Issue Brief: Major State Programs That Can Support Regional Economic Development

Issue Brief: Major State Programs That Can Support Regional Economic Development August 2022 Executive Summary This Issue Brief provides a preliminary compilation of major state programs that can support inclusive regional economic development initiatives. Commission staff developed this compilation to provide a sense of the potential scope of California’s investment in regional development as the state begins implementation of the Community Economic Resilience Fund (CERF), a $600 million statewide initiative to support regional economic planning and the development of more equitable and sustainable regional economies. With the rollout of CERF, state and regional policymakers may benefit from awareness of the range of new and existing programs and funding streams that align with CERF’s goals around the creation of quality jobs and development of sustainable industries. In developing this compilation, Commission staff focused on identifying programs and investments with potential to support inclusive economic development in California’s inland and rural regions, which are generally less prosperous than coastal, metropolitan areas and have tended to benefit less from the state’s economic growth in recent decades. (See the note at the top of Appendix 1 for a more detailed description of the programs included in this analysis). In addition to the $600 million provided to CERF, the state has invested around $8.2 billion in one-time funding and about $1.2 billion in annual continuing funding in 2021-22 and 2022-23 towards various programs and investments that could help advance regional development strategies in inland and rural regions. This funding supports 61 programs and investments across 21 departments and agencies. It provides: ◊ $4 billion in one-time funding and $150 million in annual continuing funding to support 22 clean energy and climate-related programs. These programs help bolster forest health and wildfire resilience projects, green energy and technology, and grants for projects that reduce greenhouse gas emissions. ◊ $2.8 billion in one-time funding and $891 million in annual continuing funding for 23 training, workforce development, and career pathways programs. ◊ $974 million in one-time funding and $25 million in annual continuing funding to support 10 investments that support the construction and expansion of higher education centers, facilities, and campuses. ◊ $467.5 million in one-time funding and $180 million in annual continuing funding for six business development and incentive programs, which focus on providing financial, technical, or other business-related assistance to California businesses. Issue Brief: Major State Programs That Can Support Regional Economic Development August 2022 Introduction This Issue Brief is part of the Commission’s study on equitable regional economic development, which launched earlier this year and focuses on California’s efforts to close regional disparities and promote greater prosperity across the state. These efforts include the Community Economic Resilience Fund (CERF), a major state program to encourage inclusive regional economic planning and development. Lawmakers dedicated $600 million to the program when it was created in 2021—an unprecedented amount of money to support California’s regional economic agenda. However, it is likely that leaders and regional stakeholders will need to leverage additional funding streams and resources in order to have a transformational impact on regional economies in a state the size of California. State policymakers are in the process of allocating billions of dollars towards programs that could help boost regional economies and support inclusive and sustainable development across California. This Issue Brief aims to illustrate the breadth of programs and quantity of funding available that broadly align with CERF’s objectives. Given that the Commission’s wider study centers on closing regional disparities, this Brief focuses on programs and investments that support or have potential to support economic development in the inland and rural regions that have tended to benefit less from California’s vibrant economy over the past few decades than coastal metropolitan regions. State policymakers are in the process of allocating billions of dollars towards programs that could help boost regional economies and support inclusive and sustainable development across California. Community Economic Resilience Fund (CERF) In 2021, Governor Newsom signed SB 162, creating California’s first large-scale, statewide effort to encourage regional economic planning and development. The program—known as the Community Economic Resilience Fund (CERF)—aims “to build an equitable and sustainable economy across California’s diverse regions,” and “foster long-term economic resilience in the overall transition to a carbon-neutral economy.” In addition, CERF aims to employ a high road approach to economic development to “support the creation of quality jobs and equal access to those jobs.”1 High road refers to jobs that are family supporting, provide living wages and comprehensive benefits, and offer the opportunity for career advancement.2 CERF will provide funding to 13 regional partnerships (see Graphic 1) to develop regional plans for building more sustainable and resilient regional economies and implement strategic projects that help enact those plans. Program guidelines suggest priority industries include renewable energy, energy efficiency, zero-emission vehicles, agriculture, and forestry (See Appendix 3 for a full list). LITTLE HOOVER COMMISSION WWW.LHC.CA.GOV | 2 Issue Brief: Major State Programs That Can Support Regional Economic Development August 2022 Graphic 1: CERF Regions REDWOOD COAST NORTH STATE NORTHERN SAN SACRAMENTO JOAQUIN VALLEY BAY AREA EASTERN SIERRA CENTRAL SAN JOAQUIN VALLEY CENTRAL COAST KERN COUNTY INLAND EMPIRE LOS ANGELES COUNTY ORANGE COUNTY SOUTHERN BORDER Source: Governor’s Office of Planning and Research, Labor and Workforce Development Agency, and the Governor’s Office of Business and Economic Research. “Finalized CERF Regions and Responses to Frequently Asked Questions.” https://opr.ca.gov/economic-development/just-transition/docs/20211217-CERF_Final_Regions_FAQ.pdf. LITTLE HOOVER COMMISSION WWW.LHC.CA.GOV | 3 Issue Brief: Major State Programs That Can Support Regional Economic Development August 2022 CERF REGIONS WILL LIKELY NEED ADDITIONAL FUNDING TO MAKE A LONGSTANDING IMPACT ON THEIR REGION’S GROWTH TRAJECTORIES California’s $600 million allocation for CERF represents a substantial investment in the state’s regional economic agenda. However, when allocated among 13 regions, CERF funding is quite modest in relation to the program’s ambitious goals. For example, should CERF funding be divided among regions based on current population levels, the Inland Empire would probably receive around $58 million. The San Joaquin Valley regions3 would probably receive a combined $53 million. Spread over four years, this provides just $14.5 million and $13.3 million per year, respectively.4 When Allocated Among 13 Regions, CERF Funding is Quite Modest in Relation to the Program’s Goals Estimated CERF Regional Allocations Based on Current Population Levels ESTIMATED POPULATION- ESTIMATED ANNUAL CERF REGION POPULATION BASED INVESTMENT ALLOCATION Los