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AJR 30 (Gipson) — Assembly Committee on Jobs, Economic Development, and the Economy (June 21, 2022)

Summary

This is an Assembly Committee on Jobs, Economic Development, and the Economy analysis of AJR 30 (Gipson), as introduced April 21, 2022, for a hearing on June 21, 2022 before Chair Sabrina Cervantes. The joint resolution asks Congress and the US President to provide a fair allocation of federal transportation funding for freight projects in California and on the US Pacific Coast, based on the volume of containerized freight moved. Its findings say Pacific Coast ports received less than 10 percent of federal port-specific funding over the past decade. The analysis reviews the federal Infrastructure Investment and Jobs Act and lists the fiscal effect as none. It says there is no known opposition.

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Cite this document

“AJR 30 (Gipson) — Assembly Committee on Jobs, Economic Development, and the Economy (June 21, 2022).” Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2022-06-21-ajr-30-jede-analysis-b764ef3a4d/, SHA-256 ae8be07b65a551cc244451b97cde64d35a34c50d6a9233e92406cd79d3860586.

Full text

                                                                                                      AJR 30
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Date of Hearing: June 21, 2022

    ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT, AND THE ECONOMY
                             Sabrina Cervantes, Chair
                   AJR 30 (Gipson) – As Introduced April 21, 2022

SUBJECT: Freight transportation: federal funding

POLICY FRAME: California’s 11 major commercial seaports move more than 40% of the containerized
cargo entering the US, representing nearly 30% of all US exports. This cargo is responsible for more than
1 million California jobs and 3 million jobs nationally. Collectively, the California seaports are the most
consequential system of ports in the nation.

Seaports are, however, only one component of the state’s freight system. The production and delivery of
products is a multifaceted and highly integrated logistical network of specialized supply chains
comprising businesses, skilled workers, and transportation facilities and infrastructure.

California’s simultaneous expansion out of the COVID-19-induced recession and transition to a zero-
emission economy has led to increased port congestion and supply chain disruptions. Long-standing
imbalance in federal transportation funding, especially regarding seaports, limits the ability to meet its
economic, workforce, and environmental goals.

AJR 30 calls on the federal government to reverse its prior unfair practices and begin to deploy federal
freight funding under an allocation framework that reflects California and the West Coast’s significant
container volume and contribution to the overall US economy.

The analysis includes information on California and the Federal Infrastructure Package, the state’s trade-
based economy, and state and federal actions to address the most recent supply chain disruptions. There
is no known opposition to this bill.

SUMMARY: Memorializes the California Legislature’s request to the US Congress to pass and the US
President to sign legislation into law providing for a fair allocation of federal transportation funding for
freight projects in California, specifically, and on the US Pacific Coast, generally, based on the volume of
containerized freight moved. It further calls on the US Department of Transportation and all federal
agencies implementing any federal funding statute or regulation for ports or multimodal freight
transportation to provide a fair allocation to California and the US Pacific Coast, as specified.
Specifically, this bill:

1) Makes legislative findings and declarations:
   a) The national supply chain, national economy, and international standing of the US benefit from
      and depend on the airport, land port of entry, and seaport infrastructure developed to facilitate
      interstate and international trade by California, its local governments, and its residents.
   b) While there are many important benefits from facilitating international trade, and California
      recognizes the need to continue to invest in its trade and freight infrastructure, the appropriate
      development of California’s trade and freight infrastructure is impeded due to the lack of federal
      funding and federal funding not being allocated fairly to California and the Pacific Coast of the
      US.
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c) A lack of significant federal investment in interstate and international trade infrastructure in
   California has significant disproportionate costs, most notably the additional impacts of traffic
   congestion on California’s local roads, highways, and railways and the emissions from heavy-duty
   equipment, trains, trucks, and ships on air quality and public health.
d) Additional costs include the imposition of heavy local and state revenue bonding, public
   financing, and unfair private sector costs in California, which are burdens associated with building
   and maintaining the transportation infrastructure necessary to grow and facilitate interstate and
   international trade, costs that are not borne to the same degree in other states competing for the
   same international and interstate trade as California.
e) California’s 11 public seaports, whose numbers include the busiest container ports in the nation,
   facilitate interstate and international trade in the national interest, are locally financed entities that
   do not receive regular federal assistance or benefit from a fair percentage of the customs revenue
   generated in the state or a fair share of the percentage from the federal Harbor Maintenance Tax.
f) Even as total federal spending on seaports has increased over the past decade, ports on the Pacific
   Coast of the US, including California’s public seaports, have lagged behind ports on the East and
   Gulf Coasts of the US in receipt of federal funding by an overwhelming and unfair ratio.
g) The Port of Long Beach alone, for example, handles approximately 36 percent of all US loaded
   imported container traffic.
h) Ports on the Pacific Coast of the US, including ports in California, Oregon, Washington, Alaska,
   and Hawaii, have received less than 10 percent of federal port-specific funding over the past
   decade.
i) Ports on the Pacific Coast of the US have received approximately $1,200,000,000 out of over
   $12,000,000,000 in federal port-specific funding over the past decade compared to ports on the
   Atlantic Coast of the US, which have received $7,500,000,000, ports on the Gulf Coast of the US,
   which have received $3,300,000,000, and ports on the Great Lakes of the US, which have received
   $235,000,000, in federal port-specific funding over the same period.
j) California’s taxpayers have generated billions of dollars in taxpayer funds to improve the
   international goods movement infrastructure and reduce air pollution from international goods
   movement in the state above federal levels of support for the same infrastructure and
   environmental improvements.
k) The significant costs, both direct and indirect, of facilitating interstate and international trade
   should not rest primarily with California, its local governments, or its citizens.
l) The primary responsibility for facilitating interstate and international trade and mitigating the
   costly impacts of interstate and international trade rests with the federal government.
m) On November 15, 2021, the US Congress passed, and the US President signed into law, the
   federal Infrastructure Investment and Jobs Act (Public Law 117-58).
n) The federal Infrastructure Investment and Jobs Act includes over $5 billion in port-specific
   funding programs, including approximately $1.5 billion for the US Army Corps of Engineers’
   coastal navigation construction, approximately $1.2 billion for US Army Corps of Engineers’
   operations and maintenance dredging, $2.2 billion for a port infrastructure development program,
   $25 million for marine highways, and $250 million for reducing emissions from trucks at ports, in
   addition to the creation of a new port electrification grant program.
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   o) The federal Infrastructure Investment and Jobs Act includes an additional $27 billion in
      infrastructure assistance funding for eligible port projects.
   p) The federal Infrastructure Investment and Jobs Act includes a surface transportation
      reauthorization with increased infrastructure grants with port eligibility and multimodal caps for
      eligible programs.
   q) California ports are entitled to a fair share of the newly authorized and funded federal programs
      under the federal Infrastructure Investment and Jobs Act.
   r) California is experiencing the effects of an unprecedented global supply chain crisis, with
      disruptions to goods movement caused and exacerbated by the COVID-19 pandemic and surges in
      product demand, which outstrip equipment supply and availability.
   s) The impacts of the global supply chain crisis are increasing costs and threatening access of
      California exporters to foreign markets, which in turn threatens the sustainable economic growth
      of California.
   t) It is in the nation’s best interests to encourage the development and growth of California-
      originated export cargoes, improve access to foreign markets for California’s exported goods by
      reducing the real costs of freight transportation, and create and support jobs provided by
      California’s employers who can grow their export businesses or maintain their export markets.
   u) California’s exporters and the international trade they facilitate are critical components of
      California and the national economy, directly or indirectly employing millions of Californians,
      contributing billions of dollars in economic activity, and generating significant local and state tax
      revenues as a result of this activity.
   v) The development, improvement, expansion, and maintenance of California’s exports cargoes from
      farming, distribution, manufacturing, fabrication, assembly, processing, and warehousing sites in
      the state are essential to the growth of the state’s economic well-being and the ability of those
      businesses and workers associated with trade-related industries to continue to compete cost-
      effectively on a regional, national, and global scale.
   w) The global pandemic has demonstrated that access to the global supply chain in times of excessive
      demand can be limited by extenuating factors beyond the control of Californians and that the
      impacts of a lack of access to equipment, vessels, and foreign markets on the California exporter
      and the California export economy can be significant.
   x) It is in the federal interest to assist California exporters in weathering increased costs of access to
      foreign markets.

2) Declares that the California Legislature respectfully requests the US Congress to pass legislation and
   the US President to sign into law a statute providing, and US Department of Transportation and all
   federal agencies implementing any federal funding statute or regulation for ports or multimodal
   freight transportation to provide, a fair allocation of federal transportation funding for freight projects
   in California, specifically, and on the US Pacific Coast, generally, based on the volume of
   containerized freight moved.

3) Requires the Chief Clerk of the Assembly to transmit copies of this resolution to the President and
   Vice President of the US, the Speaker of the House of Representatives, the Majority Leader of the US
   Senate, each Senator and Representative representing California in the US Congress, and the
   Secretary of the US Department of Transportation.
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FISCAL EFFECT: None

COMMENTS & CONTEXT:

1) California and the Federal Infrastructure Package: The federal Infrastructure Investment and Jobs
   Act (IIJA) includes $1.2 trillion in new infrastructure funds. This represents a $550 billion increase in
   federal government spending above baseline funding levels. Among other funding, the IIJA includes:
      $621 billion on roads, bridges, public transit, rail, ports, waterways, airports, and electric vehicles
       to improve air quality, reduce congestion, and limit greenhouse gas emissions;
      $400 billion to bolster caregiving for aging and disabled Americans;
      $300 billion toward boosting manufacturing, specifically semiconductor, medical, and clean
       manufacturing;
      $111 billion to rebuild water infrastructure and replace all of the nation's lead pipes and service
       lines; and
      $100 billion to give every American access to affordable, reliable, and high-speed broadband.

