Existing law requires each local agency, as defined, to provide specified information to the public before approving an economic development subsidy within its jurisdiction, and to, among other things, hold hearings and report on those subsidies, as provided. Existing law defines economic development subsidy for these purposes to mean any expenditure of public funds or loss of revenue to a local agency in the amount of $100,000 or more, for the purpose of stimulating economic development within the jurisdiction of a local agency, as provided.

This bill would similarly require each local agency to provide specified information to the public before approving an economic development subsidy for a warehouse distribution center, as defined, and to, among things, hold hearings and report on those subsidies, as provided. This bill would require a warehouse distribution center to provide a local agency any information necessary to comply with these provisions.

This bill would declare that its provisions address a matter of statewide concern.

The California Constitution requires local agencies, for the purpose of ensuring public access to the meetings of public bodies and the writings of public officials and agencies, to comply with a statutory enactment that amends or enacts laws relating to public records or open meetings and contains findings demonstrating that the enactment furthers the constitutional requirements relating to this purpose.

This bill would make legislative findings to that effect.

Existing law requires each local agency, as defined, to provide specified information to the public before approving an economic development subsidy within its jurisdiction, and to, among other things, hold hearings and report on those subsidies, as provided. Existing law defines economic development subsidy for these purposes to mean any expenditure of public funds or loss of revenue to a local agency in the amount of $100,000 or more, for the purpose of stimulating economic development within the jurisdiction of a local agency, as provided.

This bill would similarly require each local agency to provide specified information to the public before approving an economic development subsidy for a warehouse distribution center, as defined, and to, among things, hold hearings and report on those subsidies, as provided. This bill would require a warehouse distribution center to provide a local agency any information necessary to comply with these provisions.

This bill would declare that its provisions address a matter of statewide concern.

The California Constitution requires local agencies, for the purpose of ensuring public access to the meetings of public bodies and the writings of public officials and agencies, to comply with a statutory enactment that amends or enacts laws relating to public records or open meetings and contains findings demonstrating that the enactment furthers the constitutional requirements relating to this purpose.

This bill would make legislative findings to that effect.

Existing law requires each local agency, as defined, to provide specified information to the public before approving an economic development subsidy within its jurisdiction, and to, among other things, hold hearings and report on those subsidies, as provided. Existing law defines economic development subsidy for these purposes to mean any expenditure of public funds or loss of revenue to a local agency in the amount of $100,000 or more, for the purpose of stimulating economic development within the jurisdiction of a local agency, as provided.

This bill would similarly require each local agency to provide specified information to the public before approving an economic development subsidy for a warehouse distribution center, as defined, and to, among things, hold hearings and report on those subsidies, as provided. This bill would require a warehouse distribution center to provide a local agency any information necessary to comply with these provisions.

This bill would declare that its provisions address a matter of statewide concern.

The California Constitution requires local agencies, for the purpose of ensuring public access to the meetings of public bodies and the writings of public officials and agencies, to comply with a statutory enactment that amends or enacts laws relating to public records or open meetings and contains findings demonstrating that the enactment furthers the constitutional requirements relating to this purpose.

This bill would make legislative findings to that effect.

Existing law requires each local agency, as defined, to provide specified information to the public before approving an economic development subsidy within its jurisdiction, and to, among other things, hold hearings and report on those subsidies, as provided. Existing law defines economic development subsidy for these purposes to mean any expenditure of public funds or loss of revenue to a local agency in the amount of $100,000 or more, for the purpose of stimulating economic development within the jurisdiction of a local agency, as provided.

Existing law requires each local agency, as defined, to provide specified information to the public before approving an economic development subsidy within its jurisdiction, and to, among other things, hold hearings and report on those subsidies, as provided. Existing law defines economic development subsidy for these purposes to mean any expenditure of public funds or loss of revenue to a local agency in the amount of $100,000 or more, for the purpose of stimulating economic development within the jurisdiction of a local agency, as provided.

This bill would revise the definition of economic development subsidy by raising that threshold amount from $100,000 to $150,000.

GOVERNOR'S VETO

GV Bill Id:AB 2853

Author:(Medina)

As Enrolled Ver:August 29, 2018

2/3 vote

Original Committee Reference: L. GOV.

SUMMARY: Requires local agencies to take specified actions before approving or granting economic development subsidies of $100,000 or more for warehouse distribution centers, and during the term of such subsidies.

The Senate amendments:

1. Require a local agency, before approving or granting an economic development subsidy of $100,000 or more for a warehouse distribution center, to additionally provide to the public in written form and through its Internet Web site the name and address of all corporations, including members of a commonly controlled group or members of a combined reporting group of which the corporation is a member, or any other business entities, except for sole proprietorships, that are the beneficiary of the economic development subsidy.
2. Add related definitions.

FISCAL EFFECT: None

COMMENTS:

1. Author's Statement. According to the author, "AB 2853 seeks to give local governments and communities the necessary information to hold warehouse and distribution companies that receive public subsidies accountable for good job creation. As online shopping continues to grow, companies are increasing their warehouse footprints swelling the demand for streamlined logistics centers. These warehouses are often placed in communities desperate for jobs and still recovering from the recession. Many of the jobs in these warehouses are grueling and high-stress. The benefits may be enticing but don't become available until after a year of employment. Some of the jobs are temporary or seasonal, causing employment opportunities to fluctuate and throwing families into economic instability.

"In the Economic Policy Institute's [EPI] report entitled 'Unfulfilled Promises,' EPI economist Ben Zipperer and economic analysts Janelle Jones concluded that on average, 'Amazon's fulfillment centers are ineffective at providing net job growth.' Cities are constantly in a race to the bottom as highlighted by the current bidding wars for warehouse distribution centers. If the jobs and benefits promised do not materialize, the quality of living drops, and the traffic and air quality worsens, what did the city gain? Was the economic subsidy worth the tax revenue loss? Is any job a good job or can cities do better in elevating their attractiveness without sacrificing needed tax revenue?"

1. Background. Local governments engage in a wide variety of economic development activities to build their tax bases. In this respect, local officials use their regulatory powers to direct spending and tax policies which, in turn, influence where, when and how the private sector invests capital and improves real property.

The Legislature recently delved into the issue of local government subsidies when it considered and approved AB 562 (Williams), Chapter 740, Statutes of 2013. AB 562 established requirements for local agencies to meet before approving any subsidy, and during the term of such subsidies. In arguing for the bill, the author noted, "Each year, local governments give out billions of dollars in tax incentives to corporations in hopes of increasing economic growth and drawing jobs for their residents…State requirements for local budgets, annual financial reports, and regular audits allow constituents to review most of the direct fiscal decisions made by local governments. However, local economic subsidies do not receive the same public scrutiny as budgets and regulatory decisions. Additionally, local governments rarely track how many jobs are created and it's impossible to know whether the jobs would have been created without the aid. AB 562 seeks to remedy this shortcoming."

AB 562 succeeded, after several years of failed attempts, in requiring local agencies to gather and make available to the public – in writing and on the agency's website – specified information about any subsidy of $100,000 or more, both before the subsidy is approved and during the life of the subsidy. In addition to basic identifying information about each subsidy and public hearing requirements, AB 562 required the following information:

• 1. The estimated total amount of the expenditure of public funds by, or revenue lost to, the local agency as a result of the subsidy;
  2. Projected and actual tax revenue accruing to the local agency as a result of the subsidy; and,
  3. Estimated and actual number of jobs created by the subsidy, broken down by full-time, part-time, and temporary positions.

1. Subsidies and Warehouse Distribution Centers. Since AB 562 was enacted, a number of news reports and studies have focused on Amazon distribution centers and the subsidies state and local agencies have granted in an effort to convince Amazon to locate in their jurisdictions. This followed on the heels of several years of controversy surrounding Amazon's avoidance of sales taxes as a cornerstone of the company's business development strategy. Among the publications and research institutes that have reported recently on the issue of local government subsidies, both generally and specifically for Amazon, are the Economic Policy Institute, the Institute for Local Self-Reliance, The Atlantic, the New Republic, the Fresno Bee, the New York Times, Good Jobs First, and others.

According to a New York Times article dated December 1, 2012, "A Times investigation has examined and tallied thousands of local incentives granted nationwide and has found that states, counties and cities are giving up more than $80 billion each year to companies. The beneficiaries come from virtually every corner of the corporate world, encompassing oil and coal conglomerates, technology and entertainment companies, banks and big-box retail chains. The cost of the awards is certainly far higher. A full accounting, The Times discovered, is not possible because the incentives are granted by thousands of government agencies and officials, and many do not know the value of all their awards. Nor do they know if the money was worth it because they rarely track how many jobs are created. Even where officials do track incentives, they acknowledge that it is impossible to know whether the jobs would have been created without the aid…

"A portrait arises of mayors and governors who are desperate to create jobs, outmatched by multinational corporations and short on tools to fact-check what companies tell them. Many of the officials said they feared that companies would move jobs overseas if they did not get subsidies in the United States. Over the years, corporations have increasingly exploited that fear, creating a high-stakes bazaar where they pit local officials against one another to get the most lucrative packages. States compete with other states, cities compete with surrounding suburbs, and even small towns have entered the race with the goal of defeating their neighbors...Questioned about incentives, officials at dozens of other large corporations said they owed it to shareholders to maximize profits. Many emphasized that they employ thousands of Americans who pay taxes and spend money in the local economy."

Focusing on subsidies exclusively for Amazon, the Economic Policy Institute issued a report on February 1, 2018, which states, "The expansion of Amazon's physical distribution network has coincided with a strategic business plan of negotiating millions in tax abatements, credits, exemptions, and infrastructure assistance from state and local governments in the name of regional economic development. By the end of 2016, Amazon had likely received over $1 billion in state and local subsidies for its facilities, which would include not only fulfillment centers but 'sortation' centers that only sort packages, mailing centers, and other facilities. In return for the incentives each of the fulfillment centers receives, Amazon claims to create hundreds of jobs with competitive pay and benefits.

"Using tax and other incentives to lure businesses to state and local areas is a long-running economic development strategy pursued by subnational governments. In nearly every state, businesses can receive a significantly lighter tax burden for constructing a sports stadium, filming a movie, or building a manufacturing assembly plant. The results on whether these types of community development strategies have a positive impact on job creation and growth is highly debated in popular news outlets and among researchers. And as Amazon has grown, the debate in some cases has specifically focused on Amazon."

The report found that, "When Amazon opens a new fulfillment center, the host county gains roughly 30% more warehousing and storage jobs but no new net jobs overall, as the jobs created in warehousing and storage are likely offset by job losses in other industries…State and local governments give away millions in tax abatements, credits, exemptions, and infrastructure assistance to lure Amazon warehouses but don't get a commensurate 'return' on that investment. Rather than spending public resources on an ineffective strategy to boost local employment (luring Amazon fulfillment centers), state and local governments should invest in public services (particularly in early-childhood education and infrastructure) that are proven to spur long-term economic development."

1. Bill Summary. This bill establishes requirements that local agencies must meet before and during the term of any subsidy exceeding $100,000 for warehouse distribution centers. In addition to the requirements established by AB 562 for all subsidies exceeding $100,000, this bill requires local agencies to provide the following additional information regarding subsidies specific to warehouse distribution centers:
   1. The name and address of all corporations, including members of a commonly controlled group or members of a combined reporting group of which the corporation is a member, or any other business entities, except for sole proprietorships, that are the beneficiary of the economic development subsidy;
   2. Job classifications and wage rates for the estimated and actual number of jobs created by the subsidy;
   3. The estimated and actual number of independent contractors, including contract rates, funded by the subsidy;
   4. The estimated value of benefit packages for each job classification created by the subsidy;
   5. The estimated number of jobs for disadvantaged workers created by the subsidy;
   6. For each warehouse distribution center that is a beneficiary of a subsidy:
      1. A description of its outreach, training, and hiring plans, including plans to hire disadvantaged workers;
      2. A description and total value of any state or federal subsidies applied for, or received by, the warehouse distribution center;
      3. The amount spent on training, apprenticeship, or other skills development programs for employees;
      4. The retention rate of employees broken down by full-time, part-time, and temporary positions, and if the turnover rate of employees exceeds 20%; and,
      5. The number of employment arbitration agreements signed by employees and independent contractors, if any.

This bill also requires annual reporting and public hearings regarding subsidies for warehouse distribution centers, and requires such centers to provide local agencies with any information necessary for local agencies to comply with the bill's requirements.

This bill is sponsored by the California Labor Federation.

1. Proposition 42. Proposition 42 was passed by voters on June 3, 2014, and requires all local governments to comply with the Public Records Act and the Ralph M. Brown Act (Brown Act) and with any subsequent changes to those Acts. Proposition 42 also eliminated reimbursement to local agencies for costs of complying with the Public Records Act and the Brown Act.

