Assembly Standing Committee on Economic Development, Growth, and Household Impact

Good morning everyone. It's exactly 9:30 in the morning. Like to me start meetings on time. So we're going to start on the minute with that. Good morning and welcome to the Assembly Committee on Economic Development Growth and Household Impact informational hearing Making sense of California's economy, Real costs pressures and household impacts facing Californians.

To ensure Members of the media and the public have access to our proceedings today, this hearing will be streamed on Assembly's website and Members of the public can provide testimony in person here in room 127. To preserve the safety of everyone here and ensure the public's access to the discussion, please follow the directions of your sergeants.

Thank you to Committee Members for joining me today to discuss affordability issue here in the State of California. California's economy is one of the largest and most diverse in the world, playing a pivotal role in both national and global markets. Despite its economic strength, California faces significant challenges that affect its residents and businesses.

Sorry, we're doing making sure there's live stream so we have to make sure we're always live streamed 24/7. Despite economics in California faces significant challenges that affect residents and businesses. Rising costs are a major concern for California's residents, especially middle and low income households.

Today we look forward to hearing from our expert witnesses and having a robust dialogue as we continue to forego through these challenges. Vice Chair Castillo, you have the floor for any opening remarks.

Thank you and welcome everyone. I have a little sore throat today, so I'm sorry. I look forward to working with everyone on this Committee. Thank you.

Thank you Vice Chair. I also, before we call our panelists, want to acknowledge our Committee Members, Assembly Members; Soria, Bonta and Stefani. Thank you. And of course to our amazing staff, Carla and Ashley, who we wouldn't work today as good, we wouldn't look as great if it wasn't for our awesome staff.

You have to always acknowledge your staff because they're as good as your team. So thank you both for today. With that we're going to go ahead and call our first panel. We have Sarah Bone, Vice President and Director of Economic Policy and Senior Fellow John Lewis Bryson, Chair in Policy Research.

Catherine Russ, Professor of Economics, University of California Davis, Research Associate, National Bureau of Economic Research and Brian Euler, Deputy Legislative Analyst, Economy, Taxes and Labor to the Legislative Analysis Office. Thank you to the three of you for being here today. We can get started.

Thank you Chair. Thank you for having me here today. My name is Sarah Bone. I'm an economist and Senior Fellow at the Public Policy Institute of California where I direct our center on economic policy.

I'm going to share some insights from our research today on how we've been assessing Californians concerns about the economy over the short and long term. And the harsh reality is that Californians are very concerned about the economic prospects in this state.

Our latest survey at PPIC found 69% of Californians are expecting bad times ahead for the economy over the next 12 months. Of course, there are some kind of new concerns this year with kind of federal policy around trade, around immigration, around federal funding. But these concerns Californians hold predated that for sure.

Since the pandemic, we've seen this kind of similar rates of pessimism about their economic prospects. So in my view, kind of the number one driver. And I've prepared a few slides that I hope will kind of make some of the key points stronger for you. You have them on paper as well as on this slide deck.

Inflation, in my view, is really the primary driver of the recent kind of major concerns Californians have about the economy. This chart shows price level growth year over year, all the way back to 1960. And you see that for about 30 years before the pandemic, price levels were pretty stable.

They were bouncing around a couple points here or there until the pandemic when in July 2022, prices spiked at growing 9% year over year. So most working age Californians have no experience with the kind of pain of inflation crisis.

Those who lived through the mid-70s and the early 80s crises that you see on this chart that were even worse than the pandemic inflation crisis maybe have some awareness of how destabilizing price increases are. But today's Californians mostly haven't had that experience for better. That's good news. Right?

But the inflation shock that we felt during the pandemic was really severe. And economists generally agree that that was driven by the pandemic's unique circumstances, especially shocks to the supply chain that really slowed goods getting to market, which had also changed because we were spending more time at home and changing our buying shopping patterns.

The good news is that today we're in a safer territory. Inflation is rising at about 2.8. Prices are rising about 2.8%. That's as of February. So that just means that prices are only going up at a slow, steady pace.

But the price levels that Californians face today are significantly higher than had we kind of maintained the stability that we had before the pandemic. So prices today in California are about 23% higher than they were in January 2020.

That's double the kind of rate of price growth we would have expected if we had maintained the Federal Reserve's Target Rate of 2% Price Growth Year over year. And it's hitting even worse in certain key categories for families. Food and beverage costs are up 28%, energy costs up 28% as well.

So we feel this day in, day out at the pump, in our utility bills, at the grocery store. Of course, the prices began higher in California than in the rest of the country.

So even though our price growth has been pretty similar in the state as compared to the nation, we already had higher prices here to begin with. As I know we're all full aware of housing prices about kind of double the national median in California.

We have the second highest electricity rates in California compared to all other states except Hawaii. So the kind of pain of this additional inflation price growth crisis that we had during the pandemic is really challenging kind of affordability for households.

Affordability is about those prices of things that we purchase and rely on every day, but is also about the resources that we have to make ends meet. And the good news is that over this same period, wages in California have gone up significantly.

So overall, wage earners saw an increase of about 26% in their earnings between January 2020 and January 2025. The bad news is that after inflation, that feels like a 2.9% raise over five years. Feel feeling like you're barely treading water to me is the recipe for frustration.

The real gains that you see in terms of earnings growth were very much eaten away by the inflation crisis that we went through due to the pandemic. Now, lower income earners did a little bit better, and that's shown in the second bar of this chart.

Low wages went up about 30% over the same period, so they made slightly better gains even after accounting for inflation. So this next chart shows where families spend their earnings across just four kind of key categories of food, housing, transportation and health care. A lot of family resources go to just those necessities.

And this chart breaks it down for five income groups. Starting on the left hand side from lowest income going up towards middle income. And at the right hand side are the highest income earners. So. So on average, low income families in California are spending 82% of their resources on just food, housing, transportation and health care.

Middle income families spending 77% and top income families spending 66% of their resources. So of course, higher income households have a little bit more room to cope with the higher prices that we face today. But families are also making major adjustments, they might be buying less in any of these categories or purchasing lower quality items.

And in the PPIC statewide survey, we have found that 30% of Californians have indicated they have cut back on food purchases to cope with higher prices just in the last couple of years. So the challenge with this chart is that you can see pretty clearly that the biggest expense that households face is on their housing.

And in this data, what we're counting are mortgages, rents, utility bills, home maintenance. So across the income spectrum, between 35 to 44% of household resources are going just to that housing category. So really moving the needle on affordability must consider housing costs that Californians face. And that is not an easy thing to shift.

I know is a major focus of the Legislature. But making adjustments to other kind of categories of things that families are spending the bulk of their resources on can move the needle as well and help them feel like they can get ahead, can devote more of their resources to saving or other things that they need.

Energy is one that I would just like to point out because it hits in multiple categories. So energy costs are felt in home utility bills. They're also felt at the pump, of course, so that's showing up in the transportation costs that families are facing. And they also impact businesses. So it increases the cost of doing business.

And addressing that could kind of mitigate some of the price increases that businesses need to charge for them to make ends meet.

So I'd like to close on just kind of some of the longer term concerns that we see in our work about kind of what really could move the needle on affordability and economic mobility and the challenges that low and middle income households in California have had very little, what I would refer to as kind of a raise, an increase in their earnings over the very long term.

So low income families have seen incomes increase just 10% from 1980 until today. That's a 10% raise essentially over 40 years. Middle income families have a little bit more than double that. So about 28% increase in their earnings over that 40 year period.

That is still not significant progress over such a long period of time and gets to kind of the macro changes affecting opportunity in our economy.

So for me, over the long term, kind of addressing those factors that can meaningfully improve upward mobility are really essential to affecting this equation of affordability, not just on the cost side, but on what is possible in our economy. And that is for, for me, made up of two factors.

One, ensuring we have a thriving business community where businesses can start, create jobs, keep them in California, especially good jobs that offer great opportunities and two, ensuring that the routes to work, to good jobs, to entrepreneurship are accessible and effective.

And we have a lot of policy tools on both of those dimensions that for me is very promising and thinking about how we can meaningfully improve of prosperity in California. Thank you.

Thank you, Ms. Bone. I would go to Ms. Russ next.

Good morning, Mr. Chair, Madam Vice Chair, thank you for the privilege of being with you here today. My name is Katie Russ and I'm Professor of Economics. I'm Professor of Economics at UC Davis and former Senior Economist for International Trade and Finance for the White House Council of Economic Advisors.

The new trade policy regime is characterized by increased tariffs across many goods. These tariffs are expected to bring price increases, exacerbating some of the effects that you've just heard about from the PPIC Vice President just now.

Retaliation from other countries which can affect California's exports, increased policy uncertainty which can dampen investment, and shocks to labor markets which are very difficult for workers. I'd be happy to explain more about these effects and where research or various press coverage shows that they already have occurred in the past.

Time is short today, so I'm going to jump straight to likely impacts and policies that can help mitigate them. So first we should anticipate higher prices on essentials like food and clothing and school supplies.

By one estimate from the Peterson Institute for International Economics, just the tariffs already announced on China, Canada and Mexico will cost the typical U.S. household about $1,200 a year.

So it would be wise to monitor prices on groceries, school supplies and other essentials to be prepared to increase California's state sponsored supplements to snap, WIC and other existing food aid programs to keep up with price hikes on food products, even if they can't be traced directly to tariffs.

Because the way that tariffs will filter into prices can be very difficult to track directly and it can be a bit nuanced through the supply chains.

But those those costs will be felt and also to be aware that some tariff hikes, if they're large enough or some types of retaliatory measures like export controls on critical minerals or pharmaceutical ingredients from China, could disrupt supply chains integral to certain industries in California, including health care, aerospace, electronics, machinery.

We should anticipate job displacement, especially in export industries. California goods Exports support roughly 600,000 jobs and account for nearly 5% of California's GDP, so we may want to consider fortifying transitional support for workers, including job placement.

Consider partnering with community colleges and four year universities to develop focused strategies for retraining, and reskilling, including through extension and certification programs and standing ready to subsidize schools and local services like fire and police departments. In communities facing the most concentrated job displacement.

We may want to consider which agricultural crops did not benefit proportionately to export market loss during the earlier 2018 and 2019 waves of tariffs. So we should stand ready to provide temporary assistance to farmers who need to transition to other crops or markets quickly.

Producers of nuts, dairy, processed fruits and vegetables suffered the biggest losses during the last wave of tariffs due to retaliation by other countries and were not fully remunerated by the Federal Government, so they were not made whole. Consider whether extensionists could be strategically deployed to areas where these crops are most prevalent to aid efforts to diversify.

And finally, it's worth considering place based policy and other strategies to offset the impacts of increasing uncertainty on investment. So this increased uncertainty is coming from emerging federal policy shocks like tariffs, trade policy. Uncertainty is at historic highs right now. This has been shown to dampen investment in the United States.

Thank you, Ms. Ross. Next we'll go to Mr. Euler. Yes, thank you, Brian Euler from the LIO. Thank you, Mr. Chair and Members, for having me here today. And so you've already heard a lot of good information about affordability issues facing Californians.