Angeles County 10 million $128 million $32 million Bay Area 7.7 million $98 million $24.5 million Inland Empire 4.6 million $58 million $14.5 million Southern Border 3.5 million $45 million $11.3 million Orange County 3.1 million $40 million $10 million Sacramento 2.6 million $33 million $8.3 million Central Coast 2.3 million $30 million $7.5 million Central San Joaquin Valley 1.7 million $22 million $5.5 million Northern San Joaquin Valley 1.6 million $20 million $5 million North State 612,099 $8 million $2 million Kern County 892,458 $11 million $2.8 million Redwood Coast 315,179 $4 million $1 million Eastern Sierra 189,801 $2 million $0.5 million Total: 39.3 million $500 million $125 million Note: These estimates are based on the assumption that there will be about $500 million available for implementation efforts, after funding is allocated for planning grants ($65 million), Native American Tribes to support economic planning and implementation projects ($20 million), and programmatic overhead (up to $18 million). The state has not yet announced how CERF implementation funding will be allocated among regions. This chart estimates how much funding each region would receive if investments were divided based on each region’s current population. Source: California Department of Finance. “2016-2020 American Community Survey, 5-Year Estimates, U.S. Census Bureau, Total Population, Median Age, Race/Hispanic.” https://dof.ca.gov/reports/demographic-reports/american-community-survey/#ACS2020x5. These prospective CERF allocations are far smaller than the investment needs that some current regional development initiatives have identified. Fresno DRIVE, a regional development initiative focused on the Fresno area, developed an investment plan in 2019 that calls for more than $4 billion in regional investment by 2030 to achieve the initiative’s vision for inclusive economic development, including about $200 million each for workforce development, research and development, and small business support.5 Regions Rise Together: Salinas, meanwhile, developed an investment blueprint calling for $1.7 billion in investment in the Salinas Valley, which represents just one portion of the Central Coast CERF region.6 LITTLE HOOVER COMMISSION WWW.LHC.CA.GOV | 4 Issue Brief: Major State Programs That Can Support Regional Economic Development August 2022 Regional development initiatives in other states further illustrate the discrepancy between the funding available through CERF and the scale of investment that may be necessary to achieve meaningful change in regional economies. As part of its Upstate Revitalization initiative, the State of New York in 2015 allocated $500 million each to three regions for regional economic development efforts.7 New York thus allocated roughly the same amount of funding as CERF provides to the entire state of California to three individual regions, each of which is far smaller than California in terms of both population and size of the economy. By comparison, one of these regions receiving $500 million—Central New York—has a population about 50 times smaller than California’s. It is thus likely that regional partnerships will need to pull from other funding sources—such as federal or other state programs— to maximize the effectiveness of CERF dollars and have a longstanding impact on their region’s growth trajectories. Fortunately, the state is in the process of allocating billions of dollars towards 61 programs and investments across 21 departments and agencies that align with CERF’s goals and could advance regional development strategies. Major State Programs and Investments That Can Support Equitable Regional Economic Development Federal pandemic recovery dollars along with recent unprecedented budget surpluses have enabled state lawmakers to make significant investments in programs with the potential to support regional economic development. In addition to the $600 million provided to CERF, the state has invested around $8.2 billion in one-time funding and about $1.2 billion in annual continuing funding in 2021-22 and 2022-23 towards various programs and investments with the potential to support equitable regional development. These investments have primarily focused on one-time funding to support workforce training, clean energy transition, business investment, and support for innovation and entrepreneurship. The state also provided one-time funding boosts to programs receiving ongoing funding or enhanced the overall funding amount that continuing programs receive.* At the time of publication, the governor and Legislature are still finalizing programmatic budget allocations for one-time General Fund (GF) packages that support a multitude of programs that align with CERF priorities, including the Climate and Energy Package and Extreme Heat Packages. For the purposes of this Brief, we have included funding for these programs at the levels proposed in the governor’s budget or May Revision. Regions may also be able to utilize federal funds directed toward cities and counties to expand CERF’s influence. For example, the American Rescue Plan—signed in March 2021—allocated $16 billion to California local governments to support their response to and recovery from the coronavirus pandemic. Local governments have until the end of 2024 to obligate these funds, which must be spent by the end of 2026.8 Additionally, the Infrastructure Investment and Jobs * This Brief focuses on identifying programs that align with CERF’s programmatic goals around developing more sustainable, resilient, and equitable regional economies and supporting industries that will drive regional economic diversification and innovation. LITTLE HOOVER COMMISSION WWW.LHC.CA.GOV | 5 Issue Brief: Major State Programs That Can Support Regional Economic Development August 2022 Act—signed in November 2021—includes billions of dollars in competitive grant funding available to local governments across 25 different programs in areas including transportation, climate, energy, and cybersecurity.9 Furthermore, the recently signed CHIPS and Science Act as well as the Inflation Reduction Act offer the potential of significant investments in high-tech and clean energy research and manufacturing. PROGRAMS RECEIVING ONE-TIME FUNDING: In 2021-22 and 2022-23, the state allocated approximately $8.2 billion in one-time funding towards 55 programs that align with CERF’s goals and have the potential to support regional economic development projects. While this funding primarily provides one-time support for limited-term programs, it also provides one-time funding boosts for programs receiving continuing funding (See Appendix 2). Clean Energy and Climate-Related Programs Nearly half of this funding is going towards clean energy and climate-related programs— approximately $4 billion in one-time funding is directed towards 21 programs of this type. These programs support forest health and wildfire resilience projects, climate change research, and grants for projects that reduce greenhouse gas emissions. Large programs in this category include the Forest Health Program, which provides grants for projects that improve forest health and reduce greenhouse gas emissions, as well as grants for zero-emission vehicle manufacturing. Training, Workforce Development, and Career Pathways Programs Approximately one-third of identified one-time funding goes towards training, workforce