Volume V, Issue 1 - March, 2004
California's Economy: Strategies for Success
- California's Partnership for Economic Recovery
State-level and Regional Economic Recovery Conversations
- Business Climate and California's Long-Term Prosperity
What does "business climate" really mean?
- A Focused, Unified Economic Strategy for California
Building a state economic strategy based on regional economies
A. The California Economic Strategy Panel
B. The California Regional Economies Project
- Government Performance on Economic Strategy
The "California Performance Review" and economic strategy
- Regions in Action
California's Regional Collaboratives take the lead in innovative projects and implementation
A. Social Capital in the Sierra
B. The Future of Fresno
C. Tri-Valley by the Numbers
D. San Diego Up in the Air
- Regional News and Information
The latest news and information from California's Regional Collaboratives and other CCRL strategic partners
A. Upcoming Events
B. Recent Events
I. California's Partnership for Economic Recovery
Economic recovery is a top priority for California, and Gov. Schwarzenegger has made it a central focus of his new Administration. To be effective in supporting both short-term recovery and long-term competitiveness in the global economy, the state government must craft an appropriate role that builds on "state-of-the-art" economic development practices, and create new partnerships based on the idea that economic performance is a shared responsibility.
As a first step, the state must develop a vision and strategic plan that can inform and guide state government activities and that will assure a high return on investment of state funds, staff time, and statutory and regulatory authority. Fortunately, the recent work of the California Economic Strategy Panel (see below) and of the state's leading regional Economic Development Corporations and Regional Collaboratives provides a solid base from which to move forward.
Economic Recovery Conversations
To develop and elaborate new strategies and partnerships, Secretary of Business, Transportation, and Housing Sunne Wright McPeak and other Cabinet members, together with the Governor's office, have initiated a series of Economic Recovery Conversations in Sacramento in which they can obtain first-hand input on economic strategy from business, labor, local government, civic, and community leaders.These state-level Conversations will provide valuable input to the Governor's consideration of new economic initiatives.
The first of the "Conversations" was held in December with representatives of statewide and regional business, labor, and economic development organizations; the second convened in January with local government and regional agency officials.Additional state-level Conversations will be held over the next several months to engage leaders from the Legislature and various key stakeholder groups.
Because California's economy is actually a connected constellation of regional economies, Secretary McPeak has asked CCRL to convene a series of Regional Economic Recovery Conversations around the state in which hundreds of regional civic, business, and local government leaders will provide direct input to state leaders on economic recovery challenges and strategies. Through the state-level Economic Recovery Conversations in Sacramento and the concurrent regional sessions, California will have the opportunity to develop a plan that will improve economic competitiveness from the regions up.
At these Conversations, government and business leaders are asked to put forth their best ideas for the state to address regulatory and policy reforms, as well as new performance standards for economic development programs. For example, the state-level and regional Conversations will address near-term issues like the "cost of doing business," barriers to investment and innovation, and performance measures for state regulatory and tax incentives, while also considering critical factors of regional competitiveness, such as investment in infrastructure and workforce training, and addressing housing supply and affordability.
Because we can no longer take California's economic success for granted, the "voice" of the economy - and of the regional economies - must be at the table whenever the state government makes important policy decisions, whether they involve workers' compensation reform, infrastructure investment, support for K-12 and higher education, or revenue sharing with local governments. CCRL will use the opportunity of the Economic Recovery Conversations to build a network of partnerships (as called for by the Economic Strategy Panel) that will keep economic issues in front of the state government and the regions, through good times and bad.
However, we should remember that sustaining economic prosperity is not the job of the state alone. Regional leaders are also called upon to put their ideas into action locally - as many are already doing. As California finds its way toward a golden future of robust economic growth and strong regions, all sectors - local, regional, state, and national - will have to share the responsibility of implementing the California dream.
California Recovery & Economic Strategy Project - a partnership with PG&E Co.
CCRL is pleased to announce that Pacific Gas and Electric Company has agreed to sponsor the California Recovery & Economic Strategy (CARES) project.PG&E has long been an important supporter of economic development in California, and is gearing up to strengthen public-private-civic partnerships through the CARES project. In addition to sponsoring up to nine Regional Economic Recovery Conversations in the PG&E service territory (which includes all of Northern California and the Central Coast), this project will produce an Economic Strategy Plan from the regions based on the input from the Conversations and findings from the California Regional Economies Project (see below).