And we were hoping to kind of supplement that conversation by giving a high level overview of some of the in some of those big areas of affordability, what are some of the considerations and options the Legislature has to look to to try to help mitigate those costs for households?

And with a particular eye towards options the Legislature has that won't create new state budgetary costs. Because our current assessment shared by the Administration right now is moving forward, there's a limited likelihood that we will have a lot of new resources to be expanding or creating new programs to help mitigate these issues.

So I'll touch on four overarching topic areas. Each of these could obviously be their own hearing or a series of hearings. Right. They're very complicated topics. But my hope is to sort of help the Committee sort of focus its, its further inquiries as it moves forward trying to address the issue of affordability.

As has already been mentioned, you know, sort of every discussion of affordability has to start with housing, which you've already heard is, is the single largest expense for most California households.

And California has for many years been a very expensive place to rent or buy housing, as I'm sure many of you are aware or all of you are aware of. The fundamental reason California housing is expensive is because we simply don't have enough housing for everyone who wants to live here.

And this primarily derives from a restrictive regulatory environment, both at the state and local level that makes building housing difficult. Over the last several years, the Legislature has taken many steps in this area to mitigate that regulatory environment.

But we do see the home building activity still remains at about the same level it was a decade ago, which suggests that there are additional opportunities for action in this area. So moving this, moving this discussion forward, there's some key questions that we would suggest asking.

First is which recent legislative changes have worked and which haven't, and in the cases where they don't seem to have spurred more housing, what are the reasons that those policy changes haven't been effective? And further, how and where can State provide even more opportunities to build housing without protracted administrative or regulatory review?

By asking these questions, the Committee and the Legislature can continue to push forward the progress they've already made on encouraging home building related to housing is Insurance the cost of insurance for many homeowners has risen rapidly in recent years, and at the same time, some owners, some homeowners have found it increasingly difficult to obtain insurance at all.

Rising insurance costs have been sort of the inevitable result of a confluence of difficult factors, including increasing wildfire damages in the state, increasing damages from catastrophic events worldwide, and shifting global financial conditions.

And while many of these factors are sort of outside of the direct influence of the Legislature, the legacy can nonetheless play an important role in mitigating the impacts on California households. Specifically, the Legislature could consider changes to the regulatory and policy landscape and insurance to ensure that those markets are functioning properly for homeowners.

The third category, which has also been discussed a bit as well, is energy. As has been mentioned, California's electricity and gasoline prices are among the highest in the nation, and many factors contribute to these higher energy prices. Again, not all are within the influence of the Legislature, but some factors do fall under your control on electricity.

The Legislature may have opportunities to improve affordability by considering its policies in three areas. The first is in the area of wildfire costs. Many wildfire costs, both for damages from past fires as well as efforts to mitigate future fires, are passed on to electricity customers through higher rates.

The Legislature could review the state strategies in this area to ensure that it is pursuing the most cost effective and efficient approaches in the area of wildfires. The second is that a number of public purpose programs that aim to achieve the state's GHD reduction goals are funded through charges on electricity consumers.

The Legislature there could be some value in reassessing the costs and benefits of those programs moving forward to make sure that they continue to be worthwhile in their current form.

Finally, the state's GHG reduction goals are slated to ramp up over time, and these goals, as they become more ambitious, there's a greater likelihood that they will have impact on electricity rates.

And so, looking forward, the Legislature is likely to be faced with a Frank decision about how to balance the state's ambitious goals against the inevitable cost to rate payers. Similarly, the state's efforts on GHG emission reductions play a role in the state's higher gas prices.

The state currently employs a suite of strategies of reducing GHG emissions through gasoline. And as part of its efforts to improve affordability, the Committee and the Legislature could reexamine these policies again to make sure that we're achieving those reductions in the most efficient way possible.

The final category that I wanted to highlight is health care, which, as we just saw, is one of the largest buckets of spending for most California households. The state has taken a variety of steps in recent years aimed at lessening health care costs for households.

One example is the Legislature recently created the Office of Health Care Affordability, which is tasked with collecting and analyzing data on the drivers of health care growth and setting growth targets to help prevent rapid growth. Moving forward, these efforts are just starting to ramp up.

And so an important role for the Legislature in this space will be to monitor those efforts to make sure that they're effective, make sure that they're well resourced and working the way the Legislature intended. So as I mentioned, there's a lot of, there's a lot of broad topics there, complicated topics.

Hopefully, though, it gives the Committee some, some areas to sort of focus its questions and efforts moving forward.

And I will, will add, given the breadth of those topics, I would be happy to try to, to take your questions in those areas, but I do represent a team of experts back at our office who have much more knowledge on these things than I do. If I can't answer your questions today, happy to take them back.

Work with your staff to get you answers on those.

Thank you. Thank you, Mr. Euler. And again, the overview of this panel was making sense of California's economy. So to really dive into that discussion, I want to see if my Committee Members have any questions. Okay.

Senator Patel, thank you for those presentations. Sorry I walked in a bit late. Lots going on today already. I wanted to ask you, whoever wants to jump in with these policy shocks that are coming, we can't. Our legislative process is much slower than that. We're not that nimble that we can address each of these shocks.

But the reality is some of these factors have been going on for a while, as mentioned, like housing. You said that it hasn't changed really in a decade, despite our most earnest efforts in trying to make it easier to build housing. Are there any very specific. I know you provided some very specific policy goals around energy.

What things are there for us around housing? Very, very specific recommendations that we can take action on that we might see impacts on in the next few years, not decades. I know that it's a deep, big, challenging question, but I would love to enter into that discussion.

Yeah, I mean, so I can, I can offer a few thoughts.

And I mean, I think from the outset, I mean I think the difficult reality is on housing, as you mentioned, that this is a problem that's sort of honestly 40 years in the making really and there probably isn't like a switch that you can flip and fix it overnight.

You know, as I mentioned, my comments were focused on areas where that aren't creating new budgetary costs because as I'm sure you're aware, we're sort of in a restriction budgetary environment right now. Arguably the most sort of immediate impact is through sort of the subsidized housing route. Right.

That's where we see, at least for the households where that is available. That's where you do have the quickest avenue of improvement given the resource limitations there.

I mean, I think I mentioned a couple of things, you know, sort of reviewing some of those past policies and put in place and you know, I think one area where there does seem to be General consensus that those that the recent legislative changes have been effective is in the area of accessory dwelling units.

And I think some of the understanding there is that part of the reason that those policy changes have been very effective is because there have that folks can build those units with pretty, you know, there's very minimal conditions on getting the approval for building those.

And so I think, you know, I mentioned looking at some of the other policy changes that have been put in place and considering why they maybe haven't been as effective.

Looking at some of those, reviewing some of maybe some of the conditions that are put in place, you know, that the developers or others have to meet in order to achieve those incentives or those streamlining.

Seeing where, you know, maybe some of those conditions can be even lessened more along the lines of sort of the ADU policies and then similarly looking for areas where might there be some targeted places where like ADUs, where there's consensus that yes, we want to do more of this activity, let's do create more of this reminding with very minimal conditions, maybe that could be around the areas of Transit Oriented Development, for example, where those sort of, very sort of almost by right development, development opportunities are created in these targeted spaces again like around transit, where there might be General agreement that building more housing in those places could be beneficial.

So specifically, following up, since you brought up ADUs, they are very controversial in San Diego, the City of San Diego right now, the City Council has been going back and forth on permitting and permissiveness in those ADUs. So big picture wise in California, what kind of a dent have we seen EDUS making?

And along that train of thought, it doesn't really give people opportunities to buy into the market. And I think if we want to create generational wealth and get property owners that are paying property taxes and feel stable in their communities, we have to get towards home ownership, whatever that may look like. It could be condos, for example.

Right. So the getting back to the question, what dent do we see ADUs actually making in the affordable, in the affordability, affordable housing market?

Yeah, it's a good question. I don't, I don't have specific numbers for you on that, that right now, but I do, I mean, I do think it's a fair point that there's only, sorry, there's only so much the, there's only so much opportunity there with ADUs. Right.

As you mentioned, both because there's only so many of those kinds of building opportunities and they only serve sort of a certain segment of the market. Right. And so I think that sort of underlies the need to consider sort of looking where to expand that model to a broader type of opportunity for housing construction.

But yeah, on the specific sort of how much has it contributed to building activity? I can sort of pull some numbers together and send those to you. Great.

Yeah, I'm still learning where everyone is. Don't worry, I'll find you. Thank you.

Thank you, Attorney Patel. Ms. Bonta.

Thank you, Chair, for giving us this opportunity to really talk about the economic drivers and how we really need to be able to protect the everyday Californian and what is happening in their pocketbooks right now. I have a couple questions. One, I just wanted to follow up on the conversation around ADUs.

I would like to offer a friendly amendment to Assemblymember Patel's comments. One of the opportunities that ADUs offer us is that it allows us to focus in on preservation in my community that I represent, Oakland, Alameda, Emeryville, in Oakland especially, we've seen a great amount of displacement.

I think one of the panelists referenced that ADUs actually contribute to the preservation portion of of our housing stock and allow us to be able to continue to have people stay in their homes. Right.

Our mortgage rates have increased, our insurance costs have increased, utility costs have increased, and being able to defray those costs with income on revenue streams on people's properties do two things.

One is allow allows us to be able to pay mortgage and hold the bottom line, allows us to stay in our homes and allows us to be able to have other people stay in their communities by occupying those ADUs.

I just wanted to offer that because my family has an ADU and my mother in law and my mother live in those and the reason why they live in those ADUs is because as seniors on fixed income they needed to be able to have their housing costs not be as variable as they were.

So I just wanted to offer that.

I also just wanted to dig into the conversation about the role of inflation and just to have us not lose sight of the fact that a lot of what we are experiencing now is because of the impacts of inflation over time and wanted to also just address have you all address specifically the impacts of these tariffs that the GOP is calling a minimal disturbance?

I don't think it's a minimal disturbance. I think it is actually, as Assemblymember Patel indicated, like an incredible shock to the everyday Californian. I think I heard you say $1,200 of additional annual expense needed to be covered to be able to afford food.

Are there any other things that we would be looking at as early indicators of the impacts of these tariffs? Tariffs and also the commensurate penalties and protests that our trade partners are going to be exacting because of that tariff policy?

Yeah. So the $1200 is just for the tariffs that have already been announced on Mexico, China and Canada. As soon as April 1st.

There may be much broader tariffs. So, people have been talking about reciprocal tariffs, or universal tariffs. These would be across a much broader set of countries and, um, possibly goods. So,1200 is more kind of a baseline; if any of these go into place, these other broader tariffs, then we can expect much higher expenses.

Again, tariffs are, they're tricky to track, because they're a hidden tax. So, they're not like a sales tax that you see on your receipt. So, when consumers go to the store, they're not going to think, oh, things are expensive because of the tariffs, necessarily, because you don't see it broken out.

But it's passed through the cost of goods, as they go through either supply chains on the producer side. So, they might be applied to inputs as they cross the border, and then those inputs go into production of final goods.

And so, you see that the distortions of tariffs amplified, and the costs amplified, as they pass through the supply chains. They can also be applied to final goods, and so you've heard people talk about avocados a lot, for instance. When we see them show up, may also vary.