development, and career pathways programs. The 18 identified programs supporting training and workforce development received $2.8 billion in one-time funding. Some of these programs seek to improve cross-system collaboration to bolster regional workforce strategies and goals. For instance, the Regional Equity and Recovery Partnerships program seeks to improve partnerships between local workforce development boards and regional community colleges by aiming to incorporate high road approaches to existing sector strategies and career pathway programs. Other programs focus on developing and providing workforce training services, such as the Well Capping Workforce Pilot program, which funds the development of a workforce training pilot program to train displaced oil and gas workers in remediating legacy oil infrastructure. Investments in Institutions of Higher Education The Commission also identified $974 million for 10 investments in institutions of higher education that have potential to support CERF initiatives in inland and rural regions. Accounting for around 12 percent of one-time funding, these investments support the construction and expansion of higher education centers, facilities, and campuses located in the state’s underserved and underinvested regions. Major investments include one-time funding to support Humboldt State University’s transition to a polytechnic university, as well as the expansion of San Diego State University’s Brawley Center in the Imperial Valley. LITTLE HOOVER COMMISSION WWW.LHC.CA.GOV | 6 Issue Brief: Major State Programs That Can Support Regional Economic Development August 2022 Business Development and Incentives Programs Finally, the state allocated $467.5 million in one-time funding towards six business development and incentive programs. This accounts for approximately six percent of the total one-time funding identified. These programs focus on providing financial, technical, or other business-related assistance to California businesses. For example, the state allocated $50 million towards the California Investment and Innovation Program, which provides grants to community development financial institutions (CDFIs) to provide technical assistance and capital access to economically disadvantaged communities in the state. Another program, the Inclusive Innovation Hub Program (iHub2)—which has received $22.5 million—provides grants to 13 “hubs” around the state that aim to nurture, develop, and provide seed funding to technology and science-based firms in underserved communities. Graphic 2: Breakdown of One-Time Funding Supporting CERF-Aligned Programs $4 BILLION $2.8 BILLION $974 MILLION $467.5 MILLION Clean Energy and Training, Workforce Investments in Business Development Climate-Related Development, and Institutions of and Incentives Programs Career Pathways Higher Education Major programs that received one-time funding include: Identified programs include both those that support efforts in a specific underserved region in California, as well as statewide programs that broadly align with CERF guidelines and that may provide support to inclusive development projects in inland or rural regions. Fresno-Merced Future of Food Innovation (F3) Initiative The Fresno-Merced Future of Food Innovation (F3) initiative aims to develop and scale research and development, commercialization, and innovation in the food and agricultural technology industry in the Central Valley to create jobs and bolster sustainable economic development. The 2021-22 budget provided $30 million in seed funding to support one of the initiative’s five inter- related projects, the Innovation Center for Research and Entrepreneurship in Ag-Food Technology and Engineering (iCreate). iCreate will provide a physical headquarters for the F3 initiative in downtown Fresno and improve alignment and engagement between the food production industry and academic researchers.10 LITTLE HOOVER COMMISSION WWW.LHC.CA.GOV | 7 Issue Brief: Major State Programs That Can Support Regional Economic Development August 2022 State Water Efficiency and Enhancement Program Administered by the California Department of Food and Agriculture, the State Water Efficiency and Enhancement Program (SWEEP) provides grants for the implementation of irrigation systems that reduce greenhouse gas emissions and reduce water use on California agricultural operations. As of May 2022, the Department has awarded $123 million in grants—with more than $70 million in matching funds—to 1,111 projects, covering over 168,000 acres.11 In 2021-22, the state allocated $100 million one-time General Fund (GF) for the program, to be split evenly between two years. The 2022-23 May Revision called for an additional $40 million one-time GF to support the program. Climate Innovation Grant Program Administered by the state’s Energy Commission, the Climate Innovation Grant Program will provide grants to California-based companies that conduct research activities focused on technologies that help the state achieve its climate goals. While the 2022-23 May Revision provides $1.05 billion for this program, to be spent over four years, exact allocations for this program have yet be finalized. Grant recipients would be required to provide a return to the state if they have an Initial Public Offering (in other words, the company “goes public”) or a change in ownership that results in a greater than 50 percent change in the company’s capitalization table. Companies that demonstrate their success through identified performance metrics can reduce the amount they return to the state.12 PROGRAMS RECEIVING CONTINUING FUNDING In 2021-22 and 2022-23, the state provided approximately $1.2 billion in annual continuing funding towards 10 programs that align with CERF’s goals and have the potential to support regional economic development (See Appendix 2). For the purposes of this Brief, we include programs that are term-limited but whose funding will extend through the CERF timeline and which have potential for renewal. As noted above, some programs received both one-time and continuing funding.** Training, Workforce Development, and Career Pathways Over two-thirds of annual continuing funding is helping to support six training, workforce development, and career pathways programs, amounting to $891 million annually. Approximately 83 percent of this funding is split between the Career Technical Education (CTE) Incentive Grant ($300 million), California Community College (CCC) Strong Workforce ($290 million), and K-12 Strong Workforce ($150 million) programs. All three of these programs seek to improve career education pathways. The CCC Strong Workforce Program does so through the creation of regional consortia that develop plans to address regional workforce needs and through funding for community college technical education programs. The K-12 Strong Workforce Program and CTE Incentive Grant Program provide competitive grants to local education agencies with the goal of supporting and strengthening career technical education for K-12 students. ** The percentages in this section refer to the amount of continuing funding these programs receive each year, as a portion of the $1.1 billion in identified continuing funding allocated to these programs annually. LITTLE HOOVER COMMISSION WWW.LHC.CA.GOV | 8 Issue Brief: Major State Programs That Can Support Regional Economic Development August 2022 Business