RECORDED: Bonilla, Fletcher, Furutani, Hall, Roger
Hernández, Jones, Smyth, Williams
JJA:m:d 8/27/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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