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As a leader in innovation, public policy makers have been examining issues related to innovation, technology development, comparitive advantage and globalization on the California economy. In preporation for the hearing, committee staff have reviewed legislation from the past three sessions and summaried key issues and legislation below. A more comprehensive list of bills are available from the links in the right hand box.
Access to Capital
Even as many areas of California are pulling out of the recession, businesses continue to report that they face challenges in accessing and retaining credit through traditional financial institutions. For their part, financial institutions report that stricter federal regulations have left them with little flexibility in applying underwriting criteria to a business community that has been hard hit during the recession. Other sources of businesses capital have also been impacted by the recession with estimates of billions of dollars or corporate and investment sitting and waiting for more certainty in the global, national and regional economies.
Accessing capital has been especially difficult for small businesses and early stage companies. Supporting solutions to the capital needs of these small size businesses is important to the state's immediate and long term economy. California has one of the largest, by total number and percentage of firms, in the US. Over 97% of businesses in California have less than 100 employees, which represents over 38% of all workers in the state. A 2001 study by the Kaufman Foundation further underscores their importance with its finding that 90% of all jobs created between 1997 and 2000 in the US came from small and early stage firms. Consistent with these findings, data from the U.S. Census Bureau shows that from 1990 to 2003 nearly 80% of jobs created in the US came from firms employing 20 or fewer employees. This link will help you access a Fast Facts on California's small businesses.
Many industry sectors are also highly reliant on small businesses to fill key roles in the development, production and deployment of new products and technologies. For decades, automobile plants have operated under a distributed production model whereby components, some partially assembled, are brought to the plant where the final assembly and quality controls are completed. Rather than small and large businesses competing they collaborate in order to produce higher value products. This distributed production model has been adapted and recreated and now is a prevalent method for undertaking a range of R&D and production activities. Information technology and more efficient transportation systems have also allowed small businesses from around the world become participants in the global supply chains.
Below are examples of three access to capital legisaltion. A more comprehensive list is availabel through the links on the right has side including bills that have been designed to address the access to capital needs of dominant and emerging industry sectors within California's innovation-based economy. While bills focus on manufacturing, others address challenges for small and start-up companies, others were introduced to help communities before more investment ready through the provision of business incentives.
AB 2506 (V. Manuel Pérez) Innovation and Job Creation Act of 2012- Authorizes a comprehensive set of enhancements to tax incentive programs and administrative procedures including a manufacturing sales tax exemption, increased R&D credits and secondary education donation credits for the purpose of creating jobs and supporting innovation-based businesses. Status: The bill was held at the author's request in the Assembly Committee on Business, Professions and Consumer Protection, April 2012.