II. Business Climate and California's Long-Term Prosperity
How are we to understand and address the current focus around the state on issues of "business climate?" We know that many business owners, entrepreneurs, and business organization leaders are frustrated and discouraged with the status quo: a "Business Climate Survey" conducted in 2003 by the California Business Roundtable and the California Chamber of Commerce found that more than 75% of surveyed business leaders believe that the state is moving in the wrong direction. Nearly 55% of them named the costs of doing business as the top problem facing California businesses, with the skyrocketing expense of workers' compensation insurance the most difficult to bear.
Yet, as recently as the year 2000, Site Selection magazine put California at the very top of its annual "Business Climate Rankings" based on our surging numbers of new and expanded business locations and the perceptions of national corporate real estate executives. Our state has undergone numerous economic shocks and political changes since that time, but if views can swing this quickly, do they really reflect California's underlying economic weaknesses and strengths?
The broader view of the state's business climate (as reflected in the "Call to Action" report of the California Economic Strategy Panel), on the positive side, is about promoting California as a highly competitive place to do business, based on our comparative advantages:
- Entrepreneurism and innovation
- Leading-edge capital investors
- Industries that are "winners" in the global economy - such as media and multimedia, trade, high technology products and services, highly productive agriculture, and financial and legal services
- A highly diverse population and workforce, with the ability to utilize cross-national networks for business advantage
- A deep commitment to protecting the environment and other elements of a generally enviable quality of life (if we can keep it)
On the "challenges" side, the business climate is about more than government-induced costs, such as taxes and regulations. It also directly reflects the failure of our public investments in infrastructure, K-12 and higher education, and local government services - because mobility of people and goods, housing affordability, a prepared workforce, and quality of life are also key to the competitiveness of California's regions.
If we want to build sustainable economic prosperity, the issues on the table must include short-term problems, such as workers' compensation system reform, and concerns about the long-term "foundations" of a competitive economy, such as education, research, infrastructure, workforce training, environmental quality, and effective governance. We face enormous challenges in all of these areas that will continue to hold back our business potential, unless we work together to resolve them.
III. A Focused, Unified Economic Strategy for California
Although the state and country seem to have put the recent economic downturn behind them, the steady recovery in business profits and the stock market has largely not translated into significant employment gains for California workers, as is the case with much of the rest of the country. Whether because of "outsourcing/offshoring" of high-paying jobs or because of a stunning increase in worker productivity (see this article from the Federal Reserve Bank of San Francisco), the issue of job and career opportunities for all Californians must be addressed by the state's Economic Strategy.
To effectively address the short- and long-term problems facing California's businesses and workers, the various agencies of state government must work in a strategic and collaborative way with each other and with the private sector and civic organizations. However, the state government cannot approach the economy as if it is monolithic; different regions have different resources, needs, and priorities. California needs a focused economic strategy that is driven by good information, is flexible enough to build up all of the state's regions, and tracks accountability for investment and outcomes.
In the last few years, substantial progress has been made. A policy framework is laid out succinctly and persuasively in the Economic Strategy recommendations of the Speaker's Commission on Regionalism, as well as by the California Economic Strategy Panel (CESP) and the California Workforce Investment Board (CalWIB). The CESP report "A Call to Action" and CalWIB's Strategic Plan are framing documents for future conversations about the state's role in economic development.
A. The California Economic Strategy Panel
The California Economic Strategy Panel was created to develop a statewide vision and strategy that will guide public policy decisions. Through this process, a better understanding of the state's regional economies has emerged:
- There are structural as well as cyclical changes occurring
- Local and state policymakers require reliable and timely economic data
- California is a state of diverse economic regions
- Industry clusters largely drive the success of regional economies, but improved performance in all industries and sectors is important
- Collaboration between the public and private sectors is essential for success
The CESP, in its "A Call to Action" report of December 2002, lays out the "four pillars" of good economic strategy:
- The provision and intelligent utilization of good economic data, at the statewide, regional, and local levels;
- Continued improvement in our K-12 and higher education systems and in workforce investment training programs;
- Better planning and investment in the physical infrastructure of the state, from roads and transit to housing at all income levels and parks and open space (the Report of the Governor's Commission for Building for the 21st Century lays out the policy framework that should be followed); and
- Establishing a permanent capacity for state and regional economic leadership, to assure that the "voices of the regional economies" are at the table whenever the Governor and the Legislature consider major policy decisions.