This bill contains language that says that the Legislature finds and declares that the bill furthers the purpose of the California Constitution as it relates to the right of public access to the meetings of local public bodies or the writings of local public officials and local agencies. Pursuant to California Constitution Article I, Section 3(b)(7), the bill also includes a finding that states, "This act ensures the public's right of access to information about the conduct of their government agencies relating to subsidies for warehouse distribution centers."

1. Arguments in Support. The California Labor Federation, sponsor of this bill, writes, "A 2015 report by University of California Riverside found that warehouse jobs pay less than a living wage, are often temporary, and do not provide health care benefits. Interviews with workers paint an even bleaker picture. Workers report that warehouse jobs are grueling and dangerous, contributing to high turnover. Cities are doling out subsidies, but residents are not necessarily seeing the benefits from reduced poverty or improved job quality. Massive distribution centers may also exert downward pressure on other employers in the area. The Economist reported that workers in areas where Amazon operates earn 10% less than workers in similar jobs. Another study found that one in 10 Amazon workers in Ohio were on food stamps to supplement their meager wages.

"When cities engage in a race to the bottom, the State of California loses, as well. Communities need tools to know what they are getting for their money and the ability to hold developers and employers accountable for the quality and number of jobs they promise to create. AB 2853 is simply a transparency bill, but it will give local governments and residents the tools to hold warehousing giants accountable for the public subsidies they receive. It will also give cities in a region more information so they may collectively bargain for a warehouse, rather than allowing companies to pick winners and losers – resulting in a net loss for the state."

1. Arguments in Opposition. None on file.

GOVERNOR'S VETO MESSAGE:

This bill requires local governments that provide economic subsidies of $100,000 or more for warehouse distribution centers to publically report on information such as employee wage rates, independent contractor rates, and the value of employee benefit packages for each job classification created by the subsidy.

There is value in taxpayers knowing whether economic development incentives ultimately benefit their community. That is why I signed legislation in 2013 that required local agencies to provide information about the expected and actual impacts of approved economic development subsidies.

This bill, however, significantly expands current law and goes too far by adding reporting rules that will be overly burdensome to a single industry. It may actually hinder efforts to improve business opportunities in local communities, which is an outcome no one desires.

Analysis Prepared by: Angela Mapp / L. GOV. / (916) 319-3958 FN: 0005233

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 2853

Author:(Medina)

As Amended Ver:June 19, 2018

Majority vote

Original Committee Reference: L. GOV.

SUMMARY: Requires local agencies to take specified actions before approving or granting economic development subsidies of $100,000 or more for warehouse distribution centers, and during the term of such subsidies.

The Senate amendments:

1. Require a local agency, before approving or granting an economic development subsidy of $100,000 or more for a warehouse distribution center, to additionally provide to the public in written form and through its Internet Web site the name and address of all corporations, including members of a commonly controlled group or members of a combined reporting group of which the corporation is a member, or any other business entities, except for sole proprietorships, that are the beneficiary of the economic development subsidy.
2. Add related definitions.

FISCAL EFFECT: None

COMMENTS:

1. Author's Statement. According to the author, "AB 2853 seeks to give local governments and communities the necessary information to hold warehouse and distribution companies that receive public subsidies accountable for good job creation. As online shopping continues to grow, companies are increasing their warehouse footprints swelling the demand for streamlined logistics centers. These warehouses are often placed in communities desperate for jobs and still recovering from the recession. Many of the jobs in these warehouses are grueling and high-stress. The benefits may be enticing but don't become available until after a year of employment. Some of the jobs are temporary or seasonal, causing employment opportunities to fluctuate and throwing families into economic instability.

"In the Economic Policy Institute's [EPI] report entitled 'Unfulfilled Promises,' EPI economist Ben Zipperer and economic analysts Janelle Jones concluded that on average, 'Amazon's fulfillment centers are ineffective at providing net job growth.' Cities are constantly in a race to the bottom as highlighted by the current bidding wars for warehouse distribution centers. If the jobs and benefits promised do not materialize, the quality of living drops, and the traffic and air quality worsens, what did the city gain? Was the economic subsidy worth the tax revenue loss? Is any job a good job or can cities do better in elevating their attractiveness without sacrificing needed tax revenue?"

1. Background. Local governments engage in a wide variety of economic development activities to build their tax bases. In this respect, local officials use their regulatory powers to direct spending and tax policies which, in turn, influence where, when and how the private sector invests capital and improves real property.

The Legislature recently delved into the issue of local government subsidies when it considered and approved AB 562 (Williams), Chapter 740, Statutes of 2013. AB 562 established requirements for local agencies to meet before approving any subsidy, and during the term of such subsidies. In arguing for the bill, the author noted, "Each year, local governments give out billions of dollars in tax incentives to corporations in hopes of increasing economic growth and drawing jobs for their residents…State requirements for local budgets, annual financial reports, and regular audits allow constituents to review most of the direct fiscal decisions made by local governments. However, local economic subsidies do not receive the same public scrutiny as budgets and regulatory decisions. Additionally, local governments rarely track how many jobs are created and it's impossible to know whether the jobs would have been created without the aid. AB 562 seeks to remedy this shortcoming."

AB 562 succeeded, after several years of failed attempts, in requiring local agencies to gather and make available to the public – in writing and on the agency's website – specified information about any subsidy of $100,000 or more, both before the subsidy is approved and during the life of the subsidy. In addition to basic identifying information about each subsidy and public hearing requirements, AB 562 required the following information:

• 1. The estimated total amount of the expenditure of public funds by, or revenue lost to, the local agency as a result of the subsidy;
  2. Projected and actual tax revenue accruing to the local agency as a result of the subsidy; and,
  3. Estimated and actual number of jobs created by the subsidy, broken down by full-time, part-time, and temporary positions.

1. Subsidies and Warehouse Distribution Centers. Since AB 562 was enacted, a number of news reports and studies have focused on Amazon distribution centers and the subsidies state and local agencies have granted in an effort to convince Amazon to locate in their jurisdictions. This followed on the heels of several years of controversy surrounding Amazon's avoidance of sales taxes as a cornerstone of the company's business development strategy. Among the publications and research institutes that have reported recently on the issue of local government subsidies, both generally and specifically for Amazon, are the Economic Policy Institute, the Institute for Local Self-Reliance, The Atlantic, the New Republic, the Fresno Bee, the New York Times, Good Jobs First, and others.

According to a New York Times article dated December 1, 2012, "A Times investigation has examined and tallied thousands of local incentives granted nationwide and has found that states, counties and cities are giving up more than $80 billion each year to companies. The beneficiaries come from virtually every corner of the corporate world, encompassing oil and coal conglomerates, technology and entertainment companies, banks and big-box retail chains. The cost of the awards is certainly far higher. A full accounting, The Times discovered, is not possible because the incentives are granted by thousands of government agencies and officials, and many do not know the value of all their awards. Nor do they know if the money was worth it because they rarely track how many jobs are created. Even where officials do track incentives, they acknowledge that it is impossible to know whether the jobs would have been created without the aid…

"A portrait arises of mayors and governors who are desperate to create jobs, outmatched by multinational corporations and short on tools to fact-check what companies tell them. Many of the officials said they feared that companies would move jobs overseas if they did not get subsidies in the United States. Over the years, corporations have increasingly exploited that fear, creating a high-stakes bazaar where they pit local officials against one another to get the most lucrative packages. States compete with other states, cities compete with surrounding suburbs, and even small towns have entered the race with the goal of defeating their neighbors...Questioned about incentives, officials at dozens of other large corporations said they owed it to shareholders to maximize profits. Many emphasized that they employ thousands of Americans who pay taxes and spend money in the local economy."

Focusing on subsidies exclusively for Amazon, the Economic Policy Institute issued a report on February 1, 2018, which states, "The expansion of Amazon's physical distribution network has coincided with a strategic business plan of negotiating millions in tax abatements, credits, exemptions, and infrastructure assistance from state and local governments in the name of regional economic development. By the end of 2016, Amazon had likely received over $1 billion in state and local subsidies for its facilities, which would include not only fulfillment centers but 'sortation' centers that only sort packages, mailing centers, and other facilities. In return for the incentives each of the fulfillment centers receives, Amazon claims to create hundreds of jobs with competitive pay and benefits.

"Using tax and other incentives to lure businesses to state and local areas is a long-running economic development strategy pursued by subnational governments. In nearly every state, businesses can receive a significantly lighter tax burden for constructing a sports stadium, filming a movie, or building a manufacturing assembly plant. The results on whether these types of community development strategies have a positive impact on job creation and growth is highly debated in popular news outlets and among researchers. And as Amazon has grown, the debate in some cases has specifically focused on Amazon."

The report found that, "When Amazon opens a new fulfillment center, the host county gains roughly 30% more warehousing and storage jobs but no new net jobs overall, as the jobs created in warehousing and storage are likely offset by job losses in other industries…State and local governments give away millions in tax abatements, credits, exemptions, and infrastructure assistance to lure Amazon warehouses but don't get a commensurate 'return' on that investment. Rather than spending public resources on an ineffective strategy to boost local employment (luring Amazon fulfillment centers), state and local governments should invest in public services (particularly in early-childhood education and infrastructure) that are proven to spur long-term economic development."

1. Bill Summary. This bill establishes requirements that local agencies must meet before and during the term of any subsidy exceeding $100,000 for warehouse distribution centers. In addition to the requirements established by AB 562 for all subsidies exceeding $100,000, this bill requires local agencies to provide the following additional information regarding subsidies specific to warehouse distribution centers:
   1. The name and address of all corporations, including members of a commonly controlled group or members of a combined reporting group of which the corporation is a member, or any other business entities, except for sole proprietorships, that are the beneficiary of the economic development subsidy;
   2. Job classifications and wage rates for the estimated and actual number of jobs created by the subsidy;
   3. The estimated and actual number of independent contractors, including contract rates, funded by the subsidy;
   4. The estimated value of benefit packages for each job classification created by the subsidy;
   5. The estimated number of jobs for disadvantaged workers created by the subsidy;
   6. For each warehouse distribution center that is a beneficiary of a subsidy:
      1. A description of its outreach, training, and hiring plans, including plans to hire disadvantaged workers;
      2. A description and total value of any state or federal subsidies applied for, or received by, the warehouse distribution center;
      3. The amount spent on training, apprenticeship, or other skills development programs for employees;
      4. The retention rate of employees broken down by full-time, part-time, and temporary positions, and if the turnover rate of employees exceeds 20%; and,
      5. The number of employment arbitration agreements signed by employees and independent contractors, if any.

This bill also requires annual reporting and public hearings regarding subsidies for warehouse distribution centers, and requires such centers to provide local agencies with any information necessary for local agencies to comply with the bill's requirements.

This bill is sponsored by the California Labor Federation.

1. Proposition 42. Proposition 42 was passed by voters on June 3, 2014, and requires all local governments to comply with the Public Records Act and the Ralph M. Brown Act (Brown Act) and with any subsequent changes to those Acts. Proposition 42 also eliminated reimbursement to local agencies for costs of complying with the Public Records Act and the Brown Act.

This bill contains language that says that the Legislature finds and declares that the bill furthers the purpose of the California Constitution as it relates to the right of public access to the meetings of local public bodies or the writings of local public officials and local agencies. Pursuant to California Constitution Article I, Section 3(b)(7), the bill also includes a finding that states, "This act ensures the public's right of access to information about the conduct of their government agencies relating to subsidies for warehouse distribution centers."

1. Arguments in Support. The California Labor Federation, sponsor of this bill, writes, "A 2015 report by University of California Riverside found that warehouse jobs pay less than a living wage, are often temporary, and do not provide health care benefits. Interviews with workers paint an even bleaker picture. Workers report that warehouse jobs are grueling and dangerous, contributing to high turnover. Cities are doling out subsidies, but residents are not necessarily seeing the benefits from reduced poverty or improved job quality. Massive distribution centers may also exert downward pressure on other employers in the area. The Economist reported that workers in areas where Amazon operates earn 10% less than workers in similar jobs. Another study found that one in 10 Amazon workers in Ohio were on food stamps to supplement their meager wages.

"When cities engage in a race to the bottom, the State of California loses, as well. Communities need tools to know what they are getting for their money and the ability to hold developers and employers accountable for the quality and number of jobs they promise to create. AB 2853 is simply a transparency bill, but it will give local governments and residents the tools to hold warehousing giants accountable for the public subsidies they receive. It will also give cities in a region more information so they may collectively bargain for a warehouse, rather than allowing companies to pick winners and losers – resulting in a net loss for the state."