So on strawberries, we're about to see a huge strawberry season starting, right?

So, it might be a little bit longer before people really under—really see—that strawberry prices are higher than they would have been otherwise, because of the tariffs, because, you know, the big harvest of strawberries tend to seasonally reduce the price of strawberries, but you're going to feel it. So.

And we also see, for retailers, that they may increase the prices of goods that haven't been directly targeted by tariffs, because they may see one good that they, um, they purchase through importers, you know, that's targeted by, say, a 25% tariff.

They might spread the cost of that 25% tariff across a bunch of different goods, not just that one good, because they don't want to disrupt the sales of any one item too much. So when we say $1,200, it's not so much that people are going to be able to add up exactly where that $1,200 came from.

It's that overall, we know that this is what's going to, what it's going to cost the typical household. And that's, again, only for tariffs that have already been announced on just three countries, whereas we know that more are coming, or we are told to expect that more are coming.

I think one place where you could see the tariffs really bite is on housing. So, these are really going to, or they have the potential to, really affect construction costs. So, increased costs of steel, tariffs on Canadian lumber, and many other items, even hand tools and so forth, nails, whatever.

So, this, um, this could also exacerbate challenges already faced in the housing sector.

Thank you, appreciate that. And just my last question, really, I very much appreciated the highlighting of the impacts of, of both inflation and these tariffs on, uh, on the everyday worker and the everyday businessperson. Right? My community is in many communities. We know that small businesses are the backbones of our local economies.

I've seen an incredible number of small businesses have to close. They just couldn't withstand the impacts of high commercial rent costs with COVID, and the lowering of the number of people who were actually—had—discretionary funds to be able to participate in the economy and go to restaurants and movies and theater.

And, and, then thirdly, just the displacement that that causes for our small business owners. Can you speak a little bit to the ways in which the macroeconomic—from a macroeconomic sense—like what that is doing to our small businesses? I think both of you kind of address small businesses.

Um, so there are 64,000 businesses in California that have export sales. And so, export sales are going to be vulnerable to retaliatory trade actions by our trade partners, so tariffs that those countries put on our exports.

California exports about $183 billion worth of goods each year, and of those 64,000 companies that engage in export sales in California, 95% of those are small and medium-sized enterprises, with fewer than 500 workers. So yes, we can expect small businesses also to be affected by the trade wars.

And that's in addition to the rising costs that occur because of goods that they need, um, to import, um, all sorts of equipment, computing and electronic equipment, many different things.

Sure, go ahead, Ms. Bonta.

Just on this, on this issue, I was deeply concerned by the trying to pass off the impacts of these tariffs, on top of inflation, on top of trying to recover from COVID as a minor disruption.

I don't know about you, but for my local businesses and people who are trying to get work and take their kids to school, there's nothing minor about needing to pay an additional $1,200 a year for food, or in the case of health care, spend a lot of time looking at the impacts of some other policies related to Medicaid and Medicare, Medi-Cal, an additional $600 to $1,200 for health care costs, just in premiums alone.

What can we expect to be the time frame of this, so called, "minor disruption" that I think the rest of us experience as a major travesty?

So, the immediate effects, so—the earliest effects—could occur almost immediately, in terms of the price disruptions. So, if you look at research on the earlier, the 2018-2019 waves of tariffs, you saw pretty significant impacts on the prices of goods as they crossed the border, on disappearance of manufacturing jobs.

Within a year or two, you saw these happening, and on prices at the border even sooner. So, yeah, they, they could start quite rapidly. The impacts on the job market probably would be a little bit delayed compared to impacts on prices. Prices we would, you know, some of them we could see, we can see pass through immediately.

Others it might be a little bit more subtle until we see everything kind of float through the supply chains. And for the jobs, it can, you know, it's going to, it's going to range. There'll be a range of different types of adjustments.

So, some producers will be adjusting their hiring plans, as the cost of materials and equipment go up. Others will be adjusting employment in response to reduced demand for their export sales. So, just depending on what kind of adjustments the employers are having to make, then it can, um, it can affect the timing.

And I know that Vice President Bohn is a labor market expert, so I'm going to just.

Well, I would just add—you're the trade expert—but our labor market was already softening in California over the past two years, especially relative to how it was performing in the rest of the country.

And a lot of that had to do with sectors that were struggling a little bit in tech, in Hollywood, still kind of dealing with—kind of remaking—of the work in that sector.

So, I think there's already been a hesitancy to hire and to grow in California because of some of those other macro-conditions, that are partially working ourselves out of the pandemic, and all of the major transformations that caused in our labor market.

So there isn't a lot of, you know, bandwidth to make additional adjustments, especially not in the favorable direction for workers in California.

Could I just add that we may already be seeing impacts? Just because of the increase in policy uncertainty, we may already be seeing business investment decisions affected, which could also affect their hiring decisions. It's hard to see these things in real time. One way—one place—to look is the Atlanta Fed Now Tracker for GDP.

That's not investment or labor, per se, but it gives you an idea of some of the concerns that the private sector may be starting to see or experience. Also, fluctuations in the stock market.

So, that's going to tell you what investors feel—some of these announcements—what kind of effects they may have on business profitability, and then you can, you can, you can infer what that may mean for investment and hiring plans.

Thank you.

Thank you, Assemblymember Bonta. Before we go to the next question, I wanted to just chime in on this last part of the conversation, by both the panelists and the Assembly Member, on tariffs specifically, and thank you for your expertise. One of the things that this Committee it's looking at is exactly this conversation.

As Californians, as this Committee and as a State Assembly, and under the leadership of Speaker Rivas, we are tackling these issues from the angle of the Assembly and our House. Our Committee is going to look at how these tariffs are having that impact, and we would love to welcome the expertise from your angle, Ms. Russ, on what does that look like for the consumer.

Right? I mean, you know, I think, I think there was a national election, where there's results, and people are expecting change. Right? On either side of the House. Right?

And so, as we're looking for these results, we're not seeing them, and we're getting the pressure as local Assembly Members, as local Members of our local government, what does that look like?

As we're tackling housing, as we're tackling health care at the local level, meaning statewide, how do we—what does that—look like for these tariffs at the impact? And I know the $1,200 number is, is, is being shown, but we would love to work with your, specifically, on how does that look like for the consumer at the end of the day.

So, I know, Carla, our Committee Representative here will follow up with you for sure after this, because we want to grasp—engage—with what that looks like for the consumer statewide. So, thank you for that expertise.

And I know it's really hard to maybe have an exact figure, but we want to track it as much as possible, so that we could, uh, you know, have that voice for our consumers throughout the state. With that, I know, Assemblymember Soria has some questions.

Thank you, and I also just want to thank you for the great overview on inflation, the impacts both on of inflation and also tariffs on our current Californians. I have a couple questions.

One, going back to, I think Dr. Russ, your recommendations in terms of—understanding that—there's going to be significant impact in the $1,200 potential, already increase in cost of food, clothing, and so forth.

I just want to understand, because I think one of your recommendations was to be prepared to increase the California State-sponsored supplements to SNAP, WIC, and other food aid programs that we currently have.

Do we—do you guys—have an idea, in terms of looking back at the first Trump Administration, what those increases were, so that we can use that as kind of a starting point for a recommendation, in terms of what are some of those resources that do need to be increased. So, just want to get an understanding if we have data from the past Administration, where we can kind of point to as a starting point.

Yeah, so, for increases in cost to consumers directly, so some of the most detailed estimates we have come from Kirill Borusyak at UC Berkeley and Javier Haravel, who is his co-author, and they did a number of estimates that were published in the New York Times.

But I'm sure that their research could be extrapolated to do current, you know, more, more current, updated estimates on specific types of expenditures. These are all estimates, they're extrapolations, so, when we see the prices increase at the border, what do we imagine?

Like how much do we imagine those costs will be filtering through to consumers? In terms of actually tracking those costs, that has been done for specific goods like washing machines and dryers.

It's harder to do it on a huge array of goods, again, because retailers sell many goods, and they spread the cost of these tariffs across those goods, like you've seen Home Depot actually come out in the Wall Street Journal and announce that. Right? That they're gonna be spreading the cost of these tariffs.

You have other retailers saying, well, we're not going to accept the increase in tariffs. So, instead they're being absorbed in cut—in hits—to profitability of businesses like further, further back in the supply chain before they get to the retailers. But those still affect households, right?

Maybe not through the final goods' prices, but they still are a hit to household income. So, it's, yeah. So, there are different ways that we can, we can look at this. There are different people measuring these. I've put out a couple different memos for the 2018-2019 tariffs through Econofact, and you can see comparisons of different estimates.

So, I'm happy to chat more about that.

Yeah, I guess that would be helpful as we're considering, right, what are some of the programs that we do want to—one—continue funding, given the fact that we have significant, also budgetary, challenge this year, but also looking forward, obviously this issue is not just going to be a one-year issue.

We're probably going to see this, you know, in the short term and probably longer, longer term, you know, what do we do as a legislative body when we do have the opportunity to increase, and what is that number? Right?

Or how, how do we try to address it through the investments of these programs—additional funding for these programs. So that's why I, I'm interested in, you know, continuing to look at the data and the information that you guys provide, for that reason.

The other question that I had was, you also, one of the other recommendations you noted, I think, number three, "Provide temporary assistance to farmers who need transition to other crops quickly." Obviously, the tariffs, you know, as you mentioned, impacted a certain type of folks growing, you know, I think nut trees and so forth.

Have you seen, like, other folks or other states, you know, provide some of these relief programs or, you know, in your opinion, what are some of the things that we can do? And I ask—represent—a highly agricultural district, and then also, obviously, I'm the Ag Chair for the State Assembly, so.

I imagine your district would have particularly keen interest, and it—so—my colleague Colleen Carter at UC Davis did a very detailed analysis and I have it cited and footnoted in the, the test, the written remarks that I provided to your excellent staff.

So, he can give a breakdown, crop by crop, of which farmers were made whole and which farmers were not.

And what you'll see is that many farmers in California got short shrift, whereas there were farmers in other states that were growing crops that were more adequately remunerated, through government relief, once the retaliatory actions went into place, among our trading partners.

So, I would imagine that this is something California farmers would want to pay very close attention to and be very concerned about, and be concerned, especially through their representatives, of hoping that if these disruptions do occur, that they receive full remuneration in an amount that would, would keep them whole, which did not occur for all California farmers last time, according to Carter's research.

And then my last question, just from, obviously our lessons learned during COVID, given the supply chain issues and the disruptions that we saw, what can we learn from that period to really figure out, moving forward, how our state maybe creates incentives to try to manufacture more here, create, you know, make sure that we're producing the goods here so that we mitigate some of this supply chain disruptions?

Just curious if there's, like, data on that and things that we should be looking at as a state to incentivize or, you know, invest in?

So I think the best thing to do is to talk to producers right now.

Which parts of their supply chain do they see as most vulnerable? But also understanding that they may not always know, because—so—producers may think that they're getting, say, paint from a bunch of different sources, when actually, that paint is all produced in the same place, in a particular plant, or is produced with a mineral that only comes from one place.

And so, we have to be cognizant that there are these—we call them granular vulnerabilities—in supply chains, that make it very hard to predict exactly who's going to be hit hardest.

