BILL ANALYSIS Ó
AB 2176
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Date of Hearing: April 22, 2014
ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT AND THE ECONOMY
Jose Medina, Chair
AB 2176 (John A. Pérez) - As Amended: April 9, 2014
SUBJECT : Governor's Office of Business and Economic Development
SUMMARY : Requires the Governor's Office of Business and Economic
Development (GO-Biz) to develop recommendations for a state economic
development plan and to be notified when an employer submits
notice to the state of his or her intent to undertake a mass layoff, as
specified. Specifically, this bill :
1)Requires GO-Biz to develop recommendations for an economic development
strategic plan for the state.
2)Make the following actions mandatory duties of GO-Biz, rather than
authorized authorities:
a) Make recommendations to the Governor and the Legislature that
relate to statewide economic goals, respond to emerging economic
problems, and to ensure that all state policies and programs conform
to the adopted state economic and business development goals;
b) Coordinate the development of policies and take actions that
ensure federal grants are expended in a manner that advances
statewide economic goals and objectives;
c) Market the business and investment opportunities available in
California;
d) Provide economic, workforce, and demographic data as well as
information on state programs, permitting, and incentives;
e) Establish a well-advertised telephone number, an interactive
Internet Web site, and an administrative structure that supports the
facilitation of business development and investment in the state;
f) Encourage collaboration among research institutions, startup
companies, local governments, venture capitalists, and economic
development agencies to promote innovation;
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g) Foster relationships with overseas entities to improve the
state's image as a destination for business investment and
expansion;
h) Conduct research on the state's business climate; and
i) Support small business development.
3)Includes GO-Biz in the required written notification from an employer
ordering a mass layoff, relocation, or termination and requires the
Employment Development Department (EDD) to post the notice on its
Internet Web site, upon receipt.
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.
2)Prohibits an employer from ordering a mass layoff, relocation, or
termination of a covered establishment unless the employer first gives
60 days' prior written notice to affected employees, EDD, the local
workforce investment board, and specified government officials within
which the termination, relocation, or mass layoff occurs.
EXISTING FEDERAL LAW requires most employers with 100 or more employees
to provide employees, bargaining representatives of the employees (i.e.,
unions), and specific government agencies at least 60 days notice of any
plant closing or mass layoff, as defined with specified exemptions. Also
known as the federal Worker Adjustment and Retraining Notification Act
(WARN Act).
FISCAL EFFECT : Unknown
COMMENTS :
1)Author's Purpose : According to the author, "In 2011, Governor Brown
signed AB 29 by Speaker John A. Pérez into law, which created the
Governor's Office of Business and Economic Development (GO-Biz), and
made permissive specific tasks and duties for the office, including
providing the Governor and Legislature with recommendations on new
state policies, programs, and actions, to advance statewide economic
goals and respond to emerging economic problems and opportunities.
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The last statewide economic strategy report was released in 2002, by
the California Economic Strategy Panel and it was entitled, "Creating a
Shared California Economic Development Strategy: A Call to Action." In
2011, however, the Economic Strategy Panel was removed from statute.
As part of the GO-Biz mission, it has the ability to convene strike
forces or teams to address key business development situations,
including, but not limited to, attracting new businesses, the
relocation of large manufacturers, or the closure of a large business
employer.
Under AB 2176, GO-Biz will be provided mandatory reporting status,
pursuant to the WARN Act, so that it can effectively respond to
companies that may be contemplating relocating, closing, or
significantly scaling back on their instate business operations.
Recognizing the need to better assist businesses in California and to
attract new and emerging companies to California, AB 2176 seeks to add
to the tasks and duties for GO-Biz the development of an economic
development strategic plan which will provide an economic development
roadmap to guide public policy decisions and actions to foster and
promote California's economic growth and competitiveness."
2)Framing the Policy Issue : This measure proposes the development of a
strategy to guide the state's economic development activities. Just
like a business strategy, a state strategy provides the big picture
that shows how all of the individual activities are coordinated to
achieve a desired end result. As the eighth largest economy in the
world, California's lack of a strategic plan impedes the state's
ability to communicate clear priorities on key issues such as
infrastructure development, workforce preparation, and support for
emerging and dominant industry sectors within the state's nine regional
economies.
This analysis includes additional information on the advantages of a
strategy, the interrelationships between state planning and funding,
and the role of GO-Biz.
3)What the Strategy would Accomplish : There are ten key drivers of the
California economy: capital, infrastructure, labor, business,
resources, education, research and development, consumers, nonprofits,
and government actions. Each of these drivers has both its own unique
characteristics as well as qualities that they share in common. In
addition, each of the drivers is inextricably linked within the overall
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state, federal, and global economy. A weakness within any one of the
drivers affects the others and potentially threatens the economic and
social health of the society.