1. Arguments in Opposition. None on file.

Analysis Prepared by: Angela Mapp / L. GOV. / (916) 319-3958 FN: 0003569

 THIRD READING  

Bill No: AB 2853

Author:

:

Vote:

SENATE GOVERNANCE & FIN. COMMITTEE: 6-1, 6/13/18

AYES: McGuire, Nguyen, Beall, Hernandez, Hertzberg, Lara

NOES: Moorlach

ASSEMBLY FLOOR: 52-21, 5/17/18 - See last page for vote

SUBJECT:

SOURCE: California Labor Federation

DIGEST:

This bill requires local agencies to publicly report specified information when providing economic development subsidies of $100,000 or more for warehouse distribution centers.

ANALYSIS:

Existing law:

1. Requires a local agency, before approving any subsidy of $100,000 or more, to provide to the public in written form and on the agency's Web site, if applicable, all of the following information:
   1. The name and address of all corporations or any other business entities, except for sole proprietorships, that are the beneficiary of the subsidy, if applicable;
   2. The start and end dates and schedule, if applicable, for the subsidy;
   3. A description of the subsidy, including the estimated total amount of the expenditure of public funds by, or revenue lost to, the local agency as a result of the subsidy;
   4. A statement of the public purposes for the subsidy;
   5. Projected tax revenue to the local agency as a result of the subsidy; and
   6. Estimated number of jobs created by the subsidy, broken down by full-time, part-time, and temporary positions.
2. Requires a local agency, before it grants a subsidy, to provide public notice and a hearing regarding the subsidy, as specified.
3. Requires the information specified in 1) above, to remain available to the public under existing state and federal law and be posted on the local agency's Web site, if applicable, for the entire term of the subsidy.
4. Requires a local agency, within the term of the subsidy but not later than five years after the action granting it, to issue a report for each subsidy and make it available to the public and through its Web site, if applicable. The report must contain the information described in 1) above, and the following information, if applicable:
   1. The name and address of all corporations or any other business entities, except for sole proprietorships, that are the beneficiary of the subsidy, if applicable;
   2. The start and end dates and schedule for the subsidy;
   3. A description of the subsidy, including the estimated total amount of the expenditure of public funds by, or of revenue lost to, the local agency as a result of the subsidy;
   4. The net tax revenue accruing to the local agency as a result of the subsidy; and
   5. The net number of jobs created by the subsidy, broken down by full-time, part-time, and temporary positions.
5. Requires the local agency, within the term of the subsidy but no later than five years after the action granting it, to hold a public hearing to consider any written or oral comments on the information contained in the report prepared pursuant to 4) above. For a subsidy with a term of 10 years or more, the local agency must hold a public hearing at the conclusion of each subsidy that must contain the information described in 4) above, in written form available to the public, and through its Web site, if applicable.
6. Defines "economic development subsidy" to mean any expenditure of public funds or loss of revenue to a local agency in the amount of $100,000 or more, for the purpose of stimulating economic development within the jurisdiction of a local agency, including specified benefits. "Economic development subsidy" does not include expenditures of public funds by, or loss of revenue to, the local agency for the purpose of providing housing affordable to persons and families of low or moderate income.
7. Defines “local agency” to mean a city, including a charter city, county, or city and county.

This bill:

1. Requires each local agency, on and after January 1, 2019, to provide specified information to the public before approving any economic development subsidy (subsidy) for a warehouse distribution center within its jurisdiction. All of the following information must be made available to the public in written form and through its Web site, if applicable:
   1. The name and address of all corporations, including members of a commonly controlled group or members of a combined reporting group of which the corporation is a member, or any other business entities, except for sole proprietorships, that are the beneficiary of the economic development subsidy;
   2. The name and address of all warehouse distribution centers that are the beneficiary of the subsidy;
   3. The information required under existing law for any economic development subsidy;
   4. The estimated number of independent contractors, including contract rates, funded by the subsidy;
   5. The estimated value of benefit packages, including health benefits, fringe benefits, and defined benefit pensions, for each job classification created by the subsidy;
   6. The estimated number of jobs for disadvantaged workers created by the subsidy; and
   7. For each warehouse distribution center that is the beneficiary of the subsidy, the outreach, training, and hiring plans, including plans to hire disadvantaged workers, and a description and total value of any state or federal subsidies applied for, or received by, the warehouse distribution center.
2. Requires each local agency to provide public notice and a hearing before granting a subsidy to a warehouse distribution center, although this is not required if a hearing and notice regarding the subsidy is otherwise required by law.
3. Requires the information specified in 1) above, to remain available to the public under existing state and federal law and to be posted on the local agency's Web site, if applicable, for the entire term of the subsidy.
4. Requires a local agency, after it grants a subsidy for a warehouse distribution center, to issue an annual report for each subsidy during the term of each subsidy and make the report available to the public and through its Web site, if applicable.
5. Requires the report specified in 4) above, to contain the information described in 1) above, and the following information, if applicable:
   1. The information required to be contained in the follow-up report under existing law for any economic development subsidy;
   2. The number of independent contractors, including contract rates, funded by the subsidy;
   3. The total value of benefit packages, including health benefits, fringe benefits, and defined benefit pensions, for each job classification created by the subsidy;
   4. The net number of jobs for disadvantaged workers created by the subsidy; and
   5. For each warehouse distribution center that is the beneficiary of the subsidy: the amount spent on training, apprenticeship, or other skills development programs for employees; the retention rate of employees broken down by full-time, part-time, and temporary positions, and if the turnover rate of employees exceeds 20%; and the number of employment arbitration agreements signed by employees and independent contractors, if any.
6. Requires each local agency, after it grants a subsidy for a warehouse distribution center, to hold an annual public hearing during the term of the subsidy to consider any written or oral comments on the information contained in the report prepared pursuant to 4) and 5) above.
7. Requires each public hearing required by this bill to be consolidated with a local agency's regularly scheduled hearing.
8. Requires a warehouse distribution center to provide a local agency any information necessary to comply with this bill.
9. Provides the following definitions for the purposes of this bill:
   1. "Disadvantaged worker" means an employee of the warehouse distribution center who satisfies any of the following:
      1. Was unemployed for the six months immediately preceding employment with the warehouse distribution center. In the case of an employee that completed a program of study at a college, university, or other postsecondary educational institution, received a baccalaureate, postgraduate, or professional degree, and was unemployed for the six months immediately preceding employment with the warehouse distribution center, that employee must have completed that program of study at least 12 months prior to the individual's commencement of employment with the warehouse distribution center;
      2. Is a veteran who separated from service in the Armed Forces of the United States within the 12 months preceding commencement of employment with the warehouse distribution center;
      3. Was a recipient of the credit allowed under Internal Revenue Code Section 32, relating to earned income, as applicable for federal purposes, for the previous taxable year;
      4. Is an ex-offender previously convicted of a felony; or,
      5. Is a recipient of either CalWORKs or general assistance, in accordance with the Welfare and Institutions Code, as specified.
   2. "Economic development subsidy" means any expenditure of public funds or loss of revenue to a local agency in the amount of $100,000 or more, for the purpose of stimulating economic development within the jurisdiction of a local agency, including, but not limited to, bonds, grants, loans, loan guarantees, enterprise zone or empowerment zone incentives, fee waivers, land price subsidies, matching funds, tax abatements, tax exemptions, and tax credits. "Economic development subsidy" shall not include expenditures of public funds by, or loss of revenue to, the local agency for the purpose of providing housing affordable to persons and families of low or moderate income, as defined in the Health and Safety Code, as specified.
   3. "Local agency" means a city, including a charter city, county, or city and county.
   4. "Warehouse distribution center" means an establishment as defined by any of the following North American Industry Classification System Codes: 493110 for General Warehousing and Storage; 423 for Merchant Wholesalers, Durable Goods; and, 424 for Merchant Wholesalers, Nondurable Goods.
10. Includes findings and declarations to support its purposes.

Background

In response to concerns that local economic development subsidies don’t get the same public scrutiny as budgets and regulatory decisions, the Legislature required additional public disclosures from local agencies prior to approving economic development subsidies of more than $100,000 (AB 562, Williams, Chapter 740, Statutes of 2013).

Online transactions, also called remote sales, are fundamentally changing commerce in America. According to the California Department of Tax and Fee Administration, Internet sales grew 1,321% from 2001 to 2016, compared to 62.8% growth for all sales during the same period. This growth has increased the need for warehousing and distribution centers to deliver products to consumers, as well as the number of individuals employed in this sector.

Since AB 562 was enacted, a number of news reports and studies have focused on Amazon distribution centers and the subsidies state and local agencies have granted in an effort to convince Amazon to locate in their jurisdictions. This followed on the heels of several years of controversy surrounding Amazon's avoidance of sales taxes as a cornerstone of the company's business development strategy.

Among other studies, the Economic Policy Institute issued a report on February 1, 2018, stating that Amazon has likely received over $1 billion in state and local subsidies for its facilities. Additionally, although jobs in the warehousing sector increase in counties where a fulfillment center opens by about 30%, other sectors experience job losses such that no new net jobs are created.

Concerned that local governments are granting subsidies to warehouses without commensurate benefit, some organizations want local officials to report more information about local economic development subsidies to warehouses.

Comments

1. Purpose of the bill. Californians want their governments to be both transparent and accountable. The public should be informed of how their tax dollars are being spent on subsidies. Because local governments compete against each other for the same development, subsidies become a zero-sum game. These subsidies are often offered in exchange for the promise of good paying jobs for local residents, especially in disadvantaged communities, and increased tax revenues for the local government. Yet little information is available on the quality of jobs being created and who is filling them, especially during the term of the subsidy. AB 2853 closes this gap by requiring warehouses that receive economic development studies to report annually on the number of disadvantaged workers employed in those warehouses, the compensation and benefits offered to employees, and the use of independent contractors at the warehouse. AB 2853 provides additional transparency for taxpayers concerning the use of public funds for economic development activities. Knowing more about local subsidies helps communities get ready for important discussions about goals and results.
2. Game of chicken. Economists generally agree that local economic development subsidies are bad policy. Sophisticated corporations have mastered the art of playing local governments against each other to bid up the incentives that they offer to lure economic development into their jurisdiction, even when other factors such as the ability to attract and retain a well-trained labor force, local amenities, proximity to customers, or access to natural resources are the determining factors in a company’s location decisions. Local taxpayers end up footing the bill for these incentives, and would on the whole be better off if their governments didn’t compete against each other to offer subsidies. AB 2583 enhances disclosure requirements in an effort to ensure that local governments calculate and make visible the full costs of subsidizing warehouses, but doesn’t do anything to directly stop the behavior. A more impactful approach might be to ban additional forms of economic subsidies, as was done for some big box retailers and auto malls.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT: (Verified 6/20/18)

California Labor Federation (source)

AFSCME

California Coalition for Adequate School Housing

California Conference Board of the Amalgamated Transit Union

California Conference of Machinists

California Environmental Justice Alliance

California Partnership for Working Families

California Professional Firefighters

California Teamsters Public Affairs Council

Community College Facility Coalition

County School Facilities Consortium

EBASE

Engineers and Scientist of California, IFPTE Local 20, AFL-CIO

International Longshore and Warehouse Union

LAANE

National Employment Law Project

Orange County Communities Organized for Responsible Development

Professional and Technical Engineers, IFPTE Local 21, AFL-CIO

Resource Center

Teamsters Joint Council 42

UNITE-HERE, AFL-CIO

Utility Workers of America

Warehouse Workers Resource Center

Western States Regional Joint Board

Worksafe

OPPOSITION: (Verified 6/20/18)

None received

ASSEMBLY FLOOR: 52-21, 5/17/18

AYES: Aguiar-Curry, Arambula, Baker, Berman, Bloom, Bonta, Burke, Caballero, Calderon, Carrillo, Cervantes, Chau, Chiu, Chu, Cooley, Cooper, Daly, Eggman, Frazier, Friedman, Eduardo Garcia, Gipson, Gloria, Gonzalez Fletcher, Gray, Grayson, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Levine, Limón, Low, Maienschein, McCarty, Medina, Mullin, Nazarian, O'Donnell, Quirk, Quirk-Silva, Reyes, Rodriguez, Rubio, Salas, Mark Stone, Thurmond, Ting, Weber, Wood, Rendon

NOES: Acosta, Travis Allen, Bigelow, Brough, Chávez, Chen, Choi, Cunningham, Dahle, Flora, Fong, Gallagher, Harper, Kiley, Lackey, Mathis, Mayes, Obernolte, Patterson, Voepel, Waldron

NO VOTE RECORDED: Cristina Garcia, Melendez, Muratsuchi, Santiago, Steinorth

Prepared by:

6/20/18 14:56:17

**** END ****

SENATE COMMITTEE ON GOVERNANCE AND FINANCE

Senator Mike McGuire, Chair

2017 - 2018 Regular

Local government: economic development subsidies

Requires local agencies to publicly report specified information when providing economic development subsidies of $100,000 or more for warehouse distribution centers.