But I think we also need to keep in mind that, you know, this array of retaliatory measures. So far, our trading partners have mainly announced retaliatory tariffs, so, tariffs that would hit goods in roughly the same amount as the amount of goods that we're hitting from them, with tariffs. But at some point, this may start to affect critical minerals. So, China is an important supplier of certain critical minerals.

They're also an important supplier of certain active pharmaceutical ingredients, including those that relate to diabetes treatment, so like insulin. So, it's—and the—National Academy of Sciences has done a couple assessments. So, they did one for medical supply chains, trying to look at vulnerabilities and making recommendations to see where vulnerabilities may be the biggest.

I was involved in one, looking at the market for infant formula and supply of infant formula. So, these kinds of supply chain analyses I think can be really helpful to try to assess what may be coming for critical minerals.

I mean, you immediately think of batteries and EVs, and all these kinds of supply chains that could be affected. So, trying to look at what's happened before when there have been—when there's been— say, a pullback by China on critical mineral shipment to Japan, or what happened after the Fukushima disaster and that affected auto supply chains.

You know, these are the types of disruptions that we're about to—we may be about to see—both due to big increases in tariffs. We just don't know what's going to happen with these—this new—reciprocal tariff.

I mean, we don't know how big the—is—going to take us back to the, the Hawley-Smoot Tariffs, you know, the 1930s, like it's hard to know exactly. And then, also with what kinds of retaliatory measures may be coming, because we have had a very highly interdependent global supply chain network.

And so, we don't know how different countries, that we're now treating as geopolitical rivals, may leverage some of that.

The last thing I'll say, just thank you, and just a point, as mentioned by my colleagues, that the $1200 obviously is not minimal—a minimal impact—to many of our constituents, and it seems like this is just a starting point, which is kind of scary.

And so, you know, again, I want to thank you guys for providing the information. I'm going to be looking forward to this, the hearings that we'll have and figure out policy solutions, at least in the short term, that can provide some mitigating efforts to help, especially the most vulnerable families in our districts. Thank you.

Thank you, Soria. We'll go to some Assemblymember Stephani.

Thank you, Chair, and thank you to the panelists for being here today. This is a subject that I am, of course, very concerned about. I hear from my mom all the time, at 77 on a fixed income, how she can't pay her electric bill.

This morning on the news, just talking about the rise in costs for our pets. I mean, it goes on, and on, and on. And of course, the tariff issue is one that may be somewhat out of our control but is very distressing to all of us.

One of the things that I wanted to focus in on is something that you said, Mr. Uhler. Is that right? Did I say that right? You know, that housing is by far the largest expense, especially for lower-income families, and I represent San Francisco and Northern San Mateo County.

And housing costs, of course, are extremely high in that part of our state. And one of the things that has concerned me, just being a freshman Legislator up here, is whether or not the bills we're passing are being implemented at the local level.

I come from local government, seven years on the Board of Supervisors in San Francisco, and it's come to my attention that California is very good at producing many pro-housing laws, but those pro-housing laws aren't very good at producing housing units.

And so, when you said we should really examine whether or not the laws we are passing are taking effect in a way that we intend them to, I think that's something that we need to drill down on. I don't know whether or not that work is being done, and I hope that it is. That is my question.

But you look, in 2021, the Governor signed 31 housing bills to take effect in 2022, density bonus laws, changing developer fees, SB 4, which was the "Yes in God's Backyard" Bill, which I was working with the developer in San Francisco, on a project in San Francisco, under SB 4.

But really, when you look at those laws that have passed, that are so well intentioned, why have we not been able to yield any housing units from them?

And I think that study needs to be done because we can continue to do the same thing over and over again, but expecting different results, and we all know what that is, the definition of insanity, or we can really drill down on what is happening at the local level, at the implementation phase, of these very good laws that are being passed, and why aren't we getting more housing units from them?

So, my question is to you, is that work being done to really examine why they aren't being—why we aren't realizing—any housing units from them, and what more can be done, at the local level, to realize the intention of these bills that are being passed up here in Sacramento?

Yeah, I think it's a very good question, and I don't think—I won't speak—too far for sort of the Administration and their enforcement of those rules, but I have to imagine that they are trying—keeping a very close eye—on sort of local, local implementation of those rules.

And just through the mechanism of HCD's oversight of local land-use planning, right, they do have some—an avenue for—doing that kind of enforcement. But it, but it has, there has for a long time sort of been this difficult give and take between the state and locals, in the area of housing policy and land-use policy generally.

It's not just this wave of housing bills. There's been, again, for multiple decades, sort of this back and forth where the state will try to push on some margin to get locals to build more housing. And sometimes it sort of just comes down to a big shift that needs to happen in some communities.

There just needs to be sort of a shift in their orientation towards their willingness to build housing, and until that happens, some of those state laws may come in place, they may change one margin, and the communities may look just for a different way to sort of, of put those barriers in place.

So that is, sort of, a very difficult friction. And I think it's a real thing that you're identifying—that all of these legislative efforts need to be mindful of that, ultimately, some of what this comes down to is just the community's willingness to allow this housing to be built.

Um, and, um, you know, no matter how well intentioned some of the state changes are, if there, you know, there are still other margins that the locals could, could use or, you know, other levers that they have locally to get around those rules, there's a possibility they, they will.

You know, another thing I mentioned is just sort of being careful about, you know, the kinds of conditions that are put in place for, you know, we, we want to allow this kind of streamlining, but how many, you know, sort of conditions the developer has to meet in order to, to achieve those incentives.

And you know, another sort of historical example that I'm aware of in this area that we've seen, you know, there was a long pattern of sort of—in the area of CEQA—of passing various streamlining proposal—or legislation—that didn't ever seem to really make a big dent in, like, streamlining the CEQA process.

And one of the reasons, there being, that there would be streamlining, but there would be, you know, a list of 8 or 10 conditions that folks would have to meet, in order to do those.

And that's not just sort of a burden on the developer, but it's also just, it creates avenues for litigation and other things that can slow those down.

So, I mean, I think that's another thing to be mindful of is—where we're trying to create streamlining, trying to have as few sort of boxes that have to be checked, in order to achieve those things.

I know it's not necessarily a specific answer to your question, but I think those are sort of some things to think about.

Just to follow up to that, is there a way that we can implement such a study to really understand why, if we're not getting housing units out of the housing bills that we're passing, who could effectuate that study?

Yeah, I think the Legislature certainly could request that. I mean, so through the, through the budget process, for example, one option could be providing some funding to HCD to commission for that sort of study to be done. Maybe it would be with UC Partners or someone else.

So that, I mean, yeah, the Legislature definitely has a mechanism, you know, one potential through the budget process, thinking about what kind of options there might be there to fund that kind of a study. Yep.

Thank you so much, Stefani. As we wrap up this panel, I just want to say one quick thing. I know that we all bring our lived experiences to this, to this Assembly.

One of mine is that I, you know, as much as we want to provide more public transportation to our residents, I obviously represent Southeast Los Angeles, the gateway city, we still depend, obviously, on folks driving to work. And one of the, one of those pressures you are feeling, those pocketbook issues, is the price of gas.

So obviously energy is still out there. Our residents, our community members are still feeling that impact. You know, they want, since they went up, they haven't gone down the way that, you know, we may thought. And residents are still feeling that that cost.

So obviously, we won't spend too much time on that today, because obviously, we have to—we have—two more panels today, but I want to amplify that voice because I know that's a pocketbook issue. So, maybe a quick, quick response maybe on that, and we could maybe continue that at a later discussion.

But definitely, at least for my district, that's, and I know throughout Californians, we're still feeling that, that pocketbook issue of, you know, the prices of paying for gas as they're going to work, as they're trying to, you know, spend time with their families and loved ones or just travel. So please. Thank you.

Right. Yeah, I think, so gasoline prices, I mean, I think it's one of those difficult areas, right, where the sort of the, the, the rubber meets the road on, on some of the sort of the state, the Legislature has a lot of different policy objectives. Right?

And I think one of them being affordability, another being addressing climate change, reducing GHG emissions, a variety of sort of environmental goals and, right, I think gasoline prices are one of those places where those sort of come to a head. Right? And bring that some of those trade-offs into stark contrast.

And, you know, I think that that, that doesn't necessarily mean it's time to roll back all of those environmental objectives, right, in the name of affordability, right? There's a balance to be struck there.

But I think the, the important thing to be thinking about is there's a whole host of efforts that are going in trying to reduce GHG emissions, to make gasoline cleaner, to incentivize EVs, et cetera. Um, and, you know, I think that there's some reasonable questions to be raised about are all these efforts really effective?

Are some of them sort of overlapping or duplicative? Is one of them more, you know, effective than the other? And we should just pursue through this avenue, and we don't need some of these other efforts.

So, there could just be opportunities to make sure, one, in all those places where we are sort of increasing some of those costs on gasoline to meet other objectives, are we sure that we're actually getting what we're hoping for by putting those rules in place? Right. And you know, is it striking the right balance, right?

Like obviously those priorities will change over time too. Right? Like the extent to which affordability was a consideration in adopting some of those policies may be different than it was four or five years ago, right? So, I think just constantly sort of reevaluating that it's important also.

Thank you, Mr. Uhler. Again, Ms. Russ and Ms. Bohn, thank you for your input today. We really appreciate your time and your expertise. That high level expertise really helps a lot and especially us new legislators, that's very instrumental. So, we, we look forward to more dialogue. Thank you for your time. Okay. Thank you colleagues for that discussion.

We are—just a time check—we're one hour into our, our meeting today. We're going to go into our second of our third panelists. So, with that, I'm going to go ahead and call our third panel which is Investing in California's Regional Economic Infrastructure.

First, we have Derek Kirk, Senior Advisor for Economic Policy Office of Regional Economic Development Initiatives, Governor's Office of Business Economic Development, and then we have Gurbax Sahota, President and Chief Executive Officer of California Academy of Economic Development, who has joined us virtually today. So, thank you for that.

And then lastly, we'll have David Fitzgerd, Regional Director, Small Business Development Center. Good to see you. With that, we'll go ahead and start with Mr. Kirk.

Thank you so much, Chair Solache and Members. I's a privilege to be with you on Monday morning. As the Chair noted, my name is Derek Kirk. I serve as the Senior Advisor for Economic Policy at GO-Biz, the Governor's Office of Business and Economic Development.

And I want to take a moment today to share a bit with you about the work that the Administration has been doing. Thanks to the partnership and the investments from the Legislature, through our California Jobs First efforts, and particularly, noting the work that we just recently launched around our state economic blueprint.

If we can go to the next slide, I think this maybe this clicker is not working. Thanks.

So, the work of California Jobs First, for us, is really, we've been undertaking this work since the Legislature passed the establishing legislation in September of 2021. The work for us really is about building a community-led and climate-forward economy.

I have been doing Economic Development work for about 10 years, and my wife has a hard enough time explaining what Economic Development is.

So, a lot of our work, in this space, is about how are we engaging with everyday Californians, around the ideas of what is Economic Development and how to make the economy a more tangible and recognizable thing in our lives—kind of reclaiming and making it about our economy, not the economy.

