Governor Brown’s Veto of AB 2596

November 2, 2018

Governor Brown’s Veto of AB 2596 — Barry Broome

It didn’t make headlines, but just before the September close, California Governor Jerry Brown vetoed legislation that would have put the state on a path to address critical economic development challenges and greatly improve our business climate in a way that benefits all Californians.

As a lead sponsor of AB 2596, the Greater Sacramento Economic Council (GSEC) is disappointed by the veto of a bill that received backing from the state’s broad business community and bipartisan support in the legislature. Specifically, it would have directed the state’s Office of Business and Economic Development to lead the creation of a statewide economic strategic plan – a critical roadmap that California has been lacking since 2002.

That sentence should be repeated. California – a state with a $200 billion budget – is the only state in the West that operates without a strategic statewide economic development plan. Colorado, Texas, Utah and Arizona all have economic development plans, and all contain deliberate strategies to attract businesses and workforce away from California. In other words, competing states are trying to destabilize California’s economy and our outgoing Governor would rather leave office with this glaring vulnerability than sign a bill that would immediately signal California’s commitment to improving its business climate.

Just last week, a Bay Area company employing more than 650 employees announced it is relocating to Denver. The result is a $90 million loss in annual California tax revenue and a hit to our workforce. This is the very unfortunate outcome of California operating with its head in the sand and avoiding a real conversation about the economic well-being of our state.

While California loves to tout its recent budget surplus, its legacy as the home of innovation and entrepreneurship, and its standing as the world’s sixth largest economy, all of this is at risk without a statewide strategy and the numbers prove it.

Our economy is not inclusive as it claims – California ranks seventh in income inequality and has one of the highest poverty levels in the nation, with an astonishing 20 percent of California households living at our below the federal poverty guideline. We have a jobs crisis in the Central Valley, and a housing crisis in the Bay Area and Southern California. Our state is ranked 47th in the nation for high school graduates moving on to university enrollment. California ranks 49th in the nation for the cost of doing business.

We need to build from the ground up, starting with balanced input from business, labor and local government leaders, who would outline statewide and regional economic goals, identify impediments to those goals, and evaluate the effectiveness of the state’s current economic development programs – which are varied and disjointed.

Without a plan that evaluates and measures economic outcomes and promotes inclusive growth for all of California, the siloed programs supporting our economy are less effective at producing results. This is not sustainable and will ultimately harm our communities, neighborhoods and families.

GSEC and our partners will renew efforts with the next governor of California to call for an independent assessment of the state’s competitiveness and the creation of a statewide economic development plan that will restore an inclusive economy in California that puts us back on top.