Background

Economic development subsidies. Counties, cities, and their redevelopment agencies engage in a wide variety of economic development activities to build their tax bases. Local officials use various tactics to influence where, when, and how the private sector invests capital and improves real property:

• Regulatory tools, including general plans, zoning, and subdivision standards;
• Direct spending, including building public works projects like dams, water systems, sewers, levees, and roads. Spending also includes grants and loans, and site preparation; and
• Tax policies, including lower rates on local taxes (such as sales taxes or property taxes) for selected taxpayers and tax abatements where officials return the revenues to the taxpayers.

Local officials sometimes use their economic development powers to induce businesses to relocate to their communities. Although state law bans counties, cities, and redevelopment agencies from subsidizing the relocation of big box retailers and auto malls within the same market area (SB 114, Torlakson, 2003), local agencies can otherwise exercise significant latitude in the subsidies they grant.

How local officials use their regulatory powers is relatively transparent because state law requires public notice, public hearings, and environmental reviews. State requirements for local budgets, annual financial reports, and regular audits allow constituents to review most of the direct fiscal decisions.

In response to concerns that local economic development subsidies don’t get the same public scrutiny as budgets and regulatory decisions, the Legislature required additional public disclosures from local agencies prior to approving economic development subsidies of more than $100,000 (AB 562, Williams, 2013). Cities and counties that want to approve these subsidies must report on, in a public hearing and on the local agency’s website, the following information:

• The name and address of all corporations or any other business entities, except for sole proprietorships, that are the beneficiary of the economic development subsidy;
• The start and end dates and schedule for the subsidy;
• A description of the subsidy, including the estimated total amount of the expenditure of public funds by, or of revenue lost to, the local agency as a result of the subsidy;
• A statement of the public purposes for the subsidy;
• The projected tax revenue to the local agency as a result of the subsidy; and
• The estimated number of jobs created by the subsidy, including job classifications and wage rates, broken down by full-time, part-time, and temporary positions.

This information must remain available to the public and be posted on city or county’s website for the entire term of the subsidy. Cities and counties must also issue a report for each subsidy within five years of granting the subsidy that includes the information from the initial report plus:

• The net tax revenue accruing to the local agency as a result of the subsidy; and
• The net number of jobs created by the subsidy, including job classifications and wage rates, broken down by full-time, part-time, and temporary positions.

Current law defines “economic development subsidy” to mean any expenditure of public funds or loss of revenue to a local agency in the amount of one hundred thousand dollars ($100,000) or more, for the purpose of stimulating economic development within the jurisdiction of a local agency, but excludes subsidies for providing moderate- or low-income housing.

Warehouse distribution centers. Online transactions, also called remote sales, are fundamentally changing commerce in America. According to the California Department of Tax and Fee Administration, internet sales grew 1,321% from 2001 to 2016, compared to 62.8% growth for all sales during the same period. This growth has increased the need for warehousing and distribution centers to deliver products to consumers, as well as the number of individuals employed in this sector.

Since AB 562 was enacted, a number of news reports and studies have focused on Amazon distribution centers and the subsidies state and local agencies have granted in an effort to convince Amazon to locate in their jurisdictions. This followed on the heels of several years of controversy surrounding Amazon's avoidance of sales taxes as a cornerstone of the company's business development strategy.

Many cities in California enter into agreements with retailers to reallocate or “kickback” sales taxes attributable to that retailer in exchange for a commitment to construct, operate, and maintain a warehouse or distribution center in their jurisdiction that result in an increase in sales tax revenue to the city, and meet specified levels of employment. The City of Fresno has recently entered into long-term agreements with Amazon, Nordstrom, and the Gap, and the City of Dinuba has done the same with BestBuy. The agreements generally operate in the same way. First, the city must receive a threshold amount of actual revenue from sales or property taxes. Second, the city sends a percentage of the revenue above the threshold amount but under a cap set in the agreement to the retailer if it maintains specified employment levels, generally on a per full-time equivalent position basis. The agreements state that the Legislature has in the past diverted local sales tax revenues, and that the retailer acknowledges the risk that the kickback amount may change in the future if the Legislature does so again, as proposed in SCA 20.

Cities that focus their economic development efforts on warehouse and distribution centers view these agreements as valuable economic developments tools that create employment and economic activity that can’t be generated any other way. Critics argue that these agreements give away tax revenues to some of the world’s most profitable retailers that could be used to pay for public services, and that retailers must construct distribution centers somewhere in California to meet customer demands for timely delivery.

Among the publications and research institutes that have reported recently on the issue of local government subsidies, both generally and specifically for Amazon, are the Economic Policy Institute, the Institute for Local Self-Reliance, The Atlantic, the New Republic, the Fresno Bee, the New York Times, Good Jobs First, and others. For example, a December 1, 2012, report by the New York Times found that states and local governments grant more than $80 billion annually in subsidies. The article further noted:

“A full accounting, The Times discovered, is not possible because the incentives are granted by thousands of government agencies and officials, and many do not know the value of all their awards. Nor do they know if the money was worth it because they rarely track how many jobs are created.”

In addition, focusing on subsidies exclusively for Amazon, the Economic Policy Institute issued a report on February 1, 2018, stating that Amazon has likely received over $1 billion in state and local subsidies for its facilities. Additionally, although jobs in the warehousing sector increase in counties where a fulfillment center opens by about 30%, other sectors experience job losses such that no new net jobs are created.

Concerned that local governments are granting subsidies to warehouses without commensurate benefit, some organizations want local officials to report more information about local economic development subsidies to warehouses.

Proposed Law

Assembly Bill 2853 requires a city or county, including a charter city to publicly report specified information before approving or granting economic development subsidies of $100,000 or more for warehouse distribution centers within its jurisdiction, as well as during the term of such subsidies. This reporting requirement is in lieu of the information required for economic development subsidies under current law. The information in the report must include:

• The name and address of all warehouse distribution centers that are the beneficiary of the subsidy;
• The information required under existing law for any economic development subsidy;
• The estimated number of independent contractors, including contract rates, funded by the subsidy;
• The estimated value of benefit packages, including health benefits, fringe benefits, and defined benefit pensions, for each job classification created by the subsidy;
• The estimated number of jobs for disadvantaged workers created by the subsidy; and
• For each warehouse distribution center that is the beneficiary of the subsidy, the outreach, training, and hiring plans, including plans to hire disadvantaged workers, and a description and total value of any state or federal subsidies applied for, or received by, the warehouse distribution center.

AB 2853 requires this information to remain available to the public and to be posted on the local agency's website for the entire term of the subsidy.

AB 2853 requires a local agency, after it grants a subsidy for a warehouse distribution center, to issue an annual report (instead of a single report within five years, as under existing law) for each subsidy during the term of each subsidy. This report must be publicly available through its website and include the information requirements from the initial report on the subsidy, plus:

• The information required to be contained in the follow-up report under existing law for any economic development subsidy;
• The number of independent contractors, including contract rates, funded by the subsidy;
• The total value of benefit packages, including health benefits, fringe benefits, and defined benefit pensions, for each job classification created by the subsidy;
• The net number of jobs for disadvantaged workers created by the subsidy; and
• For each warehouse distribution center that is the beneficiary of the subsidy: the amount spent on training, apprenticeship, or other skills development programs for employees; the retention rate of employees broken down by full-time, part-time, and temporary positions, and if the turnover rate of employees exceeds 20%; and the number of employment arbitration agreements signed by employees and independent contractors, if any.

AB 2853 requires each local agency to provide public notice and a hearing before granting a subsidy to a warehouse distribution center, although this is not required if a hearing and notice regarding the subsidy is otherwise required by law, and annually during the term of the subsidy to consider any written or oral comments on the information contained in the reports. These hearings must be consolidated with a local agency’s regularly scheduled hearing.

AB 2853 requires a warehouse distribution center to provide a local agency any information necessary to comply with this bill.

AB 2853 defines “disadvantaged worker” to mean an employee of the warehouse distribution center who satisfies any of the following:

• Was unemployed for the six months immediately preceding employment with the warehouse distribution center, or, in the case of an employee that completed college and was unemployed for the six months immediately preceding employment with the warehouse distribution center, that employee must have completed that program of study at least 12 months prior to the individual's commencement of employment with the warehouse distribution center;
• Served in the Armed Forces of the United States within 12 months of starting work at the warehouse distribution center;
• Received the federal Earned Income Tax Credit;
• Is an ex-offender previously convicted of a felony; or,
• Is a recipient of certain public assistance programs.

AB 2853 defines “warehouse distribution center” to mean an establishment that falls within specified North American Industry Classification System (NAICS) Codes for warehousing and storage and merchant wholesalers.

State Revenue Impact

No estimate.

Comments

1. Purpose of the bill. Californians want their governments to be both transparent and accountable. The public should be informed of how their tax dollars are being spent on subsidies. Because local governments compete against each other for the same development, subsidies become a zero-sum game. There has been widespread reporting on—and scrutiny of—the attempts of cities throughout the country to lure Amazon’s second headquarters by offering billions of dollars in economic subsidies. However, less attention has been paid to the subsidies that local governments offer the warehouses that form the backbone of the distribution operations of Amazon and other major retailers. These subsidies are often offered in exchange for the promise of good paying jobs for local residents, especially in disadvantaged communities, and increased tax revenues for the local government. Yet little information is available on the quality of jobs being created and who is filling them, especially during the term of the subsidy. AB 2853 closes this gap by requiring warehouses that receive economic development studies to report annually on the number of disadvantaged workers employed in those warehouses, the compensation and benefits offered to employees, and the use of independent contractors at the warehouse. AB 2853 provides additional transparency for taxpayers concerning the use of public funds for economic development activities. Knowing more about local subsidies helps communities get ready for important discussions about goals and results.

2. Game of chicken. Economists generally agree that local economic development subsidies are bad policy. Sophisticated corporations have mastered the art of playing local governments against each other to bid up the incentives that they offer to lure economic development into their jurisdiction, even when other factors such as the ability to attract and retain a well-trained labor force, local amenities, proximity to customers, or access to natural resources are the determining factors in a company’s location decisions. Local taxpayers end up footing the bill for these incentives, and would on the whole be better off if their governments didn’t compete against each other to offer subsidies. AB 2583 enhances disclosure requirements in an effort to ensure that local governments calculate and make visible the full costs of subsidizing warehouses, but doesn’t do anything to directly stop the behavior. A more impactful approach might be to ban additional forms of economic subsidies, as was done for some big box retailers and auto malls.

3. Naming names. AB 2853 establishes public disclosure requirements that apply to economic subsidies to warehouses in lieu of the existing disclosure requirements for economic subsidies generally. The provisions of AB 2853 substantially mirror those in existing law, along with additional requirements on benefits provided to workers, information on disadvantaged workers hired, and the use of independent contractors. However, AB 2853 does not include the requirement in existing law to list the name and address of all corporations or any other business entities, except for sole proprietorships, that are the beneficiary of the subsidy; instead, it only requires the name and address of the warehouse. But ownership of warehouses can be complex—a warehouse might be owned by one entity solely for the use of a larger entity, such as a Walmart or Amazon. In order to provide a full picture of the benefits provided to large corporations, the Committee may wish to consider amending AB 2853 to include the existing requirement to name other beneficiaries.

4. Mandate. The California Constitution generally requires the state government to reimburse the costs of new or expanded state mandated local programs. Because AB 2853 requires local governments do report on additional information prior to approving an economic development subsidy, the Legislative Counsel’s Office says that AB 2853 creates a new state-mandated local program. But this bill disclaims the state's responsibility for reimbursing local agencies for this new requirement with a finding that the act ensures the public’s right of access to information about the conduct of their governmental agencies. That’s consistent with the California Constitution because California voters eliminated the state’s responsibility to pay local governments for compliance with the Brown Act and its amendments in 2012 (Proposition 42).

5. Charter city. The California Constitution allows cities that adopt charters to control their own “municipal affairs.” In all other matters, charter cities must follow the general, statewide laws. Because the Constitution doesn't define "municipal affairs," the courts determine whether a topic is a municipal affair or whether it's an issue of statewide concern. AB 2853 says that its statutory provisions apply to charter cities. To support this assertion, the bill includes a legislative finding and declaration that the right to be informed of economic development subsidies is a matter of statewide concern.

6. Related legislation. SCA 20 (Glazer), which the Committee approved at its April 25^th meeting on a vote of 7 to 0, amends the California Constitution to provide that the retail sale of tangible personal property transacted online is consummated at the point of delivery. SCA 20 was subsequently held in the Senate Appropriations Committee.