So, last year, or—excuse me—in 2023, the Governor and Director Myers, of GO-Biz, and Secretary Knox, of the Labor Agency, rolled out the California Jobs First effort as our commitment to investing in key sectors to drive sustainable economic growth, innovation, and access to good-paying jobs for Californians.

California has historically not played a role in managing the economy. Prior administrations and prior legislators really took—and this is not a knock—it's just, I think, the reality really took a very neoliberal, hands-off approach to engaging with the business community, and let the business community do what the business community was going to do.

And given that we are California, the world's fifth largest economy, we've had some successes in that. It's also created a significant amount of wealth disparity and inequity in the way in which our economy has been managed. We do this work through really 3—uh, 13—core regions, excuse me. I grew up in the central San Joaquin Valley.

I have lived and went to school in San Diego. I started my career in Orange County. I've lived on the Central Coast and now I call the Capital Region home. I'm pretty intimately familiar with the fact that what works in Tulare County is probably not what works in San Diego County.

And it's important for us to act and to plan as 13 regions and understand the differences within those regions. And just as we are 13 regions, we are one state; we don't have 13 assemblies and 13 senates. We have one Assembly and one Senate and one Governor.

And so, for us, we, we need to ensure that we're, we're understanding what the communities have done, to do, and what we can do at a statewide level.

So, the state economic blueprint, this document I have that is now battered and coffee stained that I carry with me every day, is our representation of the first statewide data-driven sector, business, and workforce strategy that the State of California has had in over 20 years.

It's a little sad to kind of acknowledge that reality, but the reality is we've not had a statewide strategy in over 20 years. It's also the first strategy that was, was designed and informed, not from my office on J Street or from the governor's office in the swing space, but from our communities.

It is our effort to really turn the tide and understand what we can do, in terms of managing the economy. To date, and I'll just gloss over this slide, we've talked a lot about this in the public and with many of your offices.

To date, the Legislature and the Governor have invested $286 million to support economic planning across California. And while this number is a significant amount, it's been so critical for us to do this planning, because, never in California's history, has every city and county had a clear economic strategy.

In fact, funny enough, I think we do a lot of work with rural communities and ensuring that rural communities have direct access. Funny enough, our rural communities have more often had economic strategies than many of our urban communities.

The Bay Area, Los Angeles, and San Diego, for example, have not had clear-defined regional economic development strategies for a very, very long time. And so, because of these investments, those, those regions all now have strategies. The economic blueprint, as we see it, is a 10-year vision document that outlines many different core pieces.

I'm going to skip over that document and move to—or that slide—and move to this, this Strategic Sector Framework. My parents live in the State of Montana now and I often tease them that I wish I was doing this work in Montana, because we could give our whole effort to those two Strategic Sectors that we have.

The reality is though, we have 10 Strategic Tradable Sectors in California, and we have to be understanding how to prioritize our efforts, how to invest strategically, and recognizing that we have sectors at every stage of the life cycle in California, all of which need to be underpinned by this important work of investing in our anchor non-tradable or local-serving sectors.

But as we're making investments in housing and childcare and healthcare, it's critically important that we connect those investments to the growth of jobs and access to them in California. I will close with this slide, just as a quick note.

The work for us, really, is led by this North Star of helping to create, attract, and increase access to good-paying jobs. Dr. Bohn, on the previous panel, noted the importance of a thriving business community and routes to quality, good-paying jobs for everyday Californians. This strategy for us really is about doing that.

It is not a strategy where tomorrow suddenly California will become more affordable, and everyone will have access to a good-paying job. It's about ensuring that the state of California is a player in the game of managing the economy and participating and engaging with businesses.

We've identified, because of the work of our region, four core goals: 1. Supporting sustainable and equitable growth across all regions and populations, 2. Investing in the workforce for the sectors of the future, 3. Creating an attractive environment for and with job creators, and 4. Strengthening California's innovation economy and entrepreneurial spirit.

You'll notice there are a series, in the blueprint of strategic initiatives, that tee up each of those different goals and move us towards our North Star of continuing to invest in these spaces.

We're doing that, at first, through the work of, really, four pilot sectors, and some of the things that I'll note that California has historically not done—or not done well—is think about the tools with which we need to promote economic growth from the supply side and driving jobs in this space. So, thank you so much.

You can learn more, or members of the public can learn more about the plan at jobsfirst.ca.gov, and I'm looking forward to any questions.

Thank you, Mr. Kirk. We'll next go to our next presenter that will be via Zoom, virtually. I'm sorry.

Ms. Sahota.

Thank you. Chair Solache, can you hear me all right?

Yes.

Oh, thank you, Mr. Chairman. And to the Committee Member, including us and having this hearing today, also I'd like to thank your staff for making it possible for me to join you all virtually. They've done a great job putting this together and managing the technology as well.

For those of you who don't know me, my name is Gurbax Sahota and I'm the President and CEO of the California Association for Local Economic Development. We have over 950 Professional economic developers in our membership. Most of those are public sector, city, county, state, some federal entities.

But we also have quite a few nonprofits and private sector folks that are in our membership working with businesses every day, trying to help them thrive so they can create economic opportunity. A little bit about as just so you have the context of some of the feedback I'm going to share with you.

Under the Biden Administration, we were asked by the US CDA to help put together a resiliency and recovery guide. And you received the Executive summary of that to teach governments how to address economic disruptions, how to prepare for them, how to recover and how to be resilient.

Under the Trump Administration, we partnered with USDA Rural Development to put together a California Rural Infrastructure Financing Guidebook. The reason for that is we know that there's capacity issues at the local level in urban and rural areas to figure out how do you finance infrastructure projects, housing, all sorts of different types of development.

At the local level, we know there's capacity issue. How do we create a guidebook to help those folks, you know, on their first step and then continue on to move forward projects that will change the lives of their communities.

So from that perspective, when we talk about economic development, we talk about economic development as the creation of wealth through which community benefits are realized. And I share this so we have a common definition as I'm talking about this. I know because you're on this Committee, you already have expertise in this area.

And hearing your comments and questions to the prior panel, it's really clear to me that you're in the weeds of some of this activity. So it all makes sense to.

The reason we talk about economic development as the creation of wealth through which community benefits are realized is that there's a belief that through government intervention, your intervention, local intervention, federal intervention, we can create an environment where employers, businesses can thrive consistent with the value vision of our communities.

Thrive in a way that you're creating economic opportunity for California's residents if those Businesses are thriving, those residents are thriving, then hopefully your coffers are thriving and you have the funds you need to provide the community services, the benefits, the safety net that their residents also need. So we see those pieces going hand in hand.

And when we talk about prosperity in particular, I was so pleased to hear the data piece that the prior panel shared because what I'm going to talk to you is going to be one off from that data piece and it's that we have a perception issue of affordability as well at the local level.

And I say that, and I'm sure you hear, especially as elected, when you're in your district in particular and at the local level, just from cities and counties, there's a perception that prosperity isn't necessarily shared. There's a perception that California isn't a good place to be in business.

There's a perception that local government is the enemy when it comes to prosperity, affordability. There's a perception that when you're looking at workforce, the issues that matter, where we're going to invest our time is either going to be in high road jobs or it's going to be in the very low end jobs.

And we're not necessarily talking about what are the other ones on the ladder that help people move along their path to prosperity and economic empowerment. That's what we're hearing at the local level. We see it in some of the policies as well. And I'm going to talk about that because it's not all gloom and doom yet.

Derek mentioned that the state hadn't had a strategy in quite some time. The state has the option to come in and out of economic development. The Federal Government, we see it right now, has the option to come in and out of economic development. Local governments do not have that option.

When you're talking to your residents, when you're seeing what's happening to your corridors, that may be 1.0 thriving and currently aren't, or you're seeing other challenges. You can't wait for somebody else to come up with the solution.

You've got to have the solution now or as soon as you can get it, because those problems aren't going to go away. And you're the closest unit of government serving the people of our state.

We hear, there's no doubt in my mind that as our elected officials, you're hearing a lot of the same things that our local economic developers hear as well.

So if your view of prosperity is impacted not just by the rising cost of housing, commodities, utilities, but also by what you see as you walk outside your door, things like, you know, do we have the infrastructure? Do we have thriving districts? What about the in house? Are we doing something to address those issues?

All of that ties into people's understanding and their feeling about hope and prosperity. And is the economy going to be okay? Am I going to be okay? And we understand that, and I know you all understand it as well.

But from a very practical perspective, you know, when I talk about local economic development and the levers that we see happening at the local level. So as I mentioned, there's hundreds of economic developers across the state that are talking to their business community every day.

They're informing their electives on what they think are the good policies that will help advance creating economic opportunity. Because there's several places where you can impact affordability. You can invest yourselves, which we've seen the state do. You can certainly invest in nonprofits that fill the gaps where local government, state government, Federal Government can't.

But then you can also support a thriving business community and the economy so that people have economic empowerment. They have the individual dignity of being able to provide for their families and themselves, but they also are earning good wages and have the ability to mitigate these shifts, these shocks, these issues as they come along.

Because if it's not eggs, it's going to be something else. If it's not housing, it could be utilities, it could be health care. There's always going to be something that could be a hiccup on the bump to prosperity or the road to prosperity.

So if we can arm people with good jobs, if we can help businesses thrive in our state so that they can create that economic opportunity, and that includes, not profit, employers as well, then we give our folks a chance, and then we give them hope that they can surpass these issues as they come to them.

So in talking about economic empowerment, one of the things that Carla was really clear to me is make sure that you talk about solutions. So I'm going to go through my list of solutions in hopes that it helps you.

But if nothing else, I'm going to drag you into the weeds with me a little bit as we talk about local government and some of the work that we see happening there. So we think it's really important that you, as elected and leaders, create a stable environment where people and businesses can thrive. Both.

I know that, you know, there are challenges that you've had to deal with as it relates to, you know, where do you put your money? We see the budget tightening for sure at the state level. So where do you Invest what levers can you change? We've already seen that you've stood up on behalf of small business.

I don't think that we have any better advocates in the state than and our elected leaders when it comes to supporting small business in particular. And I know Danny will talk about that, so I'm not going to cover it a lot.

I also had the opportunity, the honor to serve on the state's entrepreneurship and economic mobility task force the last couple of years.

And it was so, it was so inspiring to hear people talk about if I can't see prosperity or economic mobility by finding a job with an employer that, you know that aligns with what I want to do, I can at least I can look at creating a job for myself. I could be an entrepreneur.

I can be in control of my destiny. So empowering and so important to support paths for economic entrepreneurship manufacturing. When I spoke about, you know, the runs on the ladder that help people get to the to high road jobs or to get to their next path or space.

When it comes to economic mobility, there are a lot of jobs that happen throughout that pipeline that aren't just fast food and they're not maybe necessarily the high road jobs that you're focused on.

But acknowledging that there are other industries that we need to see thrive in California, I believe it was the LAO representative mentioned that you don't necessarily have new funds, but you do have the ability to leverage funds that you have. So for example, the climate bond has money for some of the, for some very underserved populations.

It has a nice carve out there and what we had proposed and we've spoken to Senator Allen's office about this. Is there a way to leverage that with local investments that are already happening? So it's not new money, but you see local investments that are happening to further those goals.

