Review of the California Stimulus Summit

The California Association for Local Economic Development presented the California Stimulus Summit last week. The purpose of the event was to present information on understanding the American Recovery and Revitalization Act of 2009 and what it means to California. The timing of the event came on the heels of the state legislature approving the state's budget. This provided a great venue for the speakers to illustrate opportunities.

Multiple speakers provided differing insights to the elements from both the federal stimulus package and changes from the state budget. The following identifies highlights of the event.

Prefacing the formal remarks were short presentations illustrating the pending publication of two major reports. First is the 2008 Year in Review from the California Commission for Economic Development. This document focused on six key areas: Investment in Education; Enhanced Communication about the Economy; Review Tax Structure; Government Regulation; Coordination of State and Federal Interests; Increasing Advocacy. Second is research from the Public Policy Institute of California, entitled California Cities Economic Development Policies: Perspectives, Assessments and Implications for State Policy. The report illustrates that role local government is playing a very substantial role in economic development. It examines 478 cities in the state virtually all involved in economic development.

State Treasure Bill Lockyer provided insight to the state budget. He illustrate that sales tax receipts had dropped by 4 percent in 2008 and that the forecast for 2009 is higher at 6 percent. One of the most significant items he presented was the reduction in the state Gross Domestic Product, illustrating that this would be one if not the first time the state would be witness to negative growth. His concern stems from the issues of reduced spending and investment. He illustrated continued declines to the economy through 2009 and that there may not be an increase in revenue generation until 2013.

"We need to let the dust settle on the budget to determine if further cuts need to be made to balance the budget".

Bill Lockyer, State Treasurer

However, he did describe that the passage of the budget would un-freeze resources to fund 6,000 construction projects for housing, infrastructure, levies and schools. In addition, he spoke about the need to examine the budget after the dust settles because he believes that their will need to be additional cuts for a balanced budget. He concluded his remarks by illustrating a recent report from Moody's on how to stimulate the economy. The report found that bolstering resources for increased items such as food stamps, infrastructure spending and increasing unemployment benefits were ranked the highest. Items such as a payroll tax holiday, accelerated depreciation and an Alternative Minimum Tax, AMT
patch were not ranked as high as others might think.

Victoria Bradshaw with the Governor's Office identified that the final budget comprised of taxes, budgeted reforms, and stimulus. She identified that they Governor had completed 7 budgets last year. What has come out in the budget is significant, specifically the economic stimulus. The budget guidance of the Governor provides red carpet versus red tape. It also provides tax incentives for business, good resources for small business, private-public partnerships for infrastructure and California Environmental Quality Act, CEQA exemptions.

Victoria Bradshaw, Governor's Office

Dale Bonner, Agency Secretary of the Business, Transportation and Housing illustrated that there are not only items in the federal stimulus but also in the state budget in support of water infrastructure, but also for education and healthcare. He identified that the budget has a variety of elements to enhance the state's business climate, tax structure and business incentives. He also identified that there needs to be a dialogue related to what can we all do not to implement and maximize the impact form the stimulus package. He outlined the concept of Regional Recovery Work Plans that formulate specifically from regions on what they want or need to do or intend to do to spur economic stimulus over the next 90 days and can be achieved over the next 2 years. The Secretary identified that there should be an emphasis on working together, creating greater leverage. Do not put one another in the positions of making decisions whose project is better, but look at opportunities. He also identified that he would channel the Agency's resources to support infrastructure projects, and for transportation and shake the trees looking for monies in support of ways to stimulate the economy. He concluded by expressing the urgency of this economic recovery action, in the spirit of the effort, should be seen as the speed necessary to respond to an emergency disaster drill.

Dale Bonner, Agency Secretary
Business, Transportation and Housing

Lynn Jacobs, Department Director of Housing and Community Development illustrated the tools that her Department has to help communities including the Enterprise Zone program, enhanced Community Development Block Grant monies coming from the federal stimulus package, monies for the homeless and tax credits for housing. In addition, she added that there would be a second round for neighborhood stabilization program. And there will also be increased capital investments for low income housing, rental assistance for Section 8, for rural housing, weather efficiency and insulation, job programming m Native American CDBG, Homeland Security for food and Delta Restoration.

"it is a joyous day and there is optimism in the future".

John Garamendi, Lt. Governor on passage of the state budget

Lt. Governor, John Garamendi illustrated his enthusiasm for the budget by saying it was a joyous day and that there is optimism in the future. He specifically focused on the stimulus package particularly the housing program. He said," Exactly how and when it will arrive is still being worked out, but it will bring opportunity to the state". In addition he illustrate that all total, between the state budget and the stimulus package there is a lot of good news. He asked the attendees to look at both the stimulus in the budget together with the federal stimulus program to create something even bigger. He asked everyone to figure out how to leverage, exponentially grow the stimulus. Lastly, the Lt. Governor expressed that education and our subsequent investment in it is the most significant investment that Californians can make.

Further information was provided by a series of panels representing US Dept of Commerce Economic Development Administration and US Housing and Urban Development. In addition, information was provided by Toni Symonds, Committee Consultant to the Assembly Committee on the Economy, Economic Development and Jobs. Also information was provided by Senator Diane Feinstein's Office that can be found at the Senator's website at www.feinstein.senate.gov.

In addition further information can also be found at the California Association for Local Economic Development at www.caled.org.

Finally, in addition to this material, the California Business Minute has completed two short summaries on the outcome of the American Recovery and Revitalization Act of 2009 and the state budget. These can be found at the homepage at the California Business Minute.com. They will be updated as more information is identified related to their implementation.

By: Tim Johnson of the California Business Minute