Assembly Actions

Assembly Local Government Committee: 6-2

Assembly Floor: 52-21

Support and Opposition

(6/7/18)

Support: California Labor Federation (sponsor); AFSCME; California Coalition for Adequate School Housing; CA Conference Board of the Amalgamated Transit Union; CA Conference of Machinists; California Environmental Justice Alliance; California Partnership for Working Families; California Teamsters Public Affairs Council; Community College Facility Coalition; County School Facilities Consortium; EBASE; Engineers and Scientist of CA ; IFPTE Local; International Longshore and Warehouse Union; LAANE; National Employment Law Project; OCCORD; Professional and Technical Engineers; IFPTE Local 21, AFL-CIO; Regional Joint Board l 20; AFL-CIO Resource Center Teamsters Joint Council 42; UNITE-HERE, AFL-CIO; Utility Workers of America; Warehouse Workers Resource Center; Western States Regional Joint Board; Worksafe.

Opposition: Unknown.

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 2853

Author:(Medina)

As Amended Ver:May 10, 2018

Majority vote

SUMMARY: Requires local agencies to take specified actions before approving or granting economic development subsidies of $100,000 or more for warehouse distribution centers, and during the term of such subsidies. Specifically, this bill:

1. Requires each local agency, on and after January 1, 2019, to provide specified information to the public before approving any economic development subsidy (subsidy) for a warehouse distribution center within its jurisdiction. All of the following information must be made available to the public in written form and through its Internet Web site (website), if applicable:
   1. The name and address of all warehouse distribution centers that are the beneficiary of the subsidy;
   2. The start and end dates and schedule, if applicable, for the subsidy;
   3. A description of the subsidy, including the estimated total amount of the expenditure of public funds by, or of revenue lost to, the local agency as a result of the subsidy;
   4. A statement of the public purposes for the subsidy;
   5. The projected tax revenue to the local agency as a result of the subsidy;
   6. The estimated number of jobs created by the subsidy, including job classifications and wage rates, broken down by full-time, part-time, and temporary positions;
   7. The estimated number of independent contractors, including contract rates, funded by the subsidy;
   8. The estimated value of benefit packages, including health benefits, fringe benefits, and defined benefit pensions, for each job classification created by the subsidy;
   9. The estimated number of jobs for disadvantaged workers created by the subsidy;
   10. Both of the following regarding each warehouse distribution center that is the beneficiary of the subsidy:
       1. A description of the outreach, training, and hiring plans, including plans to hire disadvantaged workers; and,
       2. A description and total value of any state or federal subsidies applied for, or received by, the warehouse distribution center.
2. Requires each local agency to provide public notice and a hearing before granting a subsidy to a warehouse distribution center, although this is not required if a hearing and notice regarding the subsidy is otherwise required by law.
3. Requires the information specified in 1), above, to remain available to the public under existing state and federal law and to be posted on the local agency's website, if applicable, for the entire term of the subsidy.
4. Requires a local agency, after it grants a subsidy for a warehouse distribution center, to issue an annual report for each subsidy during the term of each subsidy and make the report available to the public and through its website, if applicable.
5. Requires the report specified in 4), above, to contain the information described in 1), above, and the following information, if applicable:
   1. The net tax revenue accruing to the local agency as a result of the subsidy;
   2. The net number of jobs created by the subsidy, including job classifications and wage rates, broken down by full-time, part-time, and temporary positions;
   3. The number of independent contractors, including contract rates, funded by the subsidy;
   4. The total value of benefit packages, including health benefits, fringe benefits, and defined benefit pensions, for each job classification created by the subsidy;
   5. The net number of jobs for disadvantaged workers created by the subsidy;
   6. All of the following regarding each warehouse distribution center that is the beneficiary of the subsidy:
      1. The amount spent on training, apprenticeship, or other skills development programs for employees;
      2. The retention rate of employees broken down by full-time, part-time, and temporary positions, and if the turnover rate of employees exceeds 20%; and,
      3. The number of employment arbitration agreements signed by employees and independent contractors, if any.
6. Requires each local agency, after it grants a subsidy for a warehouse distribution center, to hold an annual public hearing during the term of the subsidy to consider any written or oral comments on the information contained in the report prepared pursuant to 4) and 5), above.
7. Requires each public hearing required by this bill to be consolidated with a local agency's regularly scheduled hearing.
8. Requires a warehouse distribution center to provide a local agency any information necessary to comply with this bill.
9. Provides the following definitions for the purposes of this bill:
   1. "Disadvantaged worker" means an employee of the warehouse distribution center who satisfies any of the following:
      1. Was unemployed for the six months immediately preceding employment with the warehouse distribution center. In the case of an employee that completed a program of study at a college, university, or other postsecondary educational institution, received a baccalaureate, postgraduate, or professional degree, and was unemployed for the six months immediately preceding employment with the warehouse distribution center, that employee must have completed that program of study at least 12 months prior to the individual's commencement of employment with the warehouse distribution center;
      2. Is a veteran who separated from service in the Armed Forces of the United States within the 12 months preceding commencement of employment with the warehouse distribution center;
      3. Was a recipient of the credit allowed under Internal Revenue Code Section 32, relating to earned income, as applicable for federal purposes, for the previous taxable year;
      4. Is an ex-offender previously convicted of a felony; or,
      5. Is a recipient of either CalWORKs or general assistance, in accordance with the Welfare and Institutions Code, as specified.
   2. "Economic development subsidy" means any expenditure of public funds or loss of revenue to a local agency in the amount of $100,000 or more, for the purpose of stimulating economic development within the jurisdiction of a local agency, including, but not limited to, bonds, grants, loans, loan guarantees, enterprise zone or empowerment zone incentives, fee waivers, land price subsidies, matching funds, tax abatements, tax exemptions, and tax credits. "Economic development subsidy" shall not include expenditures of public funds by, or loss of revenue to, the local agency for the purpose of providing housing affordable to persons and families of low or moderate income, as defined in the Health and Safety Code, as specified.
   3. "Local agency" means a city, including a charter city, county, or city and county.
   4. "Warehouse distribution center" means an establishment as defined by any of the following North American Industry Classification System (NAICS) Codes: 493110 for General Warehousing and Storage; 423 for Merchant Wholesalers, Durable Goods; and, 424 for Merchant Wholesalers, Nondurable Goods.
10. Finds and declares that the right of the public to be informed of subsidies for warehouse distribution centers approved by their local agencies, as described in and added by this bill, is a matter of statewide concern, and not a municipal affair, as that term is used in California Constitution Article XI, Section 5.
11. Finds and declares that this bill furthers, within the meaning of California Constitution Article I, Section 3(b)(7), the purposes of that constitutional section as it relates to the right of public access to the meetings of local public bodies or the writings of local public officials and local agencies and declares, pursuant to California Constitution Article I, Section 3(b)(7), that the Legislature makes the following findings: This act ensures the public's right of access to information about the conduct of their government agencies relating to subsidies for warehouse distribution centers.

FISCAL EFFECT: None

COMMENTS:

1. Author's Statement. According to the author, "AB 2853 seeks to give local governments and communities the necessary information to hold warehouse and distribution companies that receive public subsidies accountable for good job creation. As online shopping continues to grow, companies are increasing their warehouse footprints swelling the demand for streamlined logistics centers. These warehouses are often placed in communities desperate for jobs and still recovering from the recession. Many of the jobs in these warehouses are grueling and high-stress. The benefits may be enticing but don’t become available until after a year of employment. Some of the jobs are temporary or seasonal, causing employment opportunities to fluctuate and throwing families into economic instability.

"In the Economic Policy Institute's [EPI] report entitled 'Unfulfilled Promises,' EPI economist Ben Zipperer and economic analysts Janelle Jones concluded that on average, 'Amazon's fulfillment centers are ineffective at providing net job growth.' Cities are constantly in a race to the bottom as highlighted by the current bidding wars for warehouse distribution centers. If the jobs and benefits promised do not materialize, the quality of living drops, and the traffic and air quality worsens, what did the city gain? Was the economic subsidy worth the tax revenue loss? Is any job a good job or can cities do better in elevating their attractiveness without sacrificing needed tax revenue?"

1. Background. Local governments engage in a wide variety of economic development activities to build their tax bases. In this respect, local officials use their regulatory powers to direct spending and tax policies which, in turn, influence where, when and how the private sector invests capital and improves real property.

The Legislature recently delved into the issue of local government subsidies when it considered and approved AB 562 (Williams), Chapter 740, Statutes of 2013. AB 562 established requirements for local agencies to meet before approving any subsidy, and during the term of such subsidies. In arguing for the bill, the author noted, "Each year, local governments give out billions of dollars in tax incentives to corporations in hopes of increasing economic growth and drawing jobs for their residents…State requirements for local budgets, annual financial reports, and regular audits allow constituents to review most of the direct fiscal decisions made by local governments. However, local economic subsidies do not receive the same public scrutiny as budgets and regulatory decisions. Additionally, local governments rarely track how many jobs are created and it's impossible to know whether the jobs would have been created without the aid. AB 562 seeks to remedy this shortcoming."

AB 562 succeeded, after several years of failed attempts, in requiring local agencies to gather and make available to the public – in writing and on the agency's website – specified information about any subsidy of $100,000 or more, both before the subsidy is approved and during the life of the subsidy. In addition to basic identifying information about each subsidy and public hearing requirements, AB 562 required the following information:

• 1. The estimated total amount of the expenditure of public funds by, or revenue lost to, the local agency as a result of the subsidy;
  2. Projected and actual tax revenue accruing to the local agency as a result of the subsidy; and,
  3. Estimated and actual number of jobs created by the subsidy, broken down by full-time, part-time, and temporary positions.

1. Subsidies and Warehouse Distribution Centers. Since AB 562 was enacted, a number of news reports and studies have focused on Amazon distribution centers and the subsidies state and local agencies have granted in an effort to convince Amazon to locate in their jurisdictions. This followed on the heels of several years of controversy surrounding Amazon's avoidance of sales taxes as a cornerstone of the company's business development strategy. Among the publications and research institutes that have reported recently on the issue of local government subsidies, both generally and specifically for Amazon, are the Economic Policy Institute, the Institute for Local Self-Reliance, The Atlantic, the New Republic, the Fresno Bee, the New York Times, Good Jobs First, and others.

According to a New York Times article dated December 1, 2012, "A Times investigation has examined and tallied thousands of local incentives granted nationwide and has found that states, counties and cities are giving up more than $80 billion each year to companies. The beneficiaries come from virtually every corner of the corporate world, encompassing oil and coal conglomerates, technology and entertainment companies, banks and big-box retail chains. The cost of the awards is certainly far higher. A full accounting, The Times discovered, is not possible because the incentives are granted by thousands of government agencies and officials, and many do not know the value of all their awards. Nor do they know if the money was worth it because they rarely track how many jobs are created. Even where officials do track incentives, they acknowledge that it is impossible to know whether the jobs would have been created without the aid…

"A portrait arises of mayors and governors who are desperate to create jobs, outmatched by multinational corporations and short on tools to fact-check what companies tell them. Many of the officials said they feared that companies would move jobs overseas if they did not get subsidies in the United States. Over the years, corporations have increasingly exploited that fear, creating a high-stakes bazaar where they pit local officials against one another to get the most lucrative packages. States compete with other states, cities compete with surrounding suburbs, and even small towns have entered the race with the goal of defeating their neighbors...Questioned about incentives, officials at dozens of other large corporations said they owed it to shareholders to maximize profits. Many emphasized that they employ thousands of Americans who pay taxes and spend money in the local economy."

Focusing on subsidies exclusively for Amazon, the Economic Policy Institute issued a report on February 1, 2018, which states, "The expansion of Amazon’s physical distribution network has coincided with a strategic business plan of negotiating millions in tax abatements, credits, exemptions, and infrastructure assistance from state and local governments in the name of regional economic development. By the end of 2016, Amazon had likely received over $1 billion in state and local subsidies for its facilities, which would include not only fulfillment centers but 'sortation' centers that only sort packages, mailing centers, and other facilities. In return for the incentives each of the fulfillment centers receives, Amazon claims to create hundreds of jobs with competitive pay and benefits.

"Using tax and other incentives to lure businesses to state and local areas is a long-running economic development strategy pursued by subnational governments. In nearly every state, businesses can receive a significantly lighter tax burden for constructing a sports stadium, filming a movie, or building a manufacturing assembly plant. The results on whether these types of community development strategies have a positive impact on job creation and growth is highly debated in popular news outlets and among researchers. And as Amazon has grown, the debate in some cases has specifically focused on Amazon."