Can you partner with them to make that impact even greater? What does that look like? You've mentioned housing quite a bit. And I'm going to speak to two things related to housing. One is that you do have a tool. It's not a surprise that the last 10 years housing development has been difficult.

You have passed a lot of legislation to streamline to regulate to put more pressure on local government to build housing. All nearly 500 cities and 50 counties in the state are not conspiring to stop housing development in the state.

There is a challenge that goes beyond the regulation and I think we know that cost is is an issue. You all authorized pre as the community reinvestment revitalization investment authorities Senator Cortese ran a bill to make those more viable tools and currently Assembly Member Carrillo has a bill to further that work.

These are the ways that you get funding into those communities so that we can start looking at building affordable housing. Money is an issue. I would also say that we really appreciate the work that you've already done on making additional investments.

Whether it's the small business programs you supported, the film tax credit, the CalCompetes tax credits, those are all important to local economic developers as they do their work. A couple of other things really quickly. There's over 100 bills this year that are going to be aimed at recovery, helping LA recover from the fires.

I would say, please look at those bills from the lens of if they're good for recovery, are they good policy that we should have all the time, not just in this one instance. Another thing we hear consistently, I suspect you hear it as well, is the fear that our rural communities are getting left behind.

It would be great to see the Rural Caucus reconvene and hear from the communities themselves what their challenges are, what's working and what's not. And looking at those from the perspective of is this one size fits all piece of legislation, what is the impact going to be to our rural communities?

Not just looking at it from the lens of maybe the 10 or 15 largest cities or counties in the state. And then the final thing I would say is leverage your partnerships with local government, please. Local economic developers are boots on the ground. You've heard very high level.

You know, this is what we see as far as data and trends. This is what you know, and we know those are things that are impacting the economy, without a doubt. But at some point, the policies you pass turn into an individual talking to another individual, boots on the ground, about how do we make this work?

And to find that out. To Assemblymember Stefani's point, forgive me if I mispronounced your name, but to her point about should we do a study, what you're doing right now with these informational sessions is so critical. Get out of Sacramento, listen to the people, boots on the ground. Find out what's going on.

It's not just what you hear from the Administration, it's not just what you hear from folks like me that represent large groups of people. It's the folks that are outside of Sacramento, outside our echo chamber, that can tell you what they need and what's working and what isn't.

All that to just close with saying, thank you so much for all the work that you've already done on economic development, all the support you've already given us throughout the years. And I hope we have a continued opportunity to partner with you and grow the economy and create economic opportunity for our residents. Thank you.

Thank you, Ms. Sahota. We're going to go to our third. Panelist, David Fitzgerald, from our good friends at SBDC.

All right. I did have a couple of slides. I don't know if we'll be able to get those up, but regardless, I'm excited to be able to be here and represent the five California Small Business Development Centers here in California. My name is Danny Fitzgerald. David's my brother, but that's okay. It's all right. It's a good name.

And so he's my older brother. And so within the five that we actually have. So if we could go to the next slide, this works anyway. I'll just kind of move along here. So the next slide talks about really who the five SBDC networks are. So you see that we're spread out across California.

I'm in San Diego, being able to serve that particular region. We have Orange County, Inland Empire, Los Angeles area, Central California, NorCal. We're all housed at higher education institutions and really be able to work.

But what we, the five of us represent is over 1,000 advisors, expert business consultants that are working with this California small business businesses throughout the state. Next slide. Okay, so what I want to talk before I get into the particular policy is a little bit of data about California small businesses.

So it's important to realize that there's over 4.2 million California small businesses that meet the SBA definition of under 500 employees. But within that 4.2 million, the vast, vast majority, 3.4 million, actually have no employees.

And so they fit within a particular gap where that they're not necessarily classified as either an employer or as a particular job either. And so that's where a lot of that type of work comes into play. In addition, there's over 740,000 businesses that have fewer than 20 employees.

Those two groupings right there, that's the wheelhouse of what small business development centers particularly work on and particularly work with. And so that's really kind of some of what I want to be able to talk about here in a second when I talk with my recommendations.

But really being able to understand who those small businesses are, where they are, and really be able to support them, because that's where that household income rises.

Maybe that 3.4 million represents someone who works at home, while some, while another, well, another partner works outside of the home, maybe that's, that's an additional job, a side hustle, et cetera.

That's really a way in which you're able to find a lot of that economic mobility all the way down to independent consultants and so forth that are able to kind of work with that. What this slide talks about is more so what is the existing SBDC policy?

In other words, how are we supported by both of federal and the state? This truly is a partnership between the two. So we're funded initially by the Small Business Administration. There's over 62 networks across the country. California is unique in the, we're split up into regions everywhere.

But Texas happens to be split up into just the individual state. And so that's an annual federal appropriation. Fortunately, we're not at risk. We were funded in the CR. So that continues to go. And we have our five prime grants.

And then what we do is we actually subaward to a number of different nonprofits, municipal government, as well as other educational institutions to be able to serve that are connected with the community. Everything from community colleges to economic development councils to chambers of commerce or et cetera, really be able to work with them.

The state also supports this from two different programs. The first is the capital infusion program. That's just $3 million a year. That's actually non competitive. It's distributed also to the SBDCs based upon population share. So for example, in San Diego and Imperial, we're the smallest. We're about 8.6% of the population, ergo we receive 8.6.

And so that's how we're able to receive that. The technical assistance program is $23 million annually. And so that is actually competitive and that's beyond just what the SBDCs are. So that's everything. That includes our women's business centers, that may include other nonprofits that also receive funding. And the SBDCs receive approximately 50% of that particip funding.

But again, that represents over a thousand SBDC staff and advisors across the state serving small businesses. So what does that result in? Want to advance? There we go. What does that mean? So that means this is the type of work we're able to provide. Well, let's see, we get that there. We'll get there. It's all right.

So real quickly. So we were able to provide over 500,000 hours of advising to over 120 different. Over 120,000 clients between 22 and 24. And that over 76.2% are in historically underrepresented demographic groups. So that's who we are reaching. And so in addition, we had over 11,000 training events with over 200,000 attendees.

Almost half of the people we serve are women and like I said, over 76% are historically underrepresented. And so that's really what we're able to serve. This one here talks about the particular type of impact that we had over three years, over $10 billion of economic impact of the small businesses that we were assisting able to achieve.

So that includes over 4.6 billion in capital access, close to $5 billion in new revenue, and as well as over 57,000 jobs that were created and supporting over 33,600 particular local jobs.

And so the small businesses that we work with, we're in there, we're assisting them, we're working with them day in and day out to really be able to survive everything from being more, being able to recover from the LA wildfires, to continue to be resilient, to ensure.

So if something like that strikes, to be able to manage things like this change the changes in policies that we're experiencing. The tariffs are a real big problem. Absolutely. That's why we're working on different types of training programs and to ensure they're able to recover from those, etc.

And so that's the type of work that we're able to look at. And so last I just wanted to kind of, and I'll shuffle through these quickly, wanted to be able to share with you some successful success stories.

These are some local businesses that are throughout, so from Marin county here as well as, as well as a number of different ones across the state, including one from San, another one from San Diego as well as one from the Los Angeles area as well as another one from, from San Diego as well.

And so one thing I wanted to talk about that, that that chief Consultant Castilla asked me to talk were a couple of different recommendations. One of the challenges we have is what I talked about with the 3.4 million that don't have employees.

So these folks that may be at their home and so forth, they're hard to reach, they're hard to particularly find. And so our funding that we get from the State of California is quite restrictive in that we have to provide direct services. And so we're lacking some of that funding for outreach funding.

The second is really there needs to be a better understanding from the labor and labor data sources about those self employed individuals and really what that particularly means. And last, but not least is certainly the support of what Chair Salache is providing us, which is the increase in funding for that. And certainly we appreciate that particular request.

So thank you.

Thank you, Daniel, for your work today. Quick, any quick questions from the Committee Members to our panelists today? Assembly Member Patel.

So in General, I'm very impressed with the efforts California is putting into supporting our small businesses and even the plan to look at it regionally, that's, that's very helpful for those of us, for example, in San Diego, county, where we are very different from other regions, our local businesses, when I've been speaking with our local businesses communities, they're looking for additional supports as the tariff shocks and the increasing pressures of inflation are creating significant challenges to their bottom line, their ability to recruit and retain workforce.

What are our small businesses telling you directly that they specifically need help with? I know, Mr. Fitzgerald, you talked about some of your recommendations, but maybe through the GOBIZ perspective or if you have further recommendations.

One example that business, small business owners told asked me was to reduce the cost of their business license, especially those that are sole proprietors, that have no employees and are just getting their businesses off the ground. They're looking for some relief. And that was something I heard from many small business owners in the San Diego area.

Yeah. Assemblymember Patel, thanks for the question. I think regulatory, dare I say, reform and some updates both at the local level as well as the regional and the state level is something that we continue to hear not just from small businesses, but from businesses really of all sizes.

I think in addition to the cost of permits and business licenses, et cetera, is the rather disconnected nature of those permits and those regulatory processes from the local city, the local county, various Executive branches within the state, multiple different regulatory agencies.

You'll notice in the state's economic blueprint we do recommend a series of initiatives around collaborating on the potential.

Streamlining I think is sometimes frowned upon, but coordination of some of those permits, looking at tools and identifying ways in which we can be more clear and upfront and quite frankly, honest with business owners about what those processes look like.

I appreciate that candor. I think some of the business owners that I spoke with specifically reflected on that, saying that if we knew what our money was going towards and we felt that it was helping us directly, we might be willing to pay that if we felt we were getting something in return, but they're not feeling that.

So that transparency and just diving into what are they actually getting and connecting those services together would be very helpful for our small business community. We know that the small businesses are the backbone of our local economies. My dad was a small business owner. We grew up on that small business income.

But it was definitely hard when we had those years of inflation and economic impacts. Are there things that the state can be doing to help smooth that out for our small businesses, especially as we see the tariffs and, you know, changes to labor policies, immigration policies, how it affects the ability to recruit and retain workforce?

Yeah, I would largely say that the sister document to the state economic blueprint, the Governor submitted an Executive order or issued an Executive order to mandate the creation of a new master plan for career education in California. The first new master plan since the 1960s. And we are really viewing them as supply and demand documents.

How are we understanding the demand that companies have in skills and occupations and how are we ensuring an active supply side of workers and ensuring that those workers have the necessary skill sets to doing that work?

In that vein, the Governor to administer this work, created the California Jobs First Council, a council of 98 agencies and the Public Utilities Commission. That council is co chaired by The Director of GoBIS, Director Dee Dee Myers and Secretary Stuart Knox at the labor agency.

Particularly from the lens of saying we can't just do one or the other. Right. We have to ensure workers have the skill sets necessary to go into jobs. We also have to ensure that we're engaging with employers, small and large in more particular ways and partnering with them in a way that the state hasn't done before.

Thank you for that. I appreciated your testimony today. Thank you.

Thank you so much. Assembly Member Patel. Assembly Member Bonta thank you so much.

