Hearing held by: Assembly Committee on Jobs, Economic Development, and the Economy And Assembly Budget Subcommittee No. 4 on State Administration California's Economic Development Programs: Meeting the Challenges of Today's Economy Juan Arambula, Chair Assembly Committees on: Jobs, Economic Development, and the Economy And Budget Subcommittee on State Administration Tuesday, March 27, 2007 Report Prepared by: Assembly Committee on Jobs, Economic Development, and the Economy i Assembly Committee on Assembly Budget Jobs, Economic Development, and Subcommittee No. 4 on State the Economy Administration Juan Arambula, Chair Juan Arambula, Chair Jim Silva, Vice Chair Paul Cook Anna Caballero Chuck DeVore Bonnie Garcia Mary Hayashi Curren Price Gene Mullin Mary Salas Sandré Swanson Policy Committee Staff: Budget Subcommittee Staff: Toni Symonds, Chief Consultant Chris Woods, Chief Consultant Les Spahnn, Senior Consultant Dan Rabovsky, Principal Consultant Lynne Jensen, Consultant Kealii Bright, Consultant Katie Wennig, Committee Secretary Celia Mata, Consultant Janus Norman, Consultant Branch Strickland, Consultant Assembly Republican Caucus, Office of Policy: Michele Justin, Senior Consultant Chris Ryan, Senior Consultant ii Table of Contents Page Part I Section I – Introduction ............................................................................... 1 Definition of Economic and Workforce Development....................................... 2 Possible Issues for Consideration ...................................................................... 2 Organization of this Paper ................................................................................. 3 Part II Section II – The Role of Economic Development in the California Economy ........................................................................................................... 4 The California Economy .................................................................................... 4 Small Business is the Foundation of the California Economy ........................... 4 Changing Demographics in the Workplace........................................................ 5 Economic Development in California's Regional Economies .......................... 5 Section III – Significant Trends Affecting the California Economy..11 The Emergence of the Clean Technology Industry Cluster ............................. 11 Private Sector Investments in Emerging Domestic Markets............................ 15 Changes in the Manufacturing Value Chain..................................................... 17 iii Part III Section IV – Business, Transportation, and Housing Agency ............21 Small Business Board and Small Business Loan Programs ............................. 22 The California Infrastructure and Economic Development Bank.................... 25 California Economic Development Partnership............................................... 28 Information Technology Programs and Grants ................................................ 31 California Welcome Centers............................................................................. 36 California International Trade Promotion ........................................................ 37 Office of Military and Aerospace Support ....................................................... 43 Department of Housing and Community Development................................... 45 Geographically-Targeted Economic Development Areas................................ 48 Goods Movement Plan...................................................................................... 51 Section V – Labor and Workforce Development Agency .................. 51 Employment Development Department ........................................................... 52 Employment Training Panel............................................................................. 54 California Workforce Investment Board .......................................................... 55 California Economic Strategy Panel................................................................. 56 California Business Investment Services ......................................................... 58 Section VI – State and Consumer Services Agency............................ 59 Department of General Services....................................................................... 60 iv Disabled Veterans and Small Business Certification Program ........................ 60 Minority and Women Owned Business Participation Goals............................ 62 U.S. and California Material Preferences......................................................... 63 California Contractor Preferences .................................................................... 63 Target Area and Geographically-Targeted Economic Development Area Contract Preferences Act ................................................................................. 63 Small Business Council .................................................................................... 65 Section VII – Office of the State Treasurer......................................... 66 California Debt Limit Allocation Committee................................................... 67 California Pollution Control Financing Authority............................................ 68 California Tax Credit Allocation Committee ................................................... 72 California Industrial Development Financing Advisory Commission............. 73 California Industrial Development Authority................................................... 75 California Alternative Energy and Advanced Transportation Financing Authority......................................................................................... 76 Revenue Bonds for Public Improvements including Border Infrastructure..................................................................................................... 77 Section VIII – Other State Economic Development Programs ......... 78 The California Environmental Goals and Policy Report, Governor's Office of Planning and Research ................................................... 78 The Five-Year Infrastructure Plan, Department of Finance ............................. 79 The Economic Report of the Governor ............................................................ 80 Small Business Advocate, Governor's Office of Planning and Research..................................................................................................... 80 v California Public Employees’ Retirement System and the California State Teachers' Retirement System ................................................. 81 Economic Development Related Business Incentives...................................... 83 California Government: On-Line to Desktops, California Environmental Protection Agency.................................................................... 84 Emergency and Disaster Response for Businesses........................................... 85 Office of California-Mexico Affairs and the California-Mexico Border Relations Council ................................................................................. 86 The California Commission on Industrial Innovation...................................... 87 Economic Development Programs, California Energy Commission ............... 88 Recycling Market Development Zones, Integrated Waste Management Board................................................................................................................. 89 Innovative Clean Air Technologies Program, California Air Resources Board................................................................................................................. 91 Economic Development and Workforce Preparation, California Community College System ............................................................................. 91 California Organized Investment Network, Department of Insurance............. 94 Commission for Economic Development, Office of the Lieutenant Governor......................................................................................... 96 Registry of Potential Corporate Board Members, Secretary of State............... 96 Part IV Section IX: Economic Development Initiatives in Other States....... 98 Industry Cluster Initiatives ............................................................................... 98 Workforce Training Initiatives ......................................................................... 99 Entrepreneurship and New Business Development Initiatives....................... 100 vi Job Creation Initiatives ................................................................................... 102 Rural Development Initiatives........................................................................ 102 Other Types of Economic Development Initiatives ....................................... 103 California Competitiveness ............................................................................ 103 Section X – Federal Economic Development Programs................... 104 Department of Agriculture, Rural Development ............................................ 104 Small Business Administration....................................................................... 105 Economic Development Administration ........................................................ 108 Department of Labor, Workforce Innovation in Regional Economic Development Activities................................................................. 110 New Markets Tax