The report found that, "When Amazon opens a new fulfillment center, the host county gains roughly 30% more warehousing and storage jobs but no new net jobs overall, as the jobs created in warehousing and storage are likely offset by job losses in other industries…State and local governments give away millions in tax abatements, credits, exemptions, and infrastructure assistance to lure Amazon warehouses but don’t get a commensurate 'return' on that investment. Rather than spending public resources on an ineffective strategy to boost local employment (luring Amazon fulfillment centers), state and local governments should invest in public services (particularly in early-childhood education and infrastructure) that are proven to spur long-term economic development."

1. Bill Summary. This bill establishes requirements that local agencies must meet before and during the term of any subsidy exceeding $100,000 for warehouse distribution centers. In addition to the requirements established by AB 562 for all subsidies exceeding $100,000, this bill requires local agencies to provide the following additional information regarding subsidies specific to warehouse distribution centers:
   1. Job classifications and wage rates for the estimated and actual number of jobs created by the subsidy;
   2. The estimated and actual number of independent contractors, including contract rates, funded by the subsidy;
   3. The estimated value of benefit packages for each job classification created by the subsidy;
   4. The estimated number of jobs for disadvantaged workers created by the subsidy;
   5. For each warehouse distribution center that is a beneficiary of a subsidy:
      1. A description of its outreach, training, and hiring plans, including plans to hire disadvantaged workers;
      2. A description and total value of any state or federal subsidies applied for, or received by, the warehouse distribution center;
      3. The amount spent on training, apprenticeship, or other skills development programs for employees;
      4. The retention rate of employees broken down by full-time, part-time, and temporary positions, and if the turnover rate of employees exceeds 20%; and,
      5. The number of employment arbitration agreements signed by employees and independent contractors, if any.

This bill also requires annual reporting and public hearings regarding subsidies for warehouse distribution centers, and requires such centers to provide local agencies with any information necessary for local agencies to comply with the bill's requirements.

This bill is sponsored by the California Labor Federation.

1. Proposition 42. Proposition 42 was passed by voters on June 3, 2014, and requires all local governments to comply with the Public Records Act and the Ralph M. Brown Act (Brown Act) and with any subsequent changes to those Acts. Proposition 42 also eliminated reimbursement to local agencies for costs of complying with the Public Records Act and the Brown Act.

This bill contains language that says that the Legislature finds and declares that the bill furthers the purpose of the California Constitution as it relates to the right of public access to the meetings of local public bodies or the writings of local public officials and local agencies. Pursuant to California Constitution Article I, Section 3(b)(7), the bill also includes a finding that states, "This act ensures the public's right of access to information about the conduct of their government agencies relating to subsidies for warehouse distribution centers."

1. Arguments in Support. The California Labor Federation, sponsor of this bill, writes, "A 2015 report by University of California Riverside found that warehouse jobs pay less than a living wage, are often temporary, and do not provide health care benefits. Interviews with workers paint an even bleaker picture. Workers report that warehouse jobs are grueling and dangerous, contributing to high turnover. Cities are doling out subsidies, but residents are not necessarily seeing the benefits from reduced poverty or improved job quality. Massive distribution centers may also exert downward pressure on other employers in the area. The Economist reported that workers in areas where Amazon operates earn 10% less than workers in similar jobs. Another study found that one in 10 Amazon workers in Ohio were on food stamps to supplement their meager wages.

“When cities engage in a race to the bottom, the State of California loses, as well. Communities need tools to know what they are getting for their money and the ability to hold developers and employers accountable for the quality and number of jobs they promise to create. AB 2853 is simply a transparency bill, but it will give local governments and residents the tools to hold warehousing giants accountable for the public subsidies they receive. It will also give cities in a region more information so they may collectively bargain for a warehouse, rather than allowing companies to pick winners and losers – resulting in a net loss for the state."

1. Arguments in Opposition. None on file.

Analysis Prepared by: Angela Mapp / L. GOV. / (916) 319-3958 FN: 0002866

ASSEMBLY THIRD READING

ATR Bill Id:AB 2853

Author:(Medina)

As Amended Ver:March 20, 2018

Majority vote

SUMMARY: Requires local agencies to take specified actions before approving or granting economic development subsidies of $100,000 or more for warehouse distribution centers, and during the term of such subsidies. Specifically, this bill:

1. Requires each local agency, on and after January 1, 2019, to provide specified information to the public before approving any economic development subsidy (subsidy) for a warehouse distribution center within its jurisdiction. All of the following information must be made available to the public in written form and through its Internet Web site (website), if applicable:
   1. The name and address of all warehouse distribution centers that are the beneficiary of the subsidy;
   2. The start and end dates and schedule, if applicable, for the subsidy;
   3. A description of the subsidy, including the estimated total amount of the expenditure of public funds by, or of revenue lost to, the local agency as a result of the subsidy;
   4. A statement of the public purposes for the subsidy;
   5. The projected tax revenue to the local agency as a result of the subsidy;
   6. The estimated number of jobs created by the subsidy, including job classifications and wage rates, broken down by full-time, part-time, and temporary positions;
   7. The estimated number of independent contractors, including contract rates, funded by the subsidy;
   8. The estimated value of benefit packages, including health benefits, fringe benefits, and defined benefit pensions, for each job classification created by the subsidy;
   9. The estimated number of jobs for disadvantaged workers created by the subsidy;
   10. Both of the following regarding each warehouse distribution center that is the beneficiary of the subsidy:
       1. A description of the outreach, training, and hiring plans, including plans to hire disadvantaged workers; and,
       2. A description and total value of any state or federal subsidies applied for, or received by, the warehouse distribution center.
2. Requires each local agency to provide public notice and a hearing before granting a subsidy to a warehouse distribution center, although this is not required if a hearing and notice regarding the subsidy is otherwise required by law.
3. Requires the information specified in 1), above, to remain available to the public under existing state and federal law and to be posted on the local agency's website, if applicable, for the entire term of the subsidy.
4. Requires a local agency, after it grants a subsidy for a warehouse distribution center, to issue an annual report for each subsidy during the term of each subsidy and make the report available to the public and through its website, if applicable.
5. Requires the report specified in 4), above, to contain the information described in 1), above, and the following information, if applicable:
   1. The net tax revenue accruing to the local agency as a result of the subsidy;
   2. The net number of jobs created by the subsidy, including job classifications and wage rates, broken down by full-time, part-time, and temporary positions;
   3. The number of independent contractors, including contract rates, funded by the subsidy;
   4. The total value of benefit packages, including health benefits, fringe benefits, and defined benefit pensions, for each job classification created by the subsidy;
   5. The net number of jobs for disadvantaged workers created by the subsidy;
   6. All of the following regarding each warehouse distribution center that is the beneficiary of the subsidy:
      1. The amount spent on training, apprenticeship, or other skills development programs for employees;
      2. The retention rate of employees broken down by full-time, part-time, and temporary positions, and if the turnover rate of employees exceeds 20%; and,
      3. The number of employment arbitration agreements signed by employees and independent contractors, if any.
6. Requires each local agency, after it grants a subsidy for a warehouse distribution center, to hold an annual public hearing during the term of the subsidy to consider any written or oral comments on the information contained in the report prepared pursuant to 4) and 5), above.
7. Requires each public hearing required by this bill to be consolidated with a local agency's regularly scheduled hearing.
8. Requires a warehouse distribution center to provide a local agency any information necessary to comply with this bill.
9. Provides the following definitions for the purposes of this bill:
   1. "Disadvantaged worker" means an employee of the warehouse distribution center who satisfies any of the following:
      1. Was unemployed for the six months immediately preceding employment with the warehouse distribution center. In the case of an employee that completed a program of study at a college, university, or other postsecondary educational institution, received a baccalaureate, postgraduate, or professional degree, and was unemployed for the six months immediately preceding employment with the warehouse distribution center, that employee must have completed that program of study at least 12 months prior to the individual's commencement of employment with the warehouse distribution center;
      2. Is a veteran who separated from service in the Armed Forces of the United States within the 12 months preceding commencement of employment with the warehouse distribution center;
      3. Was a recipient of the credit allowed under Internal Revenue Code Section 32, relating to earned income, as applicable for federal purposes, for the previous taxable year;
      4. Is an ex-offender previously convicted of a felony; or,
      5. Is a recipient of either CalWORKs or general assistance, in accordance with the Welfare and Institutions Code, as specified.
   2. "Economic development subsidy" means any expenditure of public funds or loss of revenue to a local agency in the amount of $100,000 or more, for the purpose of stimulating economic development within the jurisdiction of a local agency, including, but not limited to, bonds, grants, loans, loan guarantees, enterprise zone or empowerment zone incentives, fee waivers, land price subsidies, matching funds, tax abatements, tax exemptions, and tax credits. "Economic development subsidy" shall not include expenditures of public funds by, or loss of revenue to, the local agency for the purpose of providing housing affordable to persons and families of low or moderate income, as defined in the Health and Safety Code, as specified.
   3. "Local agency" means a city, including a charter city, county, or city and county.
   4. "Warehouse distribution center" means an establishment as defined by the North American Industry Classification System (NAICS) Code 493110 for General Warehousing and Storage.
10. Finds and declares that the right of the public to be informed of subsidies for warehouse distribution centers approved by their local agencies, as described in and added by this bill, is a matter of statewide concern, and not a municipal affair, as that term is used in California Constitution Article XI, Section 5.
11. Finds and declares that this bill furthers, within the meaning of California Constitution Article I, Section 3(b)(7), the purposes of that constitutional section as it relates to the right of public access to the meetings of local public bodies or the writings of local public officials and local agencies and declares, pursuant to California Constitution Article I, Section 3(b)(7), that the Legislature makes the following findings: This act ensures the public's right of access to information about the conduct of their government agencies relating to subsidies for warehouse distribution centers.

FISCAL EFFECT: None

COMMENTS:

1. Author's Statement. According to the author, "AB 2853 seeks to give local governments and communities the necessary information to hold warehouse and distribution companies that receive public subsidies accountable for good job creation. As online shopping continues to grow, companies are increasing their warehouse footprints swelling the demand for streamlined logistics centers. These warehouses are often placed in communities desperate for jobs and still recovering from the recession. Many of the jobs in these warehouses are grueling and high-stress. The benefits may be enticing but don’t become available until after a year of employment. Some of the jobs are temporary or seasonal, causing employment opportunities to fluctuate and throwing families into economic instability.

"In the Economic Policy Institute's report entitled 'Unfulfilled Promises,' EPI economist Ben Zipperer and economic analysts Janelle Jones concluded that on average, 'Amazon's fulfillment centers are ineffective at providing net job growth.' Cities are constantly in a race to the bottom as highlighted by the current bidding wars for warehouse distribution centers. If the jobs and benefits promised do not materialize, the quality of living drops, and the traffic and air quality worsens, what did the city gain? Was the economic subsidy worth the tax revenue loss? Is any job a good job or can cities do better in elevating their attractiveness without sacrificing needed tax revenue?"

1. Background. Local governments engage in a wide variety of economic development activities to build their tax bases. In this respect, local officials use their regulatory powers to direct spending and tax policies which, in turn, influence where, when and how the private sector invests capital and improves real property.

The Legislature recently delved into the issue of local government subsidies when it considered and approved AB 562 (Williams), Chapter 740, Statutes of 2013. AB 562 established requirements for local agencies to meet before approving any subsidy, and during the term of such subsidies. In arguing for the bill, the author noted, "Each year, local governments give out billions of dollars in tax incentives to corporations in hopes of increasing economic growth and drawing jobs for their residents…State requirements for local budgets, annual financial reports, and regular audits allow constituents to review most of the direct fiscal decisions made by local governments. However, local economic subsidies do not receive the same public scrutiny as budgets and regulatory decisions. Additionally, local governments rarely track how many jobs are created and it's impossible to know whether the jobs would have been created without the aid. AB 562 seeks to remedy this shortcoming."

AB 562 succeeded, after several years of failed attempts, in requiring local agencies to gather and make available to the public – in writing and on the agency's website – specified information about any subsidy of $100,000 or more, both before the subsidy is approved and during the life of the subsidy. In addition to basic identifying information about each subsidy and public hearing requirements, AB 562 required the following information:

• 1. The estimated total amount of the expenditure of public funds by, or revenue lost to, the local agency as a result of the subsidy;
  2. Projected and actual tax revenue accruing to the local agency as a result of the subsidy; and,
  3. Estimated and actual number of jobs created by the subsidy, broken down by full-time, part-time, and temporary positions.