I just wanted to acknowledge the incredible work that GOBIZ has done under this blueprint in my district, Director Dee Dee Knox and Director Terry Lynn Gray in particular. And you have been to my district many times supporting investments in our small, in our small businesses and local economy. And it's certainly been felt.

So I wanted to just kind of point our attention to. Your slides are not numbered, but it's the one around the California's diverse and dynamic economy economy is reflected in its strategic sectors. Sure. I'm also very fortunate to have a robust and growing kind of life sciences portion of our district as well.

Can you share with me how you all are in your blueprint? Are really looking at some of the anchor, I guess, local sectors and the impact of making sure that those are robust to support our local economy. So you have childcare, education, skilled workforce, healthcare, housing and then this infrastructure piece.

We know that we've made massive investments in broadband infrastructure and transportation infrastructure. Throughout the state. So just. Can you give us that? You mentioned the.

The blueprint for career development. Can you just talk about how you all are focusing on making sure that we have a strong infrastructure for our basic services like child care?

Yeah, as somebody remember, I really appreciate the question. So it is very unique for an economic development plan to so prominently call out local serving sectors like childcare, housing, healthcare, infrastructure, education and a skilled workforce. For those of us, there are quite a few parents that helped work on this plan, myself included.

I have a two and a half year old. Things like childcare and health care we really wanted to call out and many of our regional partners called out as critically important. We would note that investments in childcare, housing, health care, in the infrastructure anchor categories alone won't grow an economy.

Just because you fix a road or build a bridge doesn't mean an economy is going to grow. But without investments in those anchors anchor local serving sectors, none of the tradable sectors in the strengthen, accelerate and bet categories can grow. Right.

We have to be doing both and we have to be doing more to connect the dots between those sectors. Right. The state, the Legislature and the Governor have made significant investments in childcare to move the needle. The Biden Harris Administration moved to tie some of the chips and science act investments to child care.

What would it look like for us to partner with businesses in more targeted ways and thinking about how businesses cannot fully front the cost of childcare, but partner with us to put some skin in the game and look at things like developing childcare facilities on site like Trust Automation in San Luis Obispo or providing vouchers for local home based childcare facilities.

How are we connecting the dots in those ways? One other note on the infrastructure side, I worked in a community for a long time in the tourism and economic development space and I won't name them because I don't mean a kick at them at all.

But one of the councils of governments that I was working with that was developing their 10 year master plan for transportation said, hey, this transportation master plan is based on the 300,000 people that live in this county.

And I raised my hand and I said with my colleague, what about the 7 million people that visit this county every year? And they said, hmm, we've never actually factored them in. And so it's not a knock at them.

It's just this recognition that we have these incredibly robust systems that oversee childcare and healthcare and transportation and housing. We've never charged them with being responsible for economic development and educating them to that point.

When the California Jobs First Council first met, one of the Secretaries on the council said, hmm, no one has ever told me that I'm responsible for economic development. But this is cool, right? Like, we want to play in this space. We've just never connected the dots.

The Council is not a regulatory or body that has sudden power or permission over the funding. It's more about facilitating conversation and building bridges in those regions that prioritize those anchor sectors. How are we pushing and pulling?

The last thing I'll say is Secretary Moss at the Business, Consumer Services and Housing Agency, in her prior role at All Home before joining the Administration, All Home is Our Jobs first convener in the Bay Area.

And so she and her staff have worked really diligently with us to start to figure out how we might connect the dots in those spaces. Because, as you know, most of the state's money is going into those anchor sectors. So how do we connect those investments to actual job creation and access?

I appreciate that very robust framework. And I'm sure that we are going to be better off when we're actually recognizing that in order to be able to have good jobs, you need to have people who are educated to be able to take those jobs.

And you need child care in order to be able to make sure that your workers have the ability to afford to be able to go to work. So very much appreciate that frame.

Thank you.

Thank you, Senator Bonta. Just for me real quick, Mr. Kirk, thank you for that statewide perspective on the work that you're doing. And so kudos to that. But I did hear a little bit of concern of LA not doing its part quite, quite yet.

How can we help with being that I represent part of LA, not City of LA, which is part of the county.

Yeah, sorry, Chair Solace. So historically, the County of Los Angeles and the 88 cities of which a significant portion you represent, have not had the capacity and the resources to coordinate in a strategic way. And so LA, unfortunately, has not had dedicated economic development capacity and strategy historically.

So one, the $5 million investment that went through the California Community foundation and the LA EDC provided the first opportunity for representatives from all of the different spas and cities and county offices to actually come together.

We're also seeing an incredible partnership and commitment from the Los Angeles County Department of Economic Opportunity and Kelly Lo Bianco and the Economic and Workforce Development Department and Carolyn Hull at the City of Los Angeles to bridge those gaps and come together in a way that we haven't before.

Because while we will tell you this initial effort launch with regions rise this desire to promote inland California and opportunities to lift up those voices.

After something like the devastating wildfires that LA County experienced, this plan for LA became so critically important for us to pause and say we have a roadmap for what we want our economy to look like. And, and as we're imagining investing and recovering, we know what we need. Right. And we know how to do those spaces.

So la, I'm very proud of the Los Angeles region, the Jobs first collaborative. It is hard, right? We've invited labor, business, cities, counties, nonprofits together at the same time. And I often joke with them. I don't need you to enjoy each other's company for dinner, right. On a Monday night.

This is like Thanksgiving dinner where everybody knows it's an obligation for us to sit collaboratively together and get the work done.

Well, thank you for that update. We'll definitely do some follow up. I represent seven of those 88 cities, so not quite even a quarter of those, but LA County is so big. And then just lastly, want to just uplift SBDC's work.

I ran a Chamber of Commerce before coming to the Assembly and working with them was very rewarding and just, you know, the work that they did with their small businesses was very, you know, very local run and just wanted to amplify the work they're doing and, and anything we could be a partner with that, we're always going to do that.

So with that, thank you to the panelists. I know that we're going to run to the last panel. Thank you all for your time today and looking forward to work with you all. With that, we're going to dive into our third panel, combating household impacts and cost pressures from the ground up.

First, we have Juliana Ramirez, owner of Jr Bookkeeping. I love our owners of our small businesses, EDC Small Business Development center business advisor. And Dave White, CEO of Opportunity Stanislaus. Why do you think Stanislaus being Stan State? So that's just my concept of Stan. So welcome you. Thank you. And Ms. Ramirez, please.

Good morning, everyone. Thank you so much for having me today. On behalf of the Economic Development Collaborative, which houses the Small Business Development center serving Ventura and Santa Barbara counties, I want to express my deepest gratitude for your continued support and commitment to these invaluable organizations.

Your dedication enables us to empower businesses across the Central coast and beyond, ensuring entrepreneurs like myself have the guidance, resources and opportunities to succeed. This is my story.

In LEED 2010, life took an unexpected turn for my family after just two and a half years of marriage and with our second child on the way I was laid off from my job as a full charge bookkeeper. Within a few months, my husband also lost his job.

With little to no savings, we found ourselves relying on credit cards to get by. The struggle was overwhelming. Balancing financial instability with the responsibility of caring for our children and the inability to afford child care made it incredibly difficult to regain our footing.

Our situation worsened to the point where our primary family car was repossessed and by the end of 2012 we were forced to file for bankruptcy. But in the middle of this adversity, something new was born. Jr Bookkeeping I started the business along with my sister out of our living room on April 12012.

Driven by the necessity to provide for my family while staying home to care for my for my daughters, I had no financial cushion, no established client base, just determination to make it work. While determination was crucial, I quickly realized that I couldn't do it alone.

Thankfully, I discovered the wealth of resources available to small businesses in our community. I first learned about women's economic ventures, or Weave, in August 2012, I enrolled in Weave's Self Employment Training Program, a 14 week course designed to help entrepreneurs create a business plan to start, grow and sustain their businesses.

This program was a game changer, equipping me with the knowledge and confidence to move forward. Through weave, I learned about SCORE and edc. With score, I received mentorship that helped me solidify my marketing strategy and designed my very first website.

Meanwhile, EDC provided advisory services that helped me analyze my financials, refine my pricing structure, and define my ideal client base. With their support, I created cash flow projections and secured our first business loan critical to keeping our operations running.

In 2016, I discovered the Workforce Development Board on the Job Training Program, which allowed me to hire employees before I had the full financial capacity to do so. By agreeing to train new hires, I received wage reimbursement for up to six months, allowing me to build a skilled team while meeting client demand.

To date, Jr Bookkeeping has hired around 40 individuals, many of who have gone on to start their own businesses. Since launching my business, I have joined four different local chambers of Commerce. These memberships have provided networking opportunities, increased my business visibility, and contributed significantly to our growth.

Our company was named Small Business of the Year in 2022 and 2023 by both the Ventura and Santa Barbara chambers, respectively. Despite the resources available, the road has not been easy. One of the biggest challenges I faced has been access to capital.

Making ends meet has been a constant struggle, and in 2018, when my husband suffered a work accident that left him Unable to work for five years, I became the sole provider for our family. This caused adversity in meeting all my tax obligations timely and I'm now on the road to recovery.

Finding and retaining qualified staff has also been difficult. Jr Bookkeeping has become a hub for new and aspiring accounting professionals in Ventura County, and while it's rewarding to mentor them, many eventually move to pursue their dream jobs where they pay them.

Better still, we have been able to maintain a consistent team of nine employees, including my sister and I. Despite these challenges, Jr Bookkeeping has not only survived, but thrived. More importantly, our success has allowed us to give back to the small business community in meaningful ways.

I now serve as bilingual instructor for weave, teaching the imprendimiento or Entrepreneurship program to Spanish speaking business owners. As a certified score mentor, I provide free webinars on QuickBooks, bookkeeping and accounting at both the local and national levels.

Since 2019, I have been a financial advisor with EDC, helping businesses establish proper accounting systems, training QuickBooks, and navigate available small business resources. Through our work, we assisted over 200 businesses during the pandemic, helping them apply for grants, PPP loans, NEIDL loans, ensuring their survival during an unprecedented economic crisis.

The impact of these resources extends beyond just my business. They have empowered my family in profound ways. After working at the Same company for 20 years, my father was able to acquire the business he worked for thanks to the knowledge and support we gained from being involved in this small business resources.

He now owns the Napa Auto Parts store in Carpinteria. At just 12 years old, my daughter launched Streets, a Strawberry based sweets business, by participating in the Junior CEO program through the Santa Maria Valley Chamber of Commerce.

She was also the only Ventura County Business selected among 30 businesses in California to participate in the Accelerator for Local Goods program by DoorDash, a program designed to support small business entrepreneurs. She now is a vendor at the local at the California Strawberry Festival.

She will be there in May and also a vendor at the Goleta Lemon Festival. She will be there in September. At Jr Bookkeeping, we're committed to continuing our mission of serving small businesses with excellence.

Our goal is to become $1.0 million firm by the end of 2026 or sooner and we are currently 65% of the way there. This quarter. We are expecting to expand our services, continue hiring and strengthen our impact on the business community.

As my story illustrates, resources like weave, edc, score, the Workforce Development Board and the Chambers of Commerce are critical lifelines for small businesses. These organizations provide the mentorship, funding and workforce support necessary for businesses not only to survive, but to thrive.