As an example, California's aging infrastructure limits the state's
ability to move products from farm to factories and on to foreign and
domestic markets. These delays in moving goods increase the cost of
transportation, which impacts businesses all along the supply chain,
resulting in less job growth, lower discretionary income, and
ultimately less tax revenues.
While the impacts of poor quality infrastructure are known, addressing
these challenges requires a coordinated and comprehensive approach by
both public and private stakeholders. Since financing often requires
long-term commitments, and development projects are fairly permanent
structures within the environment, agreements need to be reflected in
public documents that can guide related decision in the future.
A state economic development strategy would serve such a purpose of
identifying important issues and engaging appropriate stakeholders for
the purpose of prioritizing key state actions. Up until August 2011,
existing law required the state to have a two-year state economic
development strategic plan. AB 2176 would re-establish a requirement
for an economic strategy that could support job creation, business
development, and attraction of private sector investment.
4)Strategy for the Post-Recession Economy : The post-recession U.S. and
global economy will have a number of key characteristics that will
differentiate it from that of the latter 20th Century. Remaining
competitive will require both the public and private sectors to adopt
new and more agile thinking about natural resources and the deployment
of human, physical, and financial capital. The chart below describes
eight key trends that economic researchers have identified as having
redefined the U.S. economy in the post-recession era.
----------------------------------------------------------------------
| Key Economic Trends Affecting the California Economy |
|----------------------------------------------------------------------|
| A. Cities and regions will become more dominant economic |
| players. |
|----------------------------------------------------------------------|
| B. Global networks will be supported through more advanced |
| information and transportation technologies. |
|----------------------------------------------------------------------|
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| C. Barriers to trade will continue to decline among both |
| developed and emerging economies. |
|----------------------------------------------------------------------|
| D. The world's largest companies will increasingly be |
| headquartered in emerging foreign markets. |
|----------------------------------------------------------------------|
| E. Global and more diversified markets will provide new |
| opportunities for entrepreneurs and smaller size businesses. |
|----------------------------------------------------------------------|
| F. Scarcity and rising prices will increase pressure on the |
| development and deployment of cleaner technologies. |
|----------------------------------------------------------------------|
| G. The retirement of Boomers will place an even greater need for |
| middle- and high-skilled workers. |
|----------------------------------------------------------------------|
| H. The available workforce will be smaller, more ethnically |
| diverse, and have educational backgrounds that are lower than |
|other developed economies. |
----------------------------------------------------------------------
Most of these trends are not really new, rather these trends are the
natural consequence of basic demographics and prior policy choices. It
is the magnitude of their collective impact that distinguishes these
eight trends. As an example, trade agreements are a centuries old
practice. However, today's open markets between the technologically
advanced countries and the increasing middle class in the emerging
economies is a game changer.
As AB 2176 moves forward, it may be useful to expand the language to
direct or encourage GO-Biz to collaborate with existing broad-based
stakeholder collaborations, such as the California Stewardship Council,
CALED, and the REAL Coalition, among others. With so many
regionally-based and statewide networks, GO-Biz would benefit from
their insights and expertise. In addition, the author may wish to:
Authorize private funding to finance the strategy and stakeholder
engagement;
Set a date for the completion of the first strategy and/or
specify how often the strategy is to be updated;
Add some specificity to the types of issues to be covered, such
as the 10 drivers illustrated in Comment 3.
The rate of economic change is exponentially increasing. From having a
few select centers of innovation in Western industrialized nations, the
world now supports multiple centers of new technology and innovation
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around the world. Geographic locations compete not just on what they
offer to local business, but also on how they can link those businesses
to other regions around the world. AB 2176 can play an important role
in keeping California highly competitive in this more technologically
sophisticated, hyperlinked, and globally-connected world.
1)State Planning and Funding : California's community and economic
development policy has historically been driven by a number of
statutory mandates including the Environmental Goals and Policy Report
(EGPR), the Five-Year Infrastructure Plan (Infrastructure Plan), the
International Trade and Investment Strategy (ITI Strategy), and the
Economic Development Strategic Plan (ED Strategy).
Collectively, these four policy mandates form the foundation for the
state's short-, middle-, and long-term economic success. The EGPR sets
the overall long-term framework in which individual departments and
agencies develop more detailed plans, including elements of the state
transportation and state housing plans. The Infrastructure Plan allows
the state to keep track of its infrastructure needs and set a rational
infrastructure development agenda that supports the long-term economic
and population growth assessments outlined in the EGPR. The ED
Strategy sets measureable economic objectives relative to the state's
position within the global economy. Finally, the development of the
ITI Strategy is built on the information and policies provided in the
EGPR, the Infrastructure Plan, and the ED Strategy.
Currently the EGPR is being updated and a new Infrastructure Plan was
released in January 2014 and the ITI Strategy in February 2014. The
requirement for an ED Strategy, as noted earlier, was removed in 2011.