1. Subsidies and Warehouse Distribution Centers. Since AB 562 was enacted, a number of news reports and studies have focused on Amazon distribution centers and the subsidies state and local agencies have granted in an effort to convince Amazon to locate in their jurisdictions. This followed on the heels of several years of controversy surrounding Amazon's avoidance of sales taxes as a cornerstone of the company's business development strategy. Among the publications and research institutes that have reported recently on the issue of local government subsidies, both generally and specifically for Amazon, are the Economic Policy Institute, the Institute for Local Self-Reliance, The Atlantic, the New Republic, the Fresno Bee, the New York Times, Good Jobs First, and others.

According to a New York Times article dated December 1, 2012, "A Times investigation has examined and tallied thousands of local incentives granted nationwide and has found that states, counties and cities are giving up more than $80 billion each year to companies. The beneficiaries come from virtually every corner of the corporate world, encompassing oil and coal conglomerates, technology and entertainment companies, banks and big-box retail chains. The cost of the awards is certainly far higher. A full accounting, The Times discovered, is not possible because the incentives are granted by thousands of government agencies and officials, and many do not know the value of all their awards. Nor do they know if the money was worth it because they rarely track how many jobs are created. Even where officials do track incentives, they acknowledge that it is impossible to know whether the jobs would have been created without the aid…

"A portrait arises of mayors and governors who are desperate to create jobs, outmatched by multinational corporations and short on tools to fact-check what companies tell them. Many of the officials said they feared that companies would move jobs overseas if they did not get subsidies in the United States. Over the years, corporations have increasingly exploited that fear, creating a high-stakes bazaar where they pit local officials against one another to get the most lucrative packages. States compete with other states, cities compete with surrounding suburbs, and even small towns have entered the race with the goal of defeating their neighbors...Questioned about incentives, officials at dozens of other large corporations said they owed it to shareholders to maximize profits. Many emphasized that they employ thousands of Americans who pay taxes and spend money in the local economy."

Focusing on subsidies exclusively for Amazon, the Economic Policy Institute issued a report on February 1, 2018, which states, "The expansion of Amazon’s physical distribution network has coincided with a strategic business plan of negotiating millions in tax abatements, credits, exemptions, and infrastructure assistance from state and local governments in the name of regional economic development. By the end of 2016, Amazon had likely received over $1 billion in state and local subsidies for its facilities, which would include not only fulfillment centers but 'sortation' centers that only sort packages, mailing centers, and other facilities. In return for the incentives each of the fulfillment centers receives, Amazon claims to create hundreds of jobs with competitive pay and benefits.

"Using tax and other incentives to lure businesses to state and local areas is a long-running economic development strategy pursued by subnational governments. In nearly every state, businesses can receive a significantly lighter tax burden for constructing a sports stadium, filming a movie, or building a manufacturing assembly plant. The results on whether these types of community development strategies have a positive impact on job creation and growth is highly debated in popular news outlets and among researchers. And as Amazon has grown, the debate in some cases has specifically focused on Amazon."

The report found that, "When Amazon opens a new fulfillment center, the host county gains roughly 30 percent more warehousing and storage jobs but no new net jobs overall, as the jobs created in warehousing and storage are likely offset by job losses in other industries…State and local governments give away millions in tax abatements, credits, exemptions, and infrastructure assistance to lure Amazon warehouses but don’t get a commensurate 'return' on that investment. Rather than spending public resources on an ineffective strategy to boost local employment (luring Amazon fulfillment centers), state and local governments should invest in public services (particularly in early-childhood education and infrastructure) that are proven to spur long-term economic development."

1. Bill Summary. This bill establishes requirements that local agencies must meet before and during the term of any subsidy exceeding $100,000 for warehouse distribution centers. In addition to the requirements established by AB 562 for all subsidies exceeding $100,000, this bill requires local agencies to provide the following additional information regarding subsidies specific to warehouse distribution centers:
   1. Job classifications and wage rates for the estimated and actual number of jobs created by the subsidy;
   2. The estimated and actual number of independent contractors, including contract rates, funded by the subsidy;
   3. The estimated value of benefit packages for each job classification created by the subsidy;
   4. The estimated number of jobs for disadvantaged workers created by the subsidy;
   5. For each warehouse distribution center that is a beneficiary of a subsidy:
      1. A description of its outreach, training, and hiring plans, including plans to hire disadvantaged workers;
      2. A description and total value of any state or federal subsidies applied for, or received by, the warehouse distribution center;
      3. The amount spent on training, apprenticeship, or other skills development programs for employees;
      4. The retention rate of employees broken down by full-time, part-time, and temporary positions, and if the turnover rate of employees exceeds 20%; and,
      5. The number of employment arbitration agreements signed by employees and independent contractors, if any.

This bill also requires annual reporting and public hearings regarding subsidies for warehouse distribution centers, and requires such centers to provide local agencies with any information necessary for local agencies to comply with the bill's requirements.

This bill is sponsored by the California Labor Federation.

1. Proposition 42. Proposition 42 was passed by voters on June 3, 2014, and requires all local governments to comply with the Public Records Act and the Ralph M. Brown Act (Brown Act) and with any subsequent changes to those Acts. Proposition 42 also eliminated reimbursement to local agencies for costs of complying with the Public Records Act and the Brown Act.

This bill contains language that says that the Legislature finds and declares that the bill furthers the purpose of the California Constitution as it relates to the right of public access to the meetings of local public bodies or the writings of local public officials and local agencies. Pursuant to California Constitution Article I, Section 3(b)(7), the bill also includes a finding that states, "This act ensures the public's right of access to information about the conduct of their government agencies relating to subsidies for warehouse distribution centers."

1. Arguments in Support. The California Labor Federation, sponsor of this bill, writes, "A 2015 report by University of California Riverside found that warehouse jobs pay less than a living wage, are often temporary, and do not provide health care benefits. Interviews with workers paint an even bleaker picture. Workers report that warehouse jobs are grueling and dangerous, contributing to high turnover. Cities are doling out subsidies, but residents are not necessarily seeing the benefits from reduced poverty or improved job quality. Massive distribution centers may also exert downward pressure on other employers in the area. The Economist reported that workers in areas where Amazon operates earn 10% less than workers in similar jobs. Another study found that 1 in 10 Amazon workers in Ohio were on food stamps to supplement their meager wages.

“When cities engage in a race to the bottom, the State of California loses, as well. Communities need tools to know what they are getting for their money and the ability to hold developers and employers accountable for the quality and number of jobs they promise to create. AB 2853 is simply a transparency bill, but it will give local governments and residents the tools to hold warehousing giants accountable for the public subsidies they receive. It will also give cities in a region more information so they may collectively bargain for a warehouse, rather than allowing companies to pick winners and losers – resulting in a net loss for the state."

1. Arguments in Opposition. None on file.

Analysis Prepared by: Angela Mapp / L. GOV. / (916) 319-3958 FN: 0002757

Date of Hearing: April 25, 2018

ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT

Cecilia Aguiar-Curry, Chair

ABPCA Bill Id:AB 2853 (

Author:Medina) – As Amended Ver:March 20, 2018

SUBJECT: Local government: economic development subsidies.

SUMMARY: Requires local agencies to take specified actions before approving or granting economic development subsidies of $100,000 or more for warehouse distribution centers and during the term of such subsidies. Specifically, this bill:

1. Requires each local agency, on and after January 1, 2019, to provide specified information to the public before approving any economic development subsidy (subsidy) for a warehouse distribution center within its jurisdiction. All of the following information must be made available to the public in written form and through its Internet Web site (website), if applicable:
   1. The name and address of all warehouse distribution centers that are the beneficiary of the subsidy;
   2. The start and end dates and schedule, if applicable, for the subsidy;
   3. A description of the subsidy, including the estimated total amount of the expenditure
      of public funds by, or of revenue lost to, the local agency as a result of the subsidy;
   4. A statement of the public purposes for the subsidy;
   5. The projected tax revenue to the local agency as a result of the subsidy;
   6. The estimated number of jobs created by the subsidy, including job classifications and wage rates, broken down by full-time, part-time, and temporary positions;
   7. The estimated number of independent contractors, including contract rates, funded by the subsidy;
   8. The estimated value of benefit packages, including health benefits, fringe benefits, and defined benefit pensions, for each job classification created by the subsidy;
   9. The estimated number of jobs for disadvantaged workers created by the subsidy;
   10. Both of the following regarding each warehouse distribution center that is the beneficiary of the subsidy:
       1. A description of the outreach, training, and hiring plans, including plans to hire disadvantaged workers; and,
       2. A description and total value of any state or federal subsidies applied for, or received by, the warehouse distribution center.
2. Requires each local agency to provide public notice and a hearing before granting a subsidy to a warehouse distribution center, although this is not required if a hearing and notice regarding the subsidy is otherwise required by law.
3. Requires the information specified in 1), above, to remain available to the public under existing state and federal law and to be posted on the local agency's website, if applicable,
   for the entire term of the subsidy.
4. Requires a local agency, after it grants a subsidy for a warehouse distribution center, to issue an annual report for each subsidy during the term of each subsidy and make the report available to the public and through its website, if applicable.
5. Requires the report specified in 4), above, to contain the information described in 1), above, and the following information, if applicable:
   1. The net tax revenue accruing to the local agency as a result of the subsidy;
   2. The net number of jobs created by the subsidy, including job classifications and wage rates, broken down by full-time, part-time, and temporary positions;
   3. The number of independent contractors, including contract rates, funded by the subsidy;
   4. The total value of benefit packages, including health benefits, fringe benefits, and defined benefit pensions, for each job classification created by the subsidy;
   5. The net number of jobs for disadvantaged workers created by the subsidy;
   6. All of the following regarding each warehouse distribution center that is the beneficiary of the subsidy:
      1. The amount spent on training, apprenticeship, or other skills development programs for employees;
      2. The retention rate of employees broken down by full-time, part-time, and temporary positions, and if the turnover rate of employees exceeds 20%; and,
      3. The number of employment arbitration agreements signed by employees and independent contractors, if any.
6. Requires each local agency, after it grants a subsidy for a warehouse distribution center, to hold an annual public hearing during the term of the subsidy to consider any written or oral comments on the information contained in the report prepared pursuant to 4) and 5), above.
7. Requires each public hearing required by this bill to be consolidated with a local agency's regularly scheduled hearing.
8. Requires a warehouse distribution center to provide a local agency any information necessary to comply with this bill.
9. Provides the following definitions for the purposes of this bill:
   1. "Disadvantaged worker" means an employee of the warehouse distribution center who satisfies any of the following:
      1. Was unemployed for the six months immediately preceding employment with the warehouse distribution center. In the case of an employee that completed a program of study at a college, university, or other postsecondary educational institution, received a baccalaureate, postgraduate, or professional degree, and was unemployed for the six months immediately preceding employment with the warehouse distribution center, that employee must have completed that program of study at least 12 months prior to the individual's commencement of employment with the warehouse distribution center;
      2. Is a veteran who separated from service in the Armed Forces of the United States within the 12 months preceding commencement of employment with the warehouse distribution center;
      3. Was a recipient of the credit allowed under Section 32 of the Internal Revenue Code, relating to earned income, as applicable for federal purposes, for the previous taxable year;
      4. Is an ex-offender previously convicted of a felony; or,
      5. Is a recipient of either CalWORKs or general assistance, in accordance with the Welfare and Institutions Code, as specified.
   2. "Economic development subsidy" means any expenditure of public funds or loss
      of revenue to a local agency in the amount of $100,000 or more, for the purpose
      of stimulating economic development within the jurisdiction of a local agency, including, but not limited to, bonds, grants, loans, loan guarantees, enterprise zone or empowerment zone incentives, fee waivers, land price subsidies, matching funds, tax abatements, tax exemptions, and tax credits. "Economic development subsidy" shall not include expenditures of public funds by, or loss of revenue to, the local agency for the purpose
      of providing housing affordable to persons and families of low or moderate income,
      as defined in the Health and Safety Code, as specified.
   3. "Local agency" means a city, including a charter city, county, or city and county.
   4. "Warehouse distribution center" means an establishment as defined by the North American Industry Classification System (NAICS) Code 493110 for General Warehousing and Storage.
10. Finds and declares that the right of the public to be informed of subsidies for warehouse distribution centers approved by their local agencies, as described in and added by this bill, is a matter of statewide concern, and not a municipal affair, as that term is used in Section 5 of Article XI of the California Constitution.
11. Finds and declares that this bill furthers, within the meaning of paragraph (7) of subdivision (b) of Section 3 of Article I of the California Constitution, the purposes of that constitutional section as it relates to the right of public access to the meetings of local public bodies or the writings of local public officials and local agencies and declares, pursuant to paragraph (7)
    of subdivision (b) of Section 3 of Article I of the California Constitution, that the Legislature makes the following findings: This act ensures the public's right of access to information about the conduct of their government agencies relating to subsidies for warehouse distribution centers.