Development and Incentives Over 14 percent of annual continuing funding is allocated for the California Competes (CalCompetes) Tax Credit. The credit provides $180 million annually and will continue through the end of the 2027-28 fiscal year, amounting to $1.4 billion total. Clean Energy and Climate Related Programs Approximately 12 percent of annual continuing funding is supporting two clean energy and climate-related programs, which are receiving $150 million annually. Most of this funding—$147 million—is going toward the Electric Program Investment Charge (EPIC) fund, which invests in clean energy technologies and approaches. Investments in Institutions of Higher Education Finally, two percent of annual continuing funding is helping to support Humboldt State University’s transition to a polytechnic university. This continuing funding—$25 million annually—will help the University add relevant academic programs, such as those centered on cybersecurity, wildfire management, and climate resilience. Graphic 3: Annual Continuing Funding Supporting CERF-Aligned Programs $891 MILLION $180 MILLION $150 MILLION $25 MILLION Training, Workforce Business Development Clean Energy and Investments in Development, and and Incentives Climate-Related Institutions of Career Pathways Programs Higher Education Major programs that received continuing funding include: California Community College Strong Workforce Program Created in 2016, the California Community College (CCC) Strong Workforce Program provides funding for regionally-aligned career education. The CCC Strong Workforce Program organizes neighboring community colleges into eight regional groups, which are responsible for collaborating with industry and local workforce development boards to address regional workforce needs. Regional groups must develop and annually update a Regional Plan, which LITTLE HOOVER COMMISSION WWW.LHC.CA.GOV | 9 Issue Brief: Major State Programs That Can Support Regional Economic Development August 2022 among other things, includes labor market data, measurable goals, as well as regionally and locally prioritized projects that close relevant labor market and employment gaps.13 The 2021-22 budget provided an increase of $42 million Prop 98 General Fund (GF), bringing the program’s total annual ongoing funding to $290 million. This program is separate from the K-12 Strong Workforce Program, which receives $150 million annually. California Competes Tax Credit The California Competes (CalCompetes) Tax Credit is a competitive income tax credit available to businesses that want to locate in California or stay and grow in the state and provide quality, full-time jobs. CalCompetes is open to businesses of any size and applicants are judged based on 12 factors, including the number of jobs created or retained; opportunity for future growth and expansion; and the extent of unemployment or poverty in the business area. Businesses may request a minimum credit of $20,000 and a maximum of no more than 20 percent ($60.9 million) of the total tax credit each fiscal year. Since the onset of the program in 2014, 1,169 businesses have been awarded tax credits committing to create 152,000 new, full time jobs in the state.14 In 2021, lawmakers directed a one-time $110 million GF boost to the program, on top of the $180 million that has been allocated for the credit since 2017-18. Additionally, the 2022-23 budget extends the tax credit beyond its original sunset date from 2022-23 to 2027-28. Electric Program Investment Charge (EPIC) Fund The Electric Investment Charge Program Fund was established in 2011 and invests in research to advance clean energy technologies and approaches.15 Since 2012, it has supported more than 430 projects with $1 billion in funding, including $182 million to advance safe and resilient energy systems, $133 million for industrial and agricultural innovation, and $68 million to support transportation electrification.16 The program is administered by the California Electricity Commission and was renewed by the state’s Public Utilities Commission in September 2020 for an additional 10 years, with an annual budget of $148 million for the first five years. Funding for the program comes from charges to electricity and natural gas users. LITTLE HOOVER COMMISSION WWW.LHC.CA.GOV | 10 Issue Brief: Major State Programs That Can Support Regional Economic Development August 2022 Appendix 1: Major Programs and Investments with the Potential to Support Equitable Regional Economic Development This Issue Brief highlights major programs that align with CERF’s goals and that could help advance regional economic development strategies. This Brief only includes funding that is directed towards specific programs and does not encompass all state dollars that may help support equitable economic development through expenditures on education, transportation, or infrastructure. ◊ It does not include general incentives, like California’s Research and Development tax credit (worth $3.1 billion in 2019), which have limited potential to be targeted toward regional priorities.17 ◊ It also does not include programs that support training in health care, education, or human services, sectors which may be sources of quality jobs but that are unlikely to drive regional economic growth, assist directly with the diversification of regional economies, or develop priority industries as identified in the CERF guidelines. ◊ Additionally, there is overlap between categories. For example, there are programs that provide financial incentives to businesses for reaching a climate change-related purposes. Because the program is climate-related staff opted to put the program in the climate category. Programs were placed in categories staff perceived to most align with the selected categories. ◊ Finally, the Brief only includes major programs, as defined by those that have received $15 million or more in funding. At the time of publication, the state is still finalizing individual budget allocations for one-time GF packages that support a multitude of programs that align with CERF priorities. For the purposes of this Brief, we have included the funding for these programs at the levels that they were proposed at in the governor’s budget or May Revision. This funding is italicized in the chart below. Program Agency Description Funding Regional Initiative for CalOSBA Provides financial and technical assistance to employ- $25 million one-time GF provided in the Social Enterprises ment social enterprises, which give on-the-job training 2022-23 budget. Program (CA Rise) and specialized supports to people who face high barri- ers to work. California Investment CPCFA Provides grants to community development financial $50 million one-time GF provided in the and Innovation Program institutions (CDFIs) to provide technical assistance and 2022-23 budget. capital access to economically disadvantaged communi- ties in the state. Social Entrepreneurs for CWDB Provides microgrants, entrepreneurial training, and tech- $20 million one-time GF provided in the Economic Development nical assistance to target populations to support them in 2021-22 budget. Grant awards were (SEED) starting or maintaining a small business that addresses a announced around Spring 2022 and social problem or community need. the anticipated grant term is June 2022 through May 2024. LITTLE HOOVER COMMISSION WWW.LHC.CA.GOV | 11 Issue Brief: Major