AB 2176 serves an important role in bringing the state's planning
paradigm back into focus.
2)Office of Business and Economic Development : In April 2010, the
Governor's Office of Economic Development was established to provide a
One-Stop-Shop for serving the needs of businesses and economic
developers. While initially established through Executive Order
S-01-10, the office was later codified and renamed as the Governor's
Office of Business and Economic Development (GO-Biz), in AB 29, Chapter
475, Statutes of 2010. In 2012, GO-Biz assisted over 5,300 companies
which resulted in the creation and/or retention of 9,050 jobs and $1.45
billion in investments. GO-Biz directly assisted over 6,500 companies
in 2013.
Among other programs, GO-Biz provides permit and other technical
assistance for new and expanding businesses, as well as administering
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the California Innovation Hub Program in partnership with the statewide
network of 16 regional economic development partnerships. The Office
of the Small Business Advocate is located at GO-Biz and the state's
international trade and foreign investment activities are coordinated
through GO-Biz.
In 2012, the Governor initiated, and the Legislature allowed to
advance, a comprehensive reorganization of the state's administrative
structure. Key changes included the dismantling of the Business,
Transportation and Housing Agency (BTH), and further consolidating
GO-Biz's position as the state's lead in economic development.
Effective July 1, 2013, GO-Biz has the administrative authority for
more economic development related programs and services including the
Small Business Loan Guarantee Program and the Infrastructure and
Economic Development Bank.
3)WARN Notice : The purpose of the state and federal WARN Act is to
provide protection to affected workers, their families, and communities
by requiring employers to give advance written notice of plant
closings, mass layoffs, or relocations. The advance notice provides
workers and their families some transition time to adjust to the
prospective loss of employment, to seek and obtain alternative jobs
and, if necessary, to possibly enter skill training or retraining that
will allow these workers to successfully compete in the job market and
continue vital financial support to their families. Additionally, the
notice gives state agencies, such as EDD, the opportunity to ensure
dislocated worker assistance can be promptly provided.
4)Related Legislation : AB 2176 is similar in intent, but not identical
in language to AB 53 (John A. Pérez), which was vetoed in 2013. Below
is a list of related legislation from the current and prior sessions.
a) Related bills from the 2013-14 Legislative Session:
i) AB 53 (John A. Pérez) California Economic Development
Strategic Plan: This bill would have required GO-Biz to lead the
preparation of the biennial California Economic Development
Strategic Plan, as specified. In addition, the bill required a
copy of the federally required Worker Adjustment and Retraining
Notification Act notice be posted on the EDD website and be
provided to GO-Biz. Status: Vetoed by the Governor, 2013.
ii) AB 1543 (Holden) Layoff Notices: This bill includes GO-Biz
in the required written notification from an employer ordering a
mass layoff, relocation, or termination and requires the EDD to
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post the notice on its Internet Web site, upon receipt. Status:
Pending in the Assembly Committee on Appropriations.
b) Related bills from prior legislative sessions:
i) AB 29 (John A. Pérez, Feuer and V. Manuel Pérez) Office of
Business and Economic Development: This bill established GO-Biz
to include a newly codified California Business Services and the
existing Office of the Small Business Advocate. Status: Signed
by the Governor, Chapter 475, Statutes of 2011.
ii) AB 699 (Portantino and V. Manuel Pérez) Update State Economic
Strategy 3: This bill would have updated the requirements for the
development of a State Economic Development Strategy, especially
in the areas of technology and innovation, and required it to be
submitted to the Legislature by May 1, 2010. Status: Held in
Assembly Appropriations Committee, 2009.
iii) AB 1233 (V. Manuel Pérez) State Economic & Workforce
Development Strategy: This bill would have required the Director
of the Governor's Office of Business and Economic Development to
prepare a five-year economic and workforce development strategy.
The blueprint will help the state set a strategic path forward by
prioritizing and coordinating state activities, supporting local
and regional economic development activities, and better
leveraging of private and public sector resources. Status: Held
in the Assembly Appropriations Committee, 2012.
iv) AB 1606 (Arambula and Lieu) Update Economic Strategy Version
1: This bill would have updated the requirements of the Economic
Strategy Panel and required the development of a targeted set of
actions to increase private investment in California's
historically underserved communities, also known as emerging
domestic markets. Status: Vetoed by the Governor, 2007.
v) AB 1916 (Portantino, Arambula, Price, Salas, and Caballero)
Update Economic Strategy Version 2: This bill would have updated
the membership and requirements of the Economic Strategy Panel,
especially in the areas of technology and innovation, and required
that the next Economic Development Strategic Plan be submitted to
the Legislature by January 1, 2010. Status: Vetoed by the
Governor, 2008.
REGISTERED SUPPORT / OPPOSITION :
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Support
None Received
Opposition
None Received
Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916) 319-2090