When entrepreneurs leverage these resources, they create jobs, stimulate local economies, and contribute to the overall prosperity of our communities. But these resources can only continue to exist with our collective support. By investing and advocating for them, we ensure that future entrepreneurs have access to the same opportunities that helped my business grow.

I deeply, I'm deeply grateful for the support I have received and I'm honored to now give back as a mentor and advisor. Together, we can continue to empower small businesses, strengthen our local community, and move California forward. Thank you.

I just want to get up and make a big applause. Liziades.

Gracias.

Congratulations. Juliana Ramirez. I'm inspired by your story. I'm sure all my colleagues are. Again, I came from a chamber so I makes me want to go back to the chamber. But not quite and just wanted real quick. I know you're next Tuesday early congratulations your 13 year anniversary. Because April 1st is next Tuesday.

That is you're almost quinceanera. Correct. Hopefully by the quinceanera time you'll make that $1.0 million. You want to do so?

Yes. Or sooner or sooner. So much.

Especiales y muchasuerte.

Gracias. Thank you.

With that we'll go on to Dave White and then we'll hear from our colleagues. Thank you. And a great story.

Thank you. Good luck, Dave. Organization as the host of the SPDC in Stanislaus County. Yes. Okay, so I have some slides. Let's see if we can get them up there. Let me introduce myself. Thank you, Mr. Chairman and Members of the Committee. It's a great honor to be here today. My name is Dave White.

I'm the CEO of Opportunity Stanislaus. We are the regional economic development organization that serves in Stanislaus county but throughout the region. We have Today I'm going to tell you the story about Volt Institute, which is an advanced manufacturing training center that was started in 2017. It's led by industry.

We call it Industry's training center because it's supported by many companies in the northern San Joaquin Valley, including Ian J. Gallo Winery and Foster Farms and many others. We started it at the former Modesto B building where they manufacturer produced newspapers that went dark in 2011. They shifted all the production to Sacramento, the Sacramento Bee.

And so we had this big vacant building in downtown Modesto and I one day I was walking through it and I thought how is this going to be repurposed? And I thought it's not going to be a manufacturing center again. But I had this fleeting thought, maybe it could be a training center.

And then lo and behold, five years later, we turn it into a training center. So, Volt Institute, do I have the ability to advance the slides here, or can you do that for me? I believe so. Okay, yeah, go ahead and advance to the next slide. So Volt Institute was started in 2017.

The purpose was to devise a very nimble, fast paced training center that meets the demands of industry. We have a large manufacturing base in the northern San Joaquin Valley. And a lot of the jobs, the good paying jobs that are being produced require skills in technology, skills as maintenance mechanics, electricians, et cetera. Next slide, please.

And so we started an industrial maintenance mechanic program. And how many of you can work on your cars today with all the computer technology and the sensors and everything? It's very difficult. You need somebody who understands that. And the same is true in industry. Industry is now driven by technology.

All the machines, they're driven by what's called PLCs, programmable logic controls. And they require people with that kind of training. And so we started this 500 hour course in maintenance mechanics in 2017, and it covers electrical, mechanical, mechatronics, PLCs, pumps, you name it. A very, very robust system of training. Next slide, please.

And then in 2021, so we took our training center, and it's been a great, amazing success as training center in Modesto. We've already graduated 400 people through the training center. They've gotten jobs making $32 an hour plus, and with benefits.

We take people that have no experience and they come through the program and they have seen an increase of 20 to $25,000 a year based on the new skills that they've acquired. So it's just a great opportunity in manufacturing.

We realized that we have this fixed asset in Modesto, but we realized there are a lot of people out there that need this training, that have barriers. Maybe it's transportation, language, economics. And in 2021, we came up with an idea to provide mobile training where we can take the training to them. Our partner in this is Amatrol.

They're the number one producer of training equipment in the United States. They happen to have mobile training equipment. So we were able to get a grant from eda, an Economic Development Administration grant, and we've been able to purchase 80 pieces of mobile training equipment. So in 2021 or last year, actually, we started the program.

This past year, we've trained more than 300 people in Stanislaus county alone in Volt on the go. What we do is we take the training to them, we set it up. We have community partners, non profit agencies who have special social service opportunities and programs. And we bring the training, we bring the instructors.

They just have to provide the space. And it's plug and play. And we do spurts of 20 hour training modules that stack on top of each other as credentials that ultimately will lead to enough training for them to get a really good job.

And so since this last year, we've done 300 such trainings in low income communities, underserved communities. We have the training in Spanish, which has been a blessing because we have people that, you know, they may understand conversational English, but when it comes to technical terms, it's difficult. So we have trainers who can teach them that.

So it's been a great success. Next slide, please. Our Volt on the go. My slides, it looked good on my screen. Obviously have some challenges there, how the way it translated, but this is what training, this is what one of the industrial training machines, the Volta, the mobile application looks like.

And we take that to the, to the location. And they work in pairs. Our instructors are former industry experts working in industry. They don't really stand up and lecture, they provide assistance and it's a self paced program. Next slide, please. We also teach development courses.

One of our mantras at Volt is we want to teach the attitude and the aptitude for success. So we have to focus on soft skills and leadership skills to train them to be successful. Once they get a job, they need to be able to work on a team, they need to understand how to communicate.

And so we teach some really successful training, leadership courses as well. We do a program called Supervisor Development Academy where we've done 20 cohorts in the last five years. And we have the ability to teach conflict resolution, proper communications, proper how to be a leader.

First time, a lot of times, people, when they enter that role, they've never been a supervisor before. So it's a very tough transition. Next slide, please. And what's on the horizon? So we just got a grant last year from the U.S. Department of Labor, $410,000 grant where we can provide what's really what we call industry 4.0.

This is instrumentation and controls and this is where manufacturing is going. It's all about automation, it's all about robotics, it's about hmi, Human Machine Interface. And so this is a machine that we were able to get where we also can take it on the road.

And they learn how to troubleshoot systems, very complicated systems that are tied through PLCs through programmable logic controls. And so what they do is they learn the different systems, they learn the computer code, then they have to troubleshoot faults that we can program into the machine. And so this is really where it's going.

And if you get any kind of training in instrumentation and controls in the Valley, you're looking at a job over $40,000 a year, over $40 per hour. So these are $100,000 jobs that are being produced. And in five years of experience, you're looking at a six figure job. So it's amazing, amazing opportunity for people. Next slide.

And the results. Like I said, we've had over 400 graduates of this training since we started Inception. What's really unique about our training is it's led by industry. And so our replacement rate is 91% placement. And a lot of our students get jobs even before they finish the training.

The other thing that we've really, because it's a self paced program, a lot of the students will finish early and they love it because then they don't have to take years and years and years to get the education. They get into a good job and then they can always go back and get more education.

70% of our participants are what are defined from underserved communities. And so we've really been blessed to provide this kind of training to people that have needs for a better job. They come out of the program without debt, they get into a job and it's life changing. I'll just share a brief anecdote.

We had a young man who came into our program. He was couch surfing and living out of his car and he just, he didn't have a home and we didn't know that until after the fact. But anyway, he came to our training and he went through our maintenance mechanic program.

He graduated early, he was highly compelled, highly motivated. And then he graduated early, got a job in tracing, making three $32 an hour. And six months later he forgot to come and get his certificate for completing the training. So about six months later he shows up, gets a certificate with a brand new car.

And he told us about the apartment that he and his girlfriend were living in. And that's really what, that's what it's all about. That's what really gets me excited when I hear these stories about how we're changing people's lives. So that's really kind of grounds up how we can really have an impact, impact on economic development.

And the sky's the limit. There's many opportunities in manufacturing. A lot of the Low level type jobs are going to go away in the next 2030 years. They're going to be replaced by highly skilled jobs that require really STEM jobs that require technology and education and engineering, math.

So anyway, I'm just glad to be here and tell a positive story about what's happening in our California economy.

Mr. White, the word opportunity in your organization really, really is very intentional and very telling of the work you're doing. So thank you for that.

Well, thank you very much. Appreciate it.

Any questions from my Committee Members? Ms. Patel?

So, first of all, you are a very inspiring woman. I have to tell you, just here hearing your story, I went through a whole cycle of emotions hearing your journey and very impressed with what you're doing. And I am very confident you're going to achieve your dreams. Very confident. Thank you. Thank you so much.

Because you do the work and you have the skills and it's just very impressive. Mr. White, is there an opportunity? I sit on the higher Ed Committee and the education Committee and I can't help but think of your certification program being able to dovetail very well with credits towards an AA degree.

Have you been able to work with your local community colleges to build that kind of partnership? Is there an opportunity there?

You're talking about prior learning credit? Yes, we are trying. There are a lot of hurdles and obstacles to make that happen, but we're trying to work through it. It's a very lengthy process to get approval in California. You have to go through the community college system.

And it does take a lot of time, but we are working toward that. It makes a lot of sense.

It does. And just providing students with flexibility and options as they go forward.

Yeah. When I was a young man, I lived in Austria for a couple of years, and then when I came back, I got 16 credits of German because I'd already learned German. I didn't have to take the courses again in college. And it just makes a lot of sense to be able to do that.

But there are some roadblocks and we're trying to work through it.

Thank you for that.

Okay.

Okay. See another questions. Again, just want to uplift both of you, the great work you're doing, both in your communities, great example, and you're just making sure that 91% rate. It's amazing to hear that folks are being, you know, placed in jobs. So thank you for the work you're doing.

We're going to continue these conversations for sure, and I'm sure we will be inviting you all to more opportunities.

Thank you so much. Thank you for having us.

Thank you.

With that, we do have a public comment that we want to acknowledge. So if there's any public comment, please know that we'll do a quick check in two minutes for a comment. So at this point we're going to go ahead and call for public comment. Okay. See no public comment. Okay, sure. Okay.

We have the mic come to you and again we have a two minutes per Member. Welcome, sir.

Well, it won't my public comment is I'm Jeff Tara, an advocate and I come to these hearings because want to hear what we are doing in California last week attended the Department of Aging and their discussion about what they are having to do in the way of landscaping the things that are going on and what's happening with our current Federal Government and knowing the other aspects that are going on.

Seeing it's good to see what California is figuring out of how they need to support and what they need to do to support this economy here. That's in a sense my public comment. And so it didn't know what you were going to be orally doing so appreciated finding out what was going on and happening.

I got involved with this because in 2008 when we had a previous crisis through their I had an instructor say to me Jeff, City College is having my workload triple and the Legislator wants to cut my budget in half.

And if you're familiar with those times, all of the cuts that were provided to many, many services of what happened.

So hopefully you guys are preparing better for what's going on because we are in less than three months into what is becoming very draconious in the aspects of happening of what we need to support and do for our economy. Unfortunately, that's my public comment.

Thank you Jeff, for your time. Seeing anyone else? Okay. We're going to move on and with that I just want to express my gratitude to all the Committee Members for today's engagement to the panelists and the stakeholders for today's engagement. Again as we tackle these issues from the Assembly angle.

Want to thank our Committee Members under the leadership of getting our Speaker Rivas and the work that's happening in the Assembly and with that we want to continue these conversations and we look forward to more of your time and future conversations. With that, you have a good day. We're adjourn 1137.