BILL ANALYSIS �
AJR 37
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ASSEMBLY THIRD READING
AJR 37 (Muratsuchi)
As Introduced February 19, 2014
Majority vote
ECONOMIC DEVELOPMENT 8-0
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|Ayes:|Medina, Campos, Daly, | | |
| |Fong, Linder, Melendez, | | |
| |Cooley, Ting | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Memorializes the Legislature's desire for the United
States (U.S.) Congress to support legislation reauthorizing the
Export-Import Bank of the United States (Ex-Im Bank).
FISCAL EFFECT : None
COMMENTS : This resolution seeks state legislative support for
federal advocacy to support the reauthorization of the Ex-Im
Bank. In deliberating the appropriateness of this resolution,
Members may wish to consider the importance of trade within the
California economy, the continuing need for programs to assist
businesses in accessing capital and new markets, and the ability
of the federal government to operate the Ex-Im Bank without
ongoing costs to the public.
Background on the Ex-Im Bank : The Ex-Im Bank is an independent
federal agency that provides a variety of financial and
insurance products that are designed to fill gaps in private
export financing. Last authorized in 2012, the Ex-Im Bank needs
to be reauthorized by September 30, 2014. The Ex-Im Bank
operates at no cost to American taxpayers and, in 2013, the
Ex-Im Bank generated more than $1 billion in revenues above the
actual amount necessary to operate its programs and maintain
prudent loss reserves.
In the federal fiscal year (FFY) 2013, the Ex-Im Bank approved
more than $27 billion in financial authorizations, which
supported an estimated $37.4 billion in export sales and
approximately 205,000 U.S. jobs. Since 2009, the Ex-Im Bank has
supported nearly 2.1 million private sector jobs.
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Of the total transactions in 2013, approximately 89% (3,413) of
the financial transactions were with small business for a total
of $6 billion. Of that $6 billion in small business
transactions, $5.2 billion were for direct support of small
businesses and $800 million was attributed to small business
inputs within the supply chain of larger U.S. exporting
companies. FFY 2013 was also a historically high year for women
and minority-owned firms, with the Ex-Im Bank completing 761
transactions for a total of $815.5 million. This represents one
in five businesses assisted in FFY 2013 were a woman- or
minority-owned business.
Between 2012 and 2014, $91 billion in financial authorizations
went to 530 California exporters, which supported $10 billion in
sales. Of those exporters, 412 were small businesses, 67 were
minority-owned businesses, and 41 were women-owned businesses.
The three top export destinations for California products were
Mexico, Singapore, and Germany. More businesses in California
use the Ex-Im Bank than from any other state except Texas, 530
versus 661. However, of those businesses, California has a
significantly higher number of small businesses, 412 versus 366.
Other accomplishments in the past several years include an
enhanced risk management approach which materially reduced
defaults since the financial crisis. The default rate for the
final quarter of 2013 was 0.267%. Fred Hochberg, the Chair and
President of the Ex-Im Bank attributes the low default rate to
the Bank's continued prudent oversight and due diligence
standards. Key changes identified in Congressional testimony
include modernizing the Bank's credit monitoring techniques,
creating a special assets unit to address emerging credit
issues; improving underwriting, and enhancing credit loss
modeling with qualitative factors. In preparation for
reauthorization, the Ex-Im Bank has met all its reporting
requirements including the preparation of a current business
plan, publication of a small business report, and submittal of
quarterly default reports.
California's Trade-Based Economy : International trade and
foreign investment serve as critical components of California's
$2.0 trillion economy. If California were a country, it would
be the 17th largest exporter and the 14th largest importer in
the world. Merchandise exports from California ($168 billion)
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accounted for over 10.6% of total U.S. exports in goods,
shipping to over 220 foreign destinations in 2013.
California's land, sea, and air ports of entry served as key
international commercial gateways for the $538 billion in
products entering and exiting the U.S. in 2012. Statewide, 4.4
million California jobs are dependent on foreign trade. Over
562,700 California workers benefit from jobs with foreign-owned
firms, which accounts for 5.1% of all private sector jobs in the
state.
The importance of trade to the California economy is increasing
as a percentage of California jobs tied to trade more than
doubled from 1992 to 2011, 10.6% to 22.0%. Most recently, the
value of trade-related work, as a component of the broader
economy was the subject of a study by the Brookings Institute
and JP Morgan Chase, Export Nation 2013. The report found that
between 2003 to 2012 exports drove post-recession growth in the
100 largest metro areas including Los Angeles, San Diego, and
the Inland Empire. The study is unique in that it collects data
by origin or production rather than origin of export movement,
as is the case with the U.S. Department of Commerce export data.
Using the Export Nation methodology, total California exports
for goods and services in 2012 was $252.9 billion. In 2012,
exports represented 12.4% of California GDP versus 8.8% in 2003.
California's 11 largest metro areas ranked in order of their
percentage contribution to total state exports and, in
parentheses, the percentage exports contribute to the metro
area's economy: 1st - Los Angeles (12% local economy); 2nd -
San Francisco (12.5% local economy ); 3rd - San Jose (23.8%
local economy); 4th - San Diego (11.5% local economy); 5th - the
Inland Empire (9.2% local economy); 6th - Sacramento (7% local
economy); 7th - Oxnard (15.2% local economy); 8th - Bakersfield
(11.3% local economy); 9th - Fresno (11.1% local economy); 10th
- Stockton (10.1% local economy); and 11th - Modesto (11.9%
local economy).
Trade and foreign investments support new job creation, bring
new technologies and skills to California workers, generate
local and state revenues, and generally strengthen the state's
economic base. In the future, California's economy will become
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increasingly reliant on accessing foreign markets where a
majority of global economic growth is expected to occur.
Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916)
319-2090 FN:
0003077