"Innovation, Investment, Collaboration"
A Statewide Action Agenda for Economic Vitality from California's Regional Leaders

Dear Friend of CCRL:

I am pleased to tell you about our new report, "Innovation, Investment, Collaboration," and about our March 3 public briefing of Governor Schwarzenegger’s Cabinet.  At that event, regional economic leaders from across the state presented the Secretaries and senior staff from ten Cabinet agencies with a recommendation for a comprehensive state economic policy that can help California’s regional economies to grow in years to come -- in what is a fiercely competitive global marketplace.  We call this policy the "Complete Business Climate" approach.

Some have doubted that state government can make an important contribution to the success of our private sector businesses and workforce.  The way I see it, they are flat out wrong.  Government is with us, whether you like it or not (I do)…but we must ensure that all agencies of state government make decisions that positively support the economy.  Others have suggested that we just reduce the cost of government (fees, taxes, regulations).  They are half-right…e.g., runaway workers’ compensation costs are very harmful to businesses, especially small and medium-sized businesses.  On the other hand, streamlining government may answer the wrong question — we don’t need more or less government, but smarter government — whose productivity and entrepreneurism rivals that of our best “gazelle” private companies.  We also need state tax and fee policies that distribute the cost of government fairly and yet provide adequate revenues to pay for the things that the people want and that our businesses need.

Meeting these needs is what our report calls "Invest to Compete."  We cannot sustain a world class economy if we don’t have world class K-12 and higher education; if we don’t marry our public R&D talent to private enterprise, through creative “innovation partnerships;” if we don’t have enough housing, for families at all income levels, to house a workforce that might otherwise leave us for places with a lower cost-of-living; if we don’t significantly improve our rail, port and road systems and thereby increase the mobility of our people and goods; if we don’t find creative ways to ensure health care coverage at a cost affordable to families and business; and if we don’t sustain a high quality of life, now and in the future, for all Californians.  This is the ultimate test of whether or not state government works — and whether our economy succeeds.

Nick Bollman, President
California Center for Regional Leadership

We are grateful for the leadership on this project provided by the Secretary of Business, Transportation and Housing Sunne Wright McPeak and Secretary of Labor and Workforce Development Victoria Bradshaw and for the support given the project by their splendid staff members.  We are grateful for the partnership in this project provided by two dozen regional economic organizations that co-sponsored the Regional Conversations.  We are also grateful to the Pacific Gas and Electric Company and Bank of America for their generous philanthropic support of the project.  Finally, I am personally deeply grateful for the excellent work on this project by CCRL staff and consultants: Sarah Henry, Trish Kelly, Seth Miller, Nooshin Navidi, Kala Venugopal, and Wallace Walrod. 

The Complete Business Climate

I. The Regional Economic Vitality Project—a Dozen Regional Conversations

At the beginning of his term Governor Arnold Schwarzenegger asked the members of his Cabinet -- led by Business, Transportation and Housing Secretary Sunne Wight McPeak -- to seek out the best advice from business, local government and community leaders about how state government can support the long-term competitiveness of the California economy. To gather these ideas the Cabinet members participated in a series of statewide Economic Vitality Conversations. In addition, however, and because California has very diverse regional economies, the Cabinet asked the California Center for Regional Leadership to work with a wide array of regional economic leadership organizations to sponsor a series of Regional Economic Vitality Conversations. Cabinet members personally attended and facilitated these Conversations, to ensure broad outreach for new ideas and to enable them to hear directly about the particular needs and different interests of California’s economic regions.  A dozen such dialogues were held across the state from March through November 2004.  They were attended by hundreds of leaders from the business community; economic development, education, and workforce organizations; local governments and community grassroots organizations.  A report lifting up both region-specific and statewide recommendations heard at these Conversations was published after each of the dozen Economic Vitality Conversations.  These reports, along with Conversation minutes and materials, can be found at: www.calregions.org/statepolicy/EVC_materials.html.

II. Economic Vitality Policy Ideas--From the Regions to Sacramento

On March 3 CCRL convened in Sacramento a "Report-Back from the Regions," during which leaders from CCRL’s Regional Collaborative partners and other sponsors of the regional Economic Vitality Conversations met with members of the Governor’s Cabinet to review the Innovation, Investment, Collaboration report and discuss follow-up strategies and activities.  Secretaries and Undersecretaries from ten different Cabinet agencies participated in the discussion.  For a complete list of meeting participants, please visit www.calregions.org/statepolicy/EVC_materials.html.  On behalf of the Governor, Cabinet Secretary Terry Tamminen praised the report and the outreach process and asked CCRL and our regional partners to work with the Cabinet leaders to further refine top priority recommendations;develop concrete implementation strategies, and establish benchmarks for progress going forward.  He asked that progress on these recommendations be regularly reviewed at Cabinet meetings in the future. For a digest of the March 3 Cabinet briefing and discussion, please visit www.calregions.org/statepolicy/EVC_materials.html.

III. Next Steps, #1: Innovation Partners in the Executive Branch

Among the main agents in state government that can elaborate and implement the comprehensive economic policy are:

California Economic Strategy Panel: The Panel is a statutory public-private partnership created to advise the Governor and Legislature on long-term economic strategy.  With the completion of a group of recent gubernatorial appointments, the Panel is being activated at just the right moment in time to advance a state economic strategy.  For more information, please visit www.labor.ca.gov/panel/.

California Regional Economies Project: This innovative partnership produces real-time economic data and links it to emerging industries and job and career opportunities.   Analyses of regional industry clusters of opportunity and competitiveness recommendations have been prepared, and the next phase will provide capacity building for use of the analytic tools. For more information, please visit www.labor.ca.gov/panel/espcrep05proj.htm.

California Workforce Investment Board: This public-private body oversees the state’s workforce investment system and advises the Governor on workforce policy.  For more information, please visit www.calwia.org.

IV. Next Steps, #2: the Legislative Branch

Though this project was conceived and carried out on behalf of the Executive Branch of government, we and our regional partners are very mindful of the shared responsibility between the Executive and Legislative branches for economic strategy and supporting successful regional economies.  This shared responsibility is of course represented in the consideration of the economic consequences of every piece of legislation that is sent by the Legislature to the Governor for signature, but it is also imbedded in the Legislature’s oversight responsibility with respect to the performance of state agencies and budget decisions made about the uses of state and federal funds.  More specifically, for example, the shared responsibility is embodied in the California Economic Strategy Panel (see above).  In addition, we recently presented on economic policy – the role of government in supporting the foundations for a strong economy - to Senator Liz Figueroa’s Committee on Government Modernization, Efficiency and Accountability, and we will work closely with Assemblymember Juan Arambula’s Committee on Jobs, Economic Development and the Economy, and with the staff and members of both houses and both parties, to advance state economic policy.

V. Next Steps, #3: the Economic Leadership Network. One of the central recommendations of the regional economic leaders is to establish a communications and action network between and among state government and the regions, what we call an Economic Leadership Network.  Not a new entity, but a permanent new way of working together, the ELN will build upon the existing working relationship between the regions and the state – on a project basis – and make it an on-going, structured partnership.  We will involve a wide array of interested organizations in the development of the ELN, and welcome suggestions from all those who care about the future of California’s regional economies.