State Programs That Can Support Regional Economic Development August 2022 California Competes Go-Biz Tax credit available to businesses that want to locate The 2021-22 budget increases the tax (CalCompetes) Tax in California or stay and grow in the state and provide credit by $110 million (from $180 million Credit quality, full-time jobs. to $290 million) for the 2021-22 fiscal year. The 2022-23 budget extends the tax credit program from 2023-24 through 2027-28 at the current level of $180 million per year (previously set to sunset in 2022-2023). California Competes Go-Biz Provides grants to eligible businesses that want to locate $120 million one-time GF provided in the (CalCompetes) Grant in California or to stay, grow, and create quality full-time 2021-22 budget. The application period Program jobs in the state. for 2021-22 FY funding was open in early 2022. The 2022-23 budget provides $120 mil- lion one-time GF for a second year of the grant program. Inclusive Innovation Hub Go-Biz Designates and awards 10 entities (and an additional $2.5 million one-time GF provided in Program (iHub2) three per the 2022-23 budget) to nurture, develop, and the 2021-22 budget to revive the iHub provide seed funding to technology and science-based program. firms in underserved communities. The 2022-23 budget provides an addi- tional $20 million GF, to be spent over four years. Forest Health Program Cal FIRE Provides grants for projects that improve forest health $159 million one-time GF/GGRF provided and reduce greenhouse gas emissions in forests across in the 2021-22 budget. the state. The 2022-23 governor’s budget proposed $240 million, split evenly between 2022-23 and 2023-24. Fire Prevention Grant Cal FIRE Provides funding for fire prevention projects and activi- $120 million one-time GF/GGRF provided Program ties in and near fire-threatened communities that focus in the 2021-22 budget. on increasing the protection of people, structures, and communities. The 2022-23 governor’s budget proposed $232 million GF/GGRF, split between 2022-23 ($115 million) and 2023-24 ($117 million). Urban Forestry Grant Cal FIRE Provides grants to local governments and nonprofits $20 million one-time GF/GGRF provided Program for projects that include the planting of trees or other in the 2021-22 budget. vegetation, improving long-term forest management, or better utilizing wood waste. The 2022-23 governor’s budget proposed $30 million, split between 2022-23 ($20 million) and 2023-24 ($10 million). Incentives for Alter- CARB Provide incentives to support farmers in the San Joaquin The 2021-22 budget provided $180 natives to Agricultural Valley in the transition from open burning to alternative million one-time GF, to be spent over Burning in the San practices for the disposal of agricultural biomass. three years. Joaquin Valley Healthy Soils Program CDFA Provides grants for the implementation of conservation The 2021-22 budget provided $160 management practices that improve soil health, seques- million one-time, split between 2021-22 ter carbon, and reduce greenhouse gas (GHG) emissions. ($75 million) and 2022-23 ($85 million). Funding is a mix of GF ($135) and GGRF ($25 million). State Water Efficiency CDFA Provides incentives for farmers to implement irrigation $100 million one-time GF provided in the and Enhancement systems that conserve water and reduce GHG emissions 2021-22 budget, split evenly between Program (SWEEP) from irrigation water pumping. 2021-22 and 2022-23. The 2022-23 May Revision proposed $40 million one-time GF. Farm to School CDFA Competitive grant program that awards projects that cul- The 2021-22 budget provides $60 million Incubator Grant tivate equity, nurture students, build climate resilience, one-time GF, split evenly between 2021- Program and create scalable and sustainable change. 22 and 2022-23. The 2022-23 budget provides an addi- tional $30 million one-time GF, and $3 million ongoing GF. Fresno-Merced Future CDFA Seed funding for developing a regional hub to stimulate $30 million in one-time GF provided in of Food Innovation (F3) innovation in sustainable agriculture production and the 2021-22 budget. Initiative processing. LITTLE HOOVER COMMISSION WWW.LHC.CA.GOV | 12 Issue Brief: Major State Programs That Can Support Regional Economic Development August 2022 Climate Innovation CEC Provides grants to California-based companies that $1.05 billion proposed in the 2022-23 May Grant Program conduct research activities focused on technologies that Revision to be spent over four years—$100 help the state achieve its climate goals. million in 2022-23, $325 million in each of 2023-24 and 2024-25, and $300 million in 2025-26. Zero-Emission Vehicle CEC Provides incentives and grants to eligible entities to de- The 2021-22 budget provided $250 mil- Package: Manufacturing velop advanced clean vehicle and fueling infrastructure lion one-time GF, evenly split between Grants technology. two years. Energy Package: Indus- CEC Provides funding to purchase and use commercial- $210 million one-time GF ($110 million in trial Decarbonization ly-available advanced technologies or develop new strat- 2022 23 and $100 million in 2023 24) pro- Grant Program egies to reduce emissions at industrial facilities. posed in the 2022-23 governor's budget. Energy Package: Long CEC Incentivizes demonstrations and early-stage deployment The 2022-23 budget provides $140 mil- Duration Storage of nearly-commercialized long-duration energy storage lion one-time GF. Projects projects. Carbon Removal CEC Provides matching funding to supplement grants for 2022-23 May Revision proposes $100 Innovation research, development, and demonstration of carbon million one-time GF, split evenly over two capture projects. years. Energy Package: Green CEC Provides funding to advance the use and production of $100 million one-time GF proposed in the Hydrogen Projects green hydrogen technology. 2022-23 governor's budget. Lithium Incentives CEC Provides incentives for projects that manufacture, The 2022-23 May Revision proposed $45 process, or recover lithium through a sales and use tax million one-time GF, available over three exclusion. years. Electric Program Invest- CEC Funds investment to advance clean energy technologies The program renewed in September ment Charge (EPIC) Fund and approaches. 2020 for an additional 10 years by the CPUC with an annual budget of $147 mil- lion for the first five years. The program is funded through charges to electricity and natural gas users. Low Carbon Economy CWDB Funds projects that seek to provide comprehensive, The 2022-23 budget provides $45 million Grant Program high-quality workforce development to priority popula- one-time GF, available over three years. tions and facilitate GHG emission reductions. Regional Forest and Fire DOC Provides block grants to regional and statewide entities $60 million one-time GF/GGRF provided Capacity Program to facilitate regional coordination for forest health and in the 2021-22 budget. wildfire resilience. The 2022-23 governor’s budget proposed $40 million GF/GGRF, split evenly between 2022-23 and 2023-24. Climate Catalyst iBank Lends money to public and private entities for climate-re- The 2021-22 budget provided $31 mil- Revolving Loan Fund lated projects. lion one-time GF in 2021-22 for forestry projects and $25 million one-time GF in 2022-23 for climate-related projects in the agriculture industry. The budget also made the revolving fund continuously appropriated and required iBank to adopt a financing plan. Transformative Climate OPR The Transformative Climate Communities (TCC) Program The 2021-22 budget provides $420 mil- Communities Program funds development and infrastructure projects that lion one-time GF over three years, $115 achieve major environmental, health, and economic ben- million in 2021-22, $165 million in 2022- efits in California’s most disadvantaged communities. 