BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
SB 928 () - International Trade Office: Mexico
Amended: April 10, 2014 Policy Vote: BP&ED 9-0
Urgency: No Mandate: No
Hearing Date: May 5, 2014 Consultant: Robert Ingenito
This bill meets the criteria for referral to the Suspense File.
Bill Summary: SB 928 would establish an international trade and
investment office in Mexico City `by January 1, 2016.
Fiscal Impact: The Governor's Office of Business and Economic
Development (GO-Biz) indicates that it would require four
positions and roughly $700,000 annually to staff the trade
office. While the bill stipulates that GO-Biz need only perform
the duties related to the trade office to the extent that
private funds are available, the bill would result in a General
Fund cost pressure to offset any shortfall in private monies
raised.
Background: In February 2010, the Little Hoover Commission
reviewed the State's economic and workforce development
programs. Specifically, it analyzed the effectiveness of all
current programs since the elimination of the California
Technology, Trade and Commerce Agency (TTCA) in 2003, and
recommended the creation of a new governmental entity to replace
TTCA, to promote greater economic development, foster job
creation, serve as a policy advisor and deliver specific
services (e.g. permitting, regulatory and other information)
directly to the State's business community. In 2012, the
Legislature created GO-Biz for these purposes. Since its
creation, GO-Biz has reportedly served over 3,000 businesses in
the areas of permit streamlining, business creation, relocation,
expansion, and regulation.
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
SB 928 (Correa)
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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.
Proposed Law: This bill would require the Director of GO-Biz to
establish and operate an international trade and investment
office in Mexico City, Mexico by January 1, 2016. The office
would be required to do all of the following: (1) facilitate
access to educational exchange programs between California and
Mexico, (2) promote the export of California goods and services
into Mexico, and (3) encourage and facilitate capital investment
from Mexico into California. The bill specifies that GO-Biz need
only perform duties related to the Mexico office to the extent
private funds are available for these purposes.
Staff Comments: The cost of operating a foreign trade office
varies significantly, and is driven by a number of factors
including, but not limited to, number of staff, level of service
provided, number of state business trips to and from California,
and the cost of living in the given country/region. Staff is
unaware of a formal commitment of private funds to establish and
run this proposed trade office.
As late as 2003-04, the State operated trade offices in 12
locations around the world. Seven foreign trade offices were
staffed by state employees, while five other offices were
staffed by contracted consultants. According to the Legislative
Analyst's Office,
these offices did not demonstrate a clear impact on state
exports or foreign investment in California. All of the trade
offices were soon closed, though an office in Shanghai reopened
in 2012.