Last year, the CESP continued to meet and develop new ways to implement a unified state economic strategy, such as the California Regional Economies Project (see below). As a result of the 2003-2004 budget, the Panel was moved to the Labor and Workforce Development Agency, further cementing the connection between workforce investment and economic development. Presently, we are awaiting the appointment of new membership on the CESP by the Governor, so that it may continue its work. The state has a great opportunity to launch an economic strategy platform by leveraging and continuing the work of the CESP.
B. The California Regional Economies Project
The CESP and CalWIB have themselves set an example of collaboration toward a focused strategy by partnering together to sponsor the California Regional Economies Project. This project is giving data-driven insight into changes, both cyclical and structural, in regions' economic bases.
As part of the project, CCRL is helping the local Workforce Investment Boards to plan and recruit participants for an ongoing series of regional forums. The attendees, who are primarily users and analysts of economic data, review and comment on detailed information about trends in jobs, income, population, and other key indicators in their region over the last 14 years. They are given profiles of industry clusters specific to the region and studies of cross regional economic and labor issues. They also discuss barriers to regional growth and development.
Five of nine planned forums have already been completed. Local WIBS, coordinating with CCRL; Collaborative Economics; the Center for the Continuing Study of the California Economy; and JK, Inc., will convene forums in the Sacramento Region and Northern California during April. Forums in the Central Coast and Southern California regions will follow shortly thereafter (the regional boundaries are those adopted by the CESP).
The Regional Economies Project forums provide a bridge connecting regional economic strategies to workforce policies, programs, and resources at the state and regional levels. They put detailed data about trends and needs in the region into the hands of government, business, and economic development leaders, giving them a base from which to plan for future prosperity.
- You can find the website for the California Regional Economies Project by going to the site for the Commerce and Economic Development Program at http://www.commerce.ca.gov, clicking on "Economic Strategy Panel" and then selecting the link to the project on the right-hand side.
IV. Government Performance on Economic Strategy
The Administration recently announced a "California Performance Review" (CPR), which will examine state government and recommend changes to improve services, accountability, and cost-effectiveness. We have urged that, as this effort moves ahead, the CPR address state government performance on economic strategy in an integrated fashion, lifting up and coordinating the recommendations that come from different teams. These teams include, among others, Job Retention and Business Development; California Business Climate; Education and Training; Infrastructure and Performance Based Budgeting; and Revenue Maximization. (Note: in the case of the latter team, we are hopeful that the return on investment of tax expenditures -- various tax credit programs, for example -- will be examined as closely as other tax and spending policies and programs.)
V. Regions in Action
Many of the Regional Collaboratives in the California Regional Network were founded as Economic Development Corporations and other business-promotion organizations. Over the years, they have pioneered an evolution of our understanding about the key elements of economic strategy, including "branding" and marketing regions, building industry clusters, and making government more supportive of businesses, but also including efforts to improve regional housing, education, mobility, health, and the environment. They believe this broad agenda is essential to achieve sustainable economic growth of their regions.
Below are a few examples of how the RCs are building the economic capacity of the regions, in part by building the quality of life in the regions:
A. Social Capital in the Sierra
Investing for Prosperity: Building Successful Communities and Economies in the Sierra Nevada presents 44 case studies, but it is also more than that. It is more than a guide to economic development for towns and cities in a fast-changing region. It is even more than a set of integrated strategies that rural communities around North America can use to diversify and build innovation into their regional economies.
The report, released in 2003 by the Sierra Business Council, is no less than a guide that reveals a new model of economic development: how rural regions can invest to produce sustainable, diverse businesses and strong communities. Notably, a major strategy outlined in the report focuses on the quality-of-life concerns ("long-term social capital") necessary to attract and retain a talented workforce: health care, housing, education, natural resource protection, and culture.
B. The Future of Fresno
The Fresno Regional Jobs Initiative may sound like another traditional think tank or private sector lobbying group, but they have bold goals and deeply held values. In response to the region's chronic double-digit employment, the elected officials, business leaders, and community organizations that together make up this private-public partnership want to add 30,000 net new jobs over the next four years. To accomplish this objective, the group has strategically targeted emerging industry clusters in which the region has a competitive advantage. Participants held a Jobs Summit on September 12, 2003, to provide input to a comprehensive, collaborative Implementation Plan.