23, and $140 million in 2023-24. Integrated Climate Ad- OPR Grant program open to local, regional, and tribal govern- The 2021-22 budget provided $25 aptation and Resiliency ments to implement regional projects aligned with the million in one-time funding, split be- Program (ICARP) Plan- priorities of the Integrated Climate Adaptation and Resil- tween 2021-22 ($10 million), 2022-23 ning Grants iency Program (ICARP), which seeks to improve regional ($10 million) and 2023-24 ($5 million). climate resilience and reduce risks from climate impacts. Applications for the first round are due in Fall 2022. Regional Climate SGC Assists disadvantaged and low-income communities The 2021-22 budget provided $20 mil- Collaboratives Program in accessing funding for climate change mitigation and lion in one-time GF, split evenly between adaptation projects by creating regional collaboratives. 2021-22 and 2022-23. California Renewable CCC Supports the creation of the California Renewable Ener- $50 million one-time Prop 98 GF provid- Energy Center of Excel- gy Center of Excellence in the Kern Community College ed in the 2022-23 budget. lence District. Inland Empire Technical CCC Supports acquisition of land on part of the Riverside $33 million one-time Prop 98 GF provid- Trade Center Community College District for construction of a future ed in the 2022-23 budget. Inland Empire Technical Trade Center. Clovis Community Col- CCC Supports construction of a new Applied Technology $25 million one-time GF provided in the lege Applied Technology building at Clovis Community College to support studies 2021-22 budget. Building in environmental, health occupation, water and waste- water, food processing, and electro-mechanical technol- ogies. LITTLE HOOVER COMMISSION WWW.LHC.CA.GOV | 13 Issue Brief: Major State Programs That Can Support Regional Economic Development August 2022 Agri-food Technology CCC Supports the Agri-food Technology and Engineering $15 million one-time Prop 98 GF provid- and Engineering Work- Workforce Collaborative at Merced College. ed in the 2022-23 budget. force Collaborative Humboldt State CSU Supports Humboldt State University’s transition to be- The 2021-22 budget provided $433 University Polytechnic come a polytechnic university. million one-time GF to support Hum- Transition boldt State's transition to a polytechnic university, and $25 million ongoing GF to support the addition of academic programs, such as cybersecurity, wildfire management, and climate resilience. CSU Bakersfield Energy CSU Supports construction of the CSU Bakersfield Energy $83 million one-time GF provided in the Center Innovation Center. 2022-23 budget. Brawley Center, San CSU Expands the San Diego State University, Brawley Center $80 million one-time GF provided in the Diego State University in the Imperial Valley to support a local workforce pipe- 2022-23 budget. line. CSU University Farms CSU Supports equipment and facilities upgrades at the CSU $75 million one-time GF provided in the Upgrades University Farms. 2022-23 budget. UC Climate Initiatives UC Includes funding for seed and matching grants for The 2022-23 budget provides $100 climate-related research, regional climate technology million one-time GF for climate action incubators, and regional workforce and training hubs. research seed and matching grants, and grants for projects at UC Innovation and Entrepreneurship Centers to incentiv- ize and expand climate innovation and entrepreneurship. As well as $47 million one-time GF for cli- mate initiatives at UC Riverside and $18 million one-time GF for climate initiatives at UC Merced. UC Riverside Center of UC Funding supports the UC Riverside Center for Environ- $15 million one-time GF provided in the Environmental Research mental Research and Technology, a research center that 2021-22 budget. and Technology Facilities seeks to address environmental challenges in air quality, climate change, energy, and transportation. Workforce Training Cal FIRE Supports community colleges and vocational training $18 million one-time GF/GGRF provided programs to train, develop, and certify forestry profes- in the 2021-22 budget. sionals and expand the workforce. The 2022-23 governor’s budget proposed $30 million, split evenly between 2022-23 and 2023-24. California Apprentice- CCC Supports the creation of new apprenticeships and Increase of $15 million Prop 98 GF pro- ship Initiative pre-apprenticeships in high-growth industries. vided in the 2021-2022 budget for a total of $30 million ongoing. Strong Workforce CCC Provides funding to improve and implement regional- Increase of $42 million Prop 98 GF in Program ly-aligned community college career technical education the 2021-22 budget for a total of $290 programs. million in ongoing funding. K-12 Strong Workforce CCC Provides grant funding to K-12 local education agencies This program receives $150 million Program (such as school boards) to create, support, or expand ongoing Prop 98 GF for grants. regionally-aligned career technical education programs. California Career Techni- CDE Competitive grant program open to local education Increase of $150 million ongoing Prop 98 cal Education Incentive agencies that seek to provide K-12 students with the GF provided in the 2021-22 budget for a Grant Program knowledge and skills needed to transition to employ- total of $300 million ongoing Prop 98 GF. ment and postsecondary education. California Partnership CDE A three-year program for students in grades 10-12 that This program receives $21 million ongo- Academies incorporates academic and career technical education, ing Prop 98 GF. partnerships with employers, internships, and mentor programs. Learning-Aligned CSAC Offers eligible students opportunities to earn money $500 million one-time GF provided in the Employment Program for their education costs while obtaining career-related 2021-22 budget, split between 2021-22 experienced in their area of study. ($200 million) and 2022-23 ($300 mil- lion). Supporting campuses will imple- ment the funds in the 2022-23 academic year. The 2022-23 budget provides an in- crease of $300 million one-time GF. LITTLE HOOVER COMMISSION WWW.LHC.CA.GOV | 14 Issue Brief: Major State Programs That Can Support Regional Economic Development August 2022 Golden State Education CSAC Supports Californians who lost their jobs due to the The 2021-22 budget provided $500 and Training Grant pandemic with a grant for reskilling, up-skilling, and million ($472.5 million in one-time ARP Program accessing educational programs. funds and $27.5 million one-time GF). Full implementation is planned for late 2022. High Road Training CWDB Expands the High Road Training Partnership Program, The 2021-22 budget provided $100 mil- Partnership Program which provides funding for training programs to build lion one-time GF. Applications are open Expansion career pathways in a variety of fields, into new sectors. on a