EXISTING LAW:

1. Requires a local agency, before approving any subsidy of $100,000 or more, to provide to the public in written form and on the agency's website, if applicable, all of the following information:
   1. The name and address of all corporations or any other business entities, except for sole proprietorships, that are the beneficiary of the subsidy, if applicable;
   2. The start and end dates and schedule, if applicable, for the subsidy;
   3. A description of the subsidy, including the estimated total amount of the expenditure
      of public funds by, or revenue lost to, the local agency as a result of the subsidy;
   4. A statement of the public purposes for the subsidy;
   5. Projected tax revenue to the local agency as a result of the subsidy; and,
   6. Estimated number of jobs created by the subsidy, broken down by full-time, part-time, and temporary positions;
2. Requires a local agency, before it grants a subsidy, to provide public notice and a hearing regarding the subsidy, as specified.
3. Requires the information specified in 1), above, to remain available to the public under existing state and federal law and be posted on the local agency's website, if applicable,
   for the entire term of the subsidy.
4. Requires a local agency, within the term of the subsidy but not later than five years after the action granting it, to issue a report for each subsidy and make it available to the public and through its website, if applicable. The report must contain the information described in 1), above, and the following information, if applicable:
   1. The name and address of all corporations or any other business entities, except for sole proprietorships, that are the beneficiary of the subsidy, if applicable;
   2. The start and end dates and schedule for the subsidy;
   3. A description of the subsidy, including the estimated total amount of the expenditure
      of public funds by, or of revenue lost to, the local agency as a result of the subsidy;
   4. The net tax revenue accruing to the local agency as a result of the subsidy; and,
   5. The net number of jobs created by the subsidy, broken down by full-time, part-time, and temporary positions.
5. Requires the local agency, within the term of the subsidy but no later than five years after the action granting it, to hold a public hearing to consider any written or oral comments on the information contained in the report prepared pursuant to 4), above. For a subsidy with a term of 10 years or more, the local agency shall hold a public hearing at the conclusion of each subsidy that shall contain the information described in 4), above, in written form available to the public, and through its website, if applicable.
6. Uses the same definitions for "economic development subsidy" and "local agency" as are used in this bill.

FISCAL EFFECT: None

COMMENTS:

1. Author's Statement. According to the author, "AB 2853 seeks to give local governments and communities the necessary information to hold warehouse and distribution companies that receive public subsidies accountable for good job creation. As online shopping continues to grow, companies are increasing their warehouse footprints swelling the demand for streamlined logistics centers. These warehouses are often placed in communities desperate for jobs and still recovering from the recession. Many of the jobs in these warehouses are grueling and high-stress. The benefits may be enticing but don’t become available until after a year of employment. Some of the jobs are temporary or seasonal, causing employment opportunities to fluctuate and throwing families into economic instability.

"In the Economic Policy Institute's report entitled 'Unfulfilled Promises,' EPI economist Ben Zipperer and economic analysts Janelle Jones concluded that on average, 'Amazon’s fulfillment centers are ineffective at providing net job growth.' Cities are constantly in a race to the bottom as highlighted by the current bidding wars for warehouse distribution centers. If the jobs and benefits promised do not materialize, the quality of living drops, and the traffic and air quality worsens, what did the city gain? Was the economic subsidy worth the tax revenue loss? Is any job a good job or can cities do better in elevating their attractiveness without sacrificing needed tax revenue?"

1. Background. Local governments engage in a wide variety of economic development activities to build their tax bases. In this respect, local officials use their regulatory powers to direct spending and tax policies which, in turn, influence where, when and how the private sector invests capital and improves real property.

The Legislature most recently delved into the issue of local government subsidies when it considered and approved AB 562 (Williams), Chapter 740, Statutes of 2013. AB 562 established requirements for local agencies to meet before approving any subsidy and during the term of such subsidies. In arguing for the bill, the author noted, "Each year, local governments give out billions of dollars in tax incentives to corporations in hopes of increasing economic growth and drawing jobs for their residents…State requirements for local budgets, annual financial reports, and regular audits allow constituents to review most of the direct fiscal decisions made by local governments. However, local economic subsidies do not receive the same public scrutiny as budgets and regulatory decisions. Additionally, local governments rarely track how many jobs are created and it’s impossible to know whether the jobs would have been created without the aid. AB 562 seeks to remedy this shortcoming."

AB 562 succeeded, after several years of failed attempts, in requiring local agencies to gather and make available to the public – in writing and on the agency's website – specified information about any subsidy of $100,000 or more, both before the subsidy is approved and during the life of the subsidy. In addition to basic identifying information about each subsidy and public hearing requirements, AB 562 required the following information:

• 1. The estimated total amount of the expenditure of public funds by, or revenue lost to, the local agency as a result of the subsidy;
  2. Projected and actual tax revenue accruing to the local agency as a result of the subsidy; and,
  3. Estimated and actual number of jobs created by the subsidy, broken down by full-time, part-time, and temporary positions.

1. Subsidies and Warehouse Distribution Centers. Since AB 562 was enacted, a number
   of news reports and studies have focused on Amazon distribution centers and the subsidies state and local agencies have granted in an effort to convince Amazon to locate in their jurisdictions. This followed on the heels of several years of controversy surrounding Amazon's avoidance of sales taxes as a cornerstone of the company's business development strategy. Among the publications and research institutes that have reported recently on the issue of local government subsidies, both generally and specifically for Amazon, are the Economic Policy Institute, the Institute for Local Self-Reliance, The Atlantic, the New Republic, the Fresno Bee, the New York Times, Good Jobs First, and others.

According to a New York Times article dated December 1, 2012, "A Times investigation has examined and tallied thousands of local incentives granted nationwide and has found that states, counties and cities are giving up more than $80 billion each year to companies. The beneficiaries come from virtually every corner of the corporate world, encompassing oil and coal conglomerates, technology and entertainment companies, banks and big-box retail chains. The cost of the awards is certainly far higher. A full accounting, The Times discovered, is not possible because the incentives are granted by thousands of government agencies and officials, and many do not know the value of all their awards. Nor do they know if the money was worth it because they rarely track how many jobs are created. Even where officials do track incentives, they acknowledge that it is impossible to know whether the jobs would have been created without the aid…

"A portrait arises of mayors and governors who are desperate to create jobs, outmatched by multinational corporations and short on tools to fact-check what companies tell them. Many of the officials said they feared that companies would move jobs overseas if they did not get subsidies in the United States. Over the years, corporations have increasingly exploited that fear, creating a high-stakes bazaar where they pit local officials against one another to get the most lucrative packages. States compete with other states, cities compete with surrounding suburbs, and even small towns have entered the race with the goal of defeating their neighbors...Questioned about incentives, officials at dozens of other large corporations said they owed it to shareholders to maximize profits. Many emphasized that they employ thousands of Americans who pay taxes and spend money in the local economy."

Focusing on subsidies exclusively for Amazon, the Economic Policy Institute issued a report on February 1, 2018, which states, "The expansion of Amazon’s physical distribution network has coincided with a strategic business plan of negotiating millions in tax abatements, credits, exemptions, and infrastructure assistance from state and local governments in the name of regional economic development. By the end of 2016, Amazon had likely received over $1 billion in state and local subsidies for its facilities, which would include not only fulfillment centers but 'sortation' centers that only sort packages, mailing centers, and other facilities. In return for the incentives each of the fulfillment centers receives, Amazon claims to create hundreds of jobs with competitive pay and benefits.

"Using tax and other incentives to lure businesses to state and local areas is a long-running economic development strategy pursued by subnational governments. In nearly every state, businesses can receive a significantly lighter tax burden for constructing a sports stadium, filming a movie, or building a manufacturing assembly plant. The results on whether these types of community development strategies have a positive impact on job creation and growth is highly debated in popular news outlets and among researchers. And as Amazon has grown, the debate in some cases has specifically focused on Amazon."

The report found that, "When Amazon opens a new fulfillment center, the host county gains roughly 30 percent more warehousing and storage jobs but no new net jobs overall, as the jobs created in warehousing and storage are likely offset by job losses in other industries…State and local governments give away millions in tax abatements, credits, exemptions, and infrastructure assistance to lure Amazon warehouses but don’t get a commensurate 'return' on that investment. Rather than spending public resources on an ineffective strategy to boost local employment (luring Amazon fulfillment centers), state and local governments should invest in public services (particularly in early-childhood education and infrastructure) that are proven to spur long-term economic development."

1. Bill Summary. This bill establishes requirements that local agencies must meet before and during the term of any subsidy exceeding $100,000 for warehouse distribution centers. In addition to the requirements established by AB 562 for all subsidies exceeding $100,000, this bill requires local agencies to provide the following additional information regarding subsidies specific to warehouse distribution centers:
   1. Job classifications and wage rates for the estimated and actual number of jobs created by the subsidy;
   2. The estimated and actual number of independent contractors, including contract rates, funded by the subsidy;
   3. The estimated value of benefit packages for each job classification created by the subsidy;
   4. The estimated number of jobs for disadvantaged workers created by the subsidy;
   5. For each warehouse distribution center that is a beneficiary of a subsidy:
      1. A description of its outreach, training, and hiring plans, including plans to hire disadvantaged workers;
      2. A description and total value of any state or federal subsidies applied for, or received by, the warehouse distribution center;
      3. The amount spent on training, apprenticeship, or other skills development programs for employees;
      4. The retention rate of employees broken down by full-time, part-time, and temporary positions, and if the turnover rate of employees exceeds 20%; and,
      5. The number of employment arbitration agreements signed by employees and independent contractors, if any.

This bill also requires annual reporting and public hearings regarding subsidies for warehouse distribution centers, and requires such centers to provide local agencies with any information necessary for local agencies to comply with the bill's requirements.

This bill is sponsored by the California Labor Federation.

1. Proposition 42. Proposition 42 was passed by voters on June 3, 2014, and requires all local governments to comply with the Public Records Act and the Ralph M. Brown Act (Brown Act) and with any subsequent changes to those Acts. Proposition 42 also eliminated reimbursement to local agencies for costs of complying with the Public Records Act and the Brown Act.

This bill contains language that says that the Legislature finds and declares that the bill furthers the purpose of the California Constitution as it relates to the right of public access to the meetings of local public bodies or the writings of local public officials and local agencies. Pursuant to paragraph (7) of subdivision (b) of Section 3 of Article I of the Constitution, the bill also includes a finding that states, "This act ensures the public's right of access to information about the conduct of their government agencies relating to subsidies for warehouse distribution centers."

1. Arguments in Support. The California Labor Federation, sponsor of this bill, writes,
   "A 2015 report by UC Riverside found that warehouse jobs pay less than a living wage, are often temporary, and do not provide health care benefits. Interviews with workers paint an even bleaker picture. Workers report that warehouse jobs are grueling and dangerous, contributing to high turnover. Cities are doling out subsidies, but residents are not necessarily seeing the benefits from reduced poverty or improved job quality. Massive distribution centers may also exert downward pressure on other employers in the area. The Economist reported that workers in areas where Amazon operates earn 10% less than workers in similar jobs. Another study found that 1 in 10 Amazon workers in Ohio were on food stamps to supplement their meager wages.

“When cities engage in a race to the bottom, the State of California loses, as well. Communities need tools to know what they are getting for their money and the ability to hold developers and employers accountable for the quality and number of jobs they promise to create. AB 2853 is simply a transparency bill, but it will give local governments and residents the tools to hold warehousing giants accountable for the public subsidies they receive. It will also give cities in a region more information so they may collectively bargain for a warehouse, rather than allowing companies to pick winners and losers – resulting in a net loss for the state."

1. Arguments in Opposition. None on file.

REGISTERED SUPPORT / OPPOSITION:

Support

California Labor Federation [SPONSOR]

American Federation of State, County and Municipal Employees

California Conference Board of the Amalgamated Transit Union

California Conference of Machinists

California Environmental Justice Alliance

California Partnership for Working Families

California Teamsters

Center on Policy Initiatives

Central Coast Alliance United for a Sustainable Economy

East Bay Alliance for a Sustainable Economy

Engineers and Scientists of CA, IFPTE Local 20

International Longshore & Warehouse Union

LAANE A New Economy for All

Los Angeles Alliance for a New Economy

National Employment Law Project

OCCORD Strong Voice for a Fair Economy

Orange County Communities Organized for Responsible Development

Professional and Technical Engineers, IFPTE Local 21

UNITE-HERE, AFL-CIO

Utility Workers of America

Warehouse Worker Resource Center

Western States Regional Joint Board

Working Partnerships USA

Worksafe

Opposition

None on file

Analysis Prepared by: Angela Mapp / L. GOV. / (916) 319-3958