What will the Fresno region look like when the excitement and collaborative energy of today translates into results for the community? The New Valley Times gives us a glimpse. Created by the Fresno Area Collaborative Regional Initiative and set in the year 2015, the hypothetical newspaper includes articles describing the bright possible future for the region as it reduces unemployment, cleans the air, improves its education system, and makes downtown into a strong urban core. The paper was distributed to 180,000 doorsteps and countless street corners by The Fresno Bee newspaper, and demonstrates the goal of the region to be a world-class community.
C. Tri-Valley by the Numbers
The Tri-Valley Business Council has partnered with the Economic Development Alliance for Business to develop a Tri-Valley Economic Report, which was published on February 14, 2004. The research includes statistics broken down by the five jurisdictions in the region, regional summary statistics, and regional comparisons with the statistics for the overall East Bay, South Bay, and entire Bay Area regions.
D. San Diego Up in the Air
As a destination tourist location with a growing need for goods movement, the San Diego region (which is hemmed in by mountain ranges, the Pacific Ocean, and the Mexican border) increasingly understands the importance of air transportation. Educating the public on these issues has been a special responsibility of the region's business and civic leadership, including the San Diego Regional Economic Development Corporation (SDREDC), because they understand how essential "air infrastructure" is to their region's ability to compete in the global economy. They are conducting a long-term community dialogue about the future of air transportation, as well as a systematic search for sites for a new regional airport. One step in this effort was a discussion held on January 16 featuring expert speakers on the impact on global competitiveness of cost-effective and convenient airports.
VI. Regional News and Information
A. Upcoming Events
- If you get excited about community indicators (and who doesn't?), then this conference is for you! The International Society for Quality-of-Life Studies is sponsoring a conference called "Advances in the Science and Practice of Community Indicators" to take place March 10-13 in Reno, Nevada. Join the fun by registering at http://business.wm.edu/isqols/community/.
- If you've made it this far through the newsletter but still wonder "What's this whole regional collaboration thing about, anyway?" a new two-day professional development course from the Lincoln Institute of Land Policy may be just what you need. "Regional Collaboration: Learning to Think and Act Like a Region" will provide a conceptual framework and teach practical strategies to initiate, design, coordinate, and sustain regional initiatives. The course will take place March 29-30 at the Lincoln House in Cambridge, Massachusetts. Visit http://www.lincolninst.edu/education/education-coursedetail.asp?id=165 for details.
- Join state policymakers, national budget experts, advocates, service providers, and local government officials on March 18 at the Sacramento Convention Center for a one-day conference, Protecting Priorities in Uncertain Times, featuring workshops and plenaries examining the state budget crisis and policy issues within the context of the new political environment. This conference is coordinated by the California Budget Project. Registration is available online at http://www.cbp.org/upevents.htm.
- The Great Central Valley is emerging as a region that matters. The implications of the region's emergence will be the focus of the Great Valley Center's annual conference, "Central Valley, On the Map!" which will be held May 5-6 in Sacramento. Keynote speakers include U.S. Surgeon General Richard H. Carmona. All the information you need about the conference is available at http://www.greatvalley.org/conference/index.aspx.
- The next National Forum on Regional Stewardship, convened by the Alliance for Regional Stewardship and set for May 19-21 in Austin, Texas, will address the theme, "Propelling the Regional Agenda: The Role of CEOs." The conference will spotlight the Austin community's strategic actions, beginning in the mid-1980s, to diversify its economic base from a center of government and higher education to a region of technological innovation. The May Forum will also be the occasion for the presentation of the first-ever Regional Stewardship Award. More information and online registration are available at http://www.regionalstewardship.org/ ARS_enews/February2004/Article1.php.
B. Recent Events
- On February 12, 2003, the Los Angeles region received a tutoring session to get its grades up. Participants at the 2004 Southern California Infrastructure Summit discussed the 2002 Los Angeles Infrastructure Report Card and what it will take to move from the low grades received by streets & highways, urban runoff, and water supply to the A level. You can look at the report card at http://www.ascelasection.org/ pdf/ReportCardFlyer.pdf (Adobe Acrobat document).
- Two recent monographs from the Alliance for Regional Stewardship investigate how the region is gaining greater acceptance as the best level for addressing many community issues. Both are available online at http://www.regionalstewardship.org/ publications.html.