quarterly basis. California Youth Lead- CWDB Supports youth community pathway programs at select The 2022-23 budget provides $60 mil- ership Corps Earn-and- community colleges across California. lion one-time GF ($20 million annually Learn Pathways through 2024-25). Collaboration with Com- CWDB Builds new partnerships between the Workforce Devel- $60 million one-time GF provided in the munity Colleges opment Board and community colleges. Includes funding 2021-22 budget. for data improvements, High Road Training Partnerships aligned with community college curricula, and equity partnerships between local boards and community colleges. Regional Equity and CWDB Competitive grant program that bolsters partnerships $25 one-time GF provided in the 2021-22 Recovery Partnerships between local workforce development boards and com- budget. Grant awards were announced Grant (RERP Grant) munity college regional consortia aiming to incorporate in June 2022 and the estimated grant "high road" approaches to existing sector strategies and term is from December 2022 through career pathway programs. September 2025. The budget also includes $10 million Prop 98 GF for the state's community colleges to participate in these efforts. Breaking Barriers to CWDB Provides individuals with barriers to employment the $30 million one-time GF provided in the Employment services they need to enter, participate in, and complete 2021-22 budget. Applications are due in workforce programs aligned with regional labor market September 2022, awards are announced needs. in October 2022, and the grant term lasts from January 2023 to April 2024. Prison to Employment CWDB Supports regional and local planning and implementa- $20 million one-time GF provided in the tion efforts to integrate re-entry, workforce, and direct 2021-22 budget. Applications for funding services to formerly incarcerated and justice-involved are due in August 2022, and the estimat- individuals. ed grant term is from January 2023 to December 2025. Well-Capping Workforce CWDB Funds development of a workforce training pilot pro- The 2022-23 budget provides $20 million Pilot for Displaced Oil gram to train displaced oil and gas workers in remediat- one-time GF. and Gas Workers ing legacy oil infrastructure. Extreme Heat Workforce CWDB Expands high road training partnerships in industry sec- The 2022-23 May Revision proposes $17 tors that align with the state's response to extreme heat. million one-time GF split between 2022-23 ($13 million) and 2023-24 ($4 million). Regional K-16 Education DGS Competitive grant program designed to support regional $250 million one-time GF provided in the Collaboratives K-16 collaboratives that create streamlined pathways 2021-22 budget. The K-16 Program uses from high school to postsecondary education to in-de- a two-phase approach. Phase one grants mand jobs. were awarded in Spring 2022. Phase two planning grant applications are due in Fall 2022 and implementation grant applications are due in Fall 2023. California Youth Appren- DIR Supports the expansion of apprenticeship and pre-ap- The 2022-23 budget provides $65 million ticeship Program prenticeship opportunities for 16- to 24-year-olds who one-time GF ($20 million in 2022-23 and are unhoused, in the welfare or juvenile justice systems, 2023-24, and $25 million in 2024-25). or otherwise facing barriers to labor market participa- tion. Employment Training EDD Provides training grants to businesses in support of The program is typically funded by a 0.1 Panel workforce training for new and existing employees. percent statewide payroll tax (funding about $100 million in programs annu- ally). Additionally, the 2021-22 budget provided $65 million one-time GF, $15 million of which is directed toward train- ing programs that align with community college workforce training programs. Apprenticeship Innova- LWDA Invests in and expands non-traditional apprenticeships. The 2022-23 budget provides $175 tion Funding Program million one-time GF, split between three years ($55 million in 2022-23, and $60 million in 2023-24 and 2024-25). LITTLE HOOVER COMMISSION WWW.LHC.CA.GOV | 15 Issue Brief: Major State Programs That Can Support Regional Economic Development August 2022 Californians for All Col- OPR Provides paid service opportunities for college students The 2021-22 budget provided $146.3 lege Service Program to address statewide challenges. million in one-time funding ($18.8 GF and $127.5 ARP). Implementation for 2021-22 budget funding is split into two cohorts, the first is from August 2022 to July 2023 and the second is from August 2023 to June 2024. The 2022-23 budget provides $146.2 million one-time GF ($73.1 million each in 2024-25 and 2025-26). California Volunteers: OPR Provides funds to administer grants to cities and coun- $200 one-time ARP funds provided in Youth Workforce Devel- ties to develop or expand youth job opportunities. Pro- the 2021-22 budget. Funding applica- opment grams that focus on climate, food insecurity, and local tions were due and approved in early pandemic recovery will receive preferential scoring. 2022. All funds must be obligated by June 2024. California Volunteers: OPR Provides job training and employment services as well as $25 million one-time GF provided in the Summer Youth Jobs job opportunities for youth in areas including COVID-19 2022-23 budget to continue the Jobs Programs recovery, food insecurity, and climate action. Corps program. Business Development Clean Energy and Climate- Investments in Institutions Training, Workforce and Incentives Related Programs of Higher Education Development, and Career Pathways CALIFORNIA STATE AGENCY AND DEPARTMENT STATE FUND ABBREVIATIONS ABBREVIATIONS ◊ GF = General Fund ◊ Cal Fire = Department of Fire and Forestry ◊ GGRF = Greenhouse Gas Reduction Fund ◊ CCC = California Community Colleges ◊ ARP = American Rescue Plan ◊ CalOSBA = California Office of the Small Business Advocate ◊ CARB = California Air Resources Board ◊ CDE = California Department of Education ◊ CDFA = California Department of Food and Agriculture ◊ CEC = California Energy Commission ◊ CPCFA = California Pollution Control Financing Authority ◊ CSAC = California Student Aid Commission ◊ CSU = California State University ◊ CWDB = California Workforce Development Board ◊ DGS = Department of General Services ◊ DIR = Department of Industrial Relations ◊ DOC = Department of Conservation ◊ EDD = Employment Development Department ◊ Go-Biz = Governor’s Office of Business and Economic Development ◊ iBank = California Infrastructure and Economic Development Bank ◊ LWDA = Labor and Workforce Development Agency ◊ OPR = Governor’s Office of Planning and Research ◊ SGC = Strategic Growth Council ◊ UC = University of California LITTLE HOOVER COMMISSION WWW.LHC.CA.GOV | 16 Issue Brief: Major State Programs That Can Support Regional Economic Development August 2022 Appendix 2: Funding by Program Categories Commission staff identified 61 programs that can support inclusive regional economic development initiatives. Fifty-one of these programs received just one-time funding and six received just continuing funding. Four programs received both one-time and continuing funding. Number of Number of Number of Percent Programs Percent Programs Total Programs Total of Total Receiving BOTH of Total Category Receiving One-Time Receiving JUST Continuing One-Time One-Time and Continuing JUST One- Funding: Continuing Funding: Funding Continuing Funding Time Funding Funding Funding Business Development 5 $467.5 Million 6% 1 0 $180 Million 14% and Incentives Clean Energy and Climate-Related 20 $4 Billion 49% 1 1 $150 Million 12% Programs Training, Work- force Develop- 17 $2.8 Billion 34% 1 5 $891 Million 72% ment, and Career Pathways Investments in Institutions of 9 $974 Million 12% 1 0 $25 Million 2% Higher Education Total: 51 $8.2 Billion 100% 4 6 $1.2 Billion 100% LITTLE HOOVER COMMISSION WWW.LHC.CA.GOV | 17 Issue Brief: Major State Programs That Can Support Regional Economic Development August 2022 Appendix 3: The Community Economic Resilience Fund The Community Economic Resilience Fund (CERF) has a two-phase structure. In the first phase, regions will receive funding to support the creation of tailored plans to promote economic development and transition. During the second phase, regions will implement specific projects that advance those plans. During the planning phase, 13 regional collaboratives—comprised of community groups, labor, industry, business leaders, and others—will work to develop tailored regional economic recovery and transition roadmaps. Each CERF region will receive a grant of up to $5 million to support its planning efforts. As part of the planning process, collaboratives will identify two to five strategic investments or projects that will help execute their plans. During the second phase of the program, collaboratives will work to implement their plans through the strategic investments and projects identified in the planning phase using a total of $500 million in state funds. Funds will be available through rolling, competitive grants from Fall 2022 to the end of 2026.18 Although specific guidelines for the implementation phase have yet to be released, proposed projects will be expected to meet the following general criteria:19 ◊ Demonstrate community support, such as through support letters from a variety of stakeholders. ◊ Align with California’s climate goals, including through the reduction of greenhouse gas emissions or energy/water usage. ◊ Support labor standards and job quality, such as by creating jobs that bring sustainable income or that define a plan to recruit, train, and support workers from disinvested communities. ◊ Further a larger regional economic strategy, including through their capacity to align with market trends or to support economic diversification strategies. Examples of potential implementation projects include those that provide technical assistance to small businesses or that support the development of sustainable and resilient industries. CERF guidelines suggest priority industries include: renewable energy, energy efficiency, carbon removal, zero-emission vehicles, advanced manufacturing, agriculture, forestry, artificial intelligence, and climate restoration.20 LITTLE HOOVER COMMISSION WWW.LHC.CA.GOV | 18 Issue Brief: Major State Programs That Can Support Regional Economic Development August 2022 13. California Education Code § 88820 -88833 (2018). https:// Notes leginfo.legislature.ca.gov/faces/codes_displayText. 14. Governor’s Office of Business and Economic Development 1. Governor’s Office of Planning and Research. “What is the (Go-Biz). “California Competes.” https://business.ca.gov/ Community Economic Resilience Fund.” https://opr.ca.gov/ california-competes-tax-credit/. economic-development/just-transition/cerf.html. 15. California Energy Commission. “Electric Program Investment 2. Inclusive Economies. “High-Road Workforce Guide for City Charge Program – EPIC.” https://www.energy.ca.gov/ Climate Action.” April 2021. https://www.usdn.org/uploads/ programs-and-topics/programs/electric-program-investment- cms/documents/workforce-guide_4.12.21_form.pdf. charge-epic-program. 3. Including Northern San Joaquin Valley, Central San Joaquin 16. California Energy Commission. “California’s Clean Energy Valley, and Kern County. Research Program Funds $1 Billion of Innovative Projects, 4. The state has not yet announced how CERF implementation Attracts $7.8 Billion in Private Investment.” May 19, 2022. funding will be allocated among regions. https://www.energy.ca.gov/news/2022-05/californias-clean- energy-research-program-funds-1-billion-innovative-projects. 5. Fresno DRIVE. “Greater Fresno Region 10-Year Investment Plan” October 31, 2019. p. 17. https://www.fresnodrive.org/_ 17. California Legislative Analyst’s Office. “The 2022-23 Budget files/ugd/69d6c8_96962f42d00c4bbe8482ef2a7bb17f80.pdf. Temporary Limits on Business Tax Provisions.” January 26, 2022. https://lao.ca.gov/Publications/Report/4500. 6. Monterey Bay Economic Partnership, California Forward, and Sankofa Consulting. “Regions Rise Together: Salinas 18. Office of Planning and Research, Labor and Workforce Investment Plan Blueprint 2021.” https://mbep.biz/wp-content/ Development Agency, and Governor’s Office of Business and uploads/2021/12/RRT-Salinas-Investment-Plan-Blueprint-2021. Economic Development. “Community Economic Resilience pdf. Fund (CERF).” https://opr.ca.gov/economic-development/just- transition/docs/20220325-CERF%20Fact%20Sheet.pdf. 7. New York State Government. “The Upstate Revitalization Initiative.” https://esd.ny.gov/about-us/signature-projects/ 19. Governor’s Office of Planning and Research, Labor and upstate-revitalization-initiative. And, Office of the New York Workforce Development Agency, and Governor’s Office of State Comptroller. “Special Report: Central New York Region Business and Economic Development. “Community and Economic Profile.” https://www.osc.state.ny.us/files/local- Economic Resilience Fund (CERF) Planning Phase Draft government/publications/pdf/centralnyregion.pdf. Document.” Pages 22-23. https://opr.ca.gov/economic- development/just-transition/docs/20220419-CERF_Planning_ 8. U.S. Department of the Treasury. “Coronavirus State and Local Phase_Draft_Guidelines_Public_Input.pdf. Fiscal Recovery Funds: Overview of the Final Rule.” January 2022. https://home.treasury.gov/system/files/136/SLFRF-Final- 20. Office of Planning and Research, Labor and Workforce Rule-Overview.pdf. Development Agency, and Governor’s Office of Business and Economic Development. “Community Economic Resilience 9. WhiteHouse.gov. “Fact Sheet: Competitive Infrastructure Fund (CERF) Planning Phase Draft Guidelines.” Page 21. Funding Opportunities for Local Governments.” https://www. https://opr.ca.gov/economic-development/just-transition/ whitehouse.gov/wp-content/uploads/2022/01/BIL-Factsheet- docs/20220419-CERF_Planning_Phase_Draft_Guidelines_ Local-Competitive-Funding.pdf. Public_Input.pdf. 10. Central Valley Community Foundation. “Facilitation Services in Support of the Fresno-Merced Future of Food Innovation Corridor: Request for Proposals.” Issue February 5, 2021. https://www.centralvalleycf.org/wp-content/uploads/2021/02/ Fresno-Merced-Future-of-Food-RFP_Final.pdf. 11. California Department of Food and Agriculture. “CDFA State Water Efficiency & Enhancement Program.” https://www.cdfa. ca.gov/oefi/sweep/docs/SWEEP_flyer_2022.pdf. 12. Governor’s Gavin Newsom. “May Revision 2022-23.” Page 65. https://www.ebudget.ca.gov/2022-23/pdf/Revised/ BudgetSummary/FullBudgetSummary.pdf. Issue Brief: Major State Programs That Can Support Regional Economic Development August 2022 (916) 445-2125 | LittleHoover@lhc.ca.gov 925 L Street, Suite 805, Sacramento, CA 95814 LITTLE HOOVER COMMISSION WWW.LHC.CA.GOV | 19