- Metropolitan Regional Grantmaking: Promising Practices and the Stewardship of Place explores the relatively new focus among foundations on supporting regional strategies, regional institutions, and regional collaboration. It was written by CCRL's own Nick Bollman and John Parr of the Alliance under a commission from the Funders' Network for Smart Growth and Livable Communities.
- Inclusive Stewardship: Emerging Collaborations Between Neighborhoods and Regions describes a new form of partnership in which local and regional leaders take shared responsibility for a long-term commitment to an inclusive concept of place. By collaborating on equal levels, they can achieve more far-reaching change and more sustainable solutions.
- The Funders' Network for Smart Growth and Livable Communities has recently completed a national scan of academic centers to better understand the nature and scope of some of the country's leading centers for regional studies and regionalism. The scan sought to do three things: 1) to identify places where there is a locus of activity on regional issues, 2) to gather information on the range of research activities taking place at these centers, and 3) to understand the general dimensions of overall program activities at these places. Download the report at http://www.fundersnetwork.org/info-url_nocat2778/info-url_nocat_show.htm?doc_id=209639.
- While last year's report focused on Southern California's performance during the 1990s, The State of the Region 2003, published by the Southern California Association of Governments, examines trends during the first years of the 21st century. They found rapid population growth with increasing diversity, employment losses, worsening housing affordability, air quality degradation, some declining crime rates, and increasing social and economic disparities. See for yourself at http://www.scag.ca.gov/ publications/#regionalvision.
- Building on the success of Getting to Smart Growth: 100 Policies for Implementation, the Smart Growth Network and International City/County Management Association (ICMA) have released Getting to Smart Growth II: 100 More Policies for Implementation. This primer provides states and communities a mix of policy options that can be mixed and matched to fit local circumstances, visions, and values and highlights steps that the private sector can take to encourage more livable communities. Download the volume or find ordering information at http://www.smartgrowth.org/ library/articles.asp?art=870.
- On December 4, The James Irvine Foundation announced $15.9 million in grants under its new strategic plan. Included in the list were substantial transition grants for several Regional Collaboratives: Action Pajaro Valley, Community Development Technologies Center, Orange County Business Council, Santa Barbara Regional Economic Community Project, and Sierra Business Council. Find the press release at http://www.irvine.org/irvine_news/ press_releases/archive/2003/12-04_grants.shtml.
- The Sacramento Region Blueprint Project, a comprehensive growth visioning project for the Greater Sacramento region, was honored with a Governor's Environmental and Economic Leadership Award in December 2003. The Blueprint Project recently completed 40 neighborhood and countywide workshops and is organizing a regional workshop for April with more than 1,300 participants expected. Read the Governor's press release about the award at http://www.calepa.ca.gov/ PressRoom/Releases/2003/R6.htm and find out more about the Blueprint Project at http://www.sacregionblueprint.org/.
- The Keston Infrastructure Institute, recently founded at the University of Southern California, needs your help in their mission to address issues related to public infrastructure investment in California. They have posted a Survey on Stakeholder Perception of Infrastructure in California on their website at http://www.usc.edu/schools/sppd/lusk/keston/. Let them know your opinions!
- Redefining Progress, in an effort to measure the true economic "well-being" of the region beyond what traditional economic income figures can show, has put together a new measure called the "Genuine Progress Indicator" (GPI). The Bay Area GPI, the first released, shows that Gross Regional Product overestimates economic well-being by $14,000 per person. The information is posted online at http://www.regionalprogress.org/ more_ca_bayarea.html.
- The American Association of State Highway and Transportation Officials (AASHTO) is running a second Transportation and Smart Growth Competition. All government and non-governmental organizations are eligible to enter in the Project, Program, and Institutional categories by Friday, April 16. For more information, contact Kris Hoellen at (202) 624-3649 or Erik Friesenhahn at (202) 624-3624 or firstname.lastname@example.org.
- On Feb. 19, Supervisor Don Knabe, the Chair of First 5 LA Commission, announced two new investments in improving the quality of family life and education opportunities in Paramount. One is being made by New Schools Better Neighborhoods (NSBN), an organization led by CCRL Board Chair David Abel. NSBN is working with the school district, the City, Gateway Cities' PEP project, and the District's early childhood education staff to underwrite the master planning of the Los Cerritos site with input from public institutions and the community. Read the press release at http://www.nsbn.org/news/item.php?id=98.