   For the movement of goods, the IIJA authorizes $16.7 billion in port infrastructure and waterways
   with the primary objective of addressing maintenance backlogs, reducing congestion and bottlenecks
   to strengthen supply chains and expedite commerce, cutting emissions near ports by boosting
   electrification and investing in other low-carbon technologies to reduce environmental impacts on
   neighboring communities.

   A significant portion of this funding will be allocated through funding formulas, while others will be
   awarded competitively based on specific criteria. AJR 30 proposes to send a message to the US
   Congress and implementing agencies, such as the US Department of Transportation, that “business as
   usual” is not acceptable to the 12% of the US population that lives in California.

   The federal government has created a Building a Better American guidebook with details on each
   program funded through the IIJA. Below is a summary of some of these programs, as described in the
   guidebook.

      The Army Corps of Engineers’ funding will support construction projects, operations, and
       maintenance. Construction funding will be used for the construction of coastal ports, inland
       waterways, and other water infrastructure. Operations and maintenance funds will be used to
       dredge Federal navigation projects and to operate and maintain authorized Army Corps projects,
       including the repair of damages caused by natural disasters.
     The Land Ports of Entry Modernization and Construction Program ($3.85 billion) provides
      funds to modernize and improve Land Ports of Entry at our Northern and Southwest Borders.
      Funds will be split between the General Services Administration and Customs and Border
      Protection.
     The Port Infrastructure Development Program ($2.25 billion) funds improvements of the
      infrastructure needed to move cargo to, through, and around ports. The IIJA significantly expands
      funding for this program and expands eligibility to include projects that will improve resiliency to
      address sea-level rise, flooding, extreme weather events, earthquakes, and tsunami inundation, as
                                                                                                   AJR 30
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       well as projects that will help reduce or eliminate criteria pollutants and greenhouse gas emissions
       associated with port operations, including projects for port electrification.

   The US Department of Transportation also offers a number of ongoing funding opportunities,
   including grants (BUILD and INFRA) and loans (TIFIA and RRIF), to develop and expand port
   infrastructure and waterways, and promote the growth and modernization of the US maritime
   industry.

   The Governor’s proposed budget for 2022-23 anticipates $20 billion in federal funding, which he
   proposes to use to accelerate the transition to zero-emission vehicles, modernize the state’s
   transportation system, spur clean energy innovation, advance the state’s housing goals, reduce wildfire
   risk to communities, and support drought resilience and response.

   One estimate is that this new federal funding represents $14 billion in additional formula funding to
   California over the five-year funding period, compared to existing formula funding levels.
   In presenting the 2022-23 budget, the Governor asks for “administrative flexibility so matching fund
   requirements for unanticipated formula or competitive programs can be provided in a timely manner
   to bolster the state’s competitiveness when applying for these programs.” Local agencies may also
   need funding flexibility to draw down all available federal funding.

   This federal funding represents an important opportunity for California to redress decades of
   underinvestment in the state’s infrastructure. Getting the state’s fair share of federal funding is
   essential in advancing the state’s zero-emission transition goals and remaining globally competitive
   with other areas of the US and around the world.

2) Unfair Federal Transportation Allocations: According to the sponsors, the California Association
   of Port Authorities and Pacific Merchant Shipping Association, its resolution is important to ensure
   California advocates from a “position of strength” and proactively addresses the state’s need for
   federal infrastructure funding. Historic federal spending patterns have resulted in “an overwhelming
   majority of seaport investment dollars diverted away from the US West Coast.”

   While California ports account for 40%-45% of all US containerized imports, over the past decade,
   the West Coast of the US received roughly 10% of all seaport investment dollars nationally. This
   imbalance in federal funding directly relates to economic opportunity.
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The chart below, provided by the Port of Los Angeles, shows the current funding disparities.




The chart below, provided by the Pacific Merchant Shipping Association, illustrates how California’s
share of containerized activity has decreased as higher federally invested ports in the South East of the
US, as well as the development of the ports in Mexico and Canada, have gained a greater share.
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   The US Secretary of Transportation Pete Buttigieg stated that “the once-in-a-generation investments
   in the Bipartisan Infrastructure Law will improve people’s lives in every state in the nation by
   increasing access to safe, clean, reliable transportation.” However, without a change in federal
   transportation allocation policies, these historic funding levels will only deepen the funding disparities
   and limit California’s global competitiveness.

3) Small Business Public Works: Federal transportation funding represents important state contracting
   opportunities for California businesses that supply the materials and contract work. In 2019, DGS
   implemented a new small business certification category - Small Business Certification for the
   Purpose of Public Works [SB 605, Chapter 673, Statute of 2017]. This new certification includes
   small businesses in the public works arena with three-year annual average gross receipts not
   exceeding $36 million and fewer than 200 employees.

   At the end of 2018-19 (six months after the bill took effect), 422 firms had applied for and received
   the small business-public works certification. Of those 422, 292 were exclusively SB-PWs, while 130
   others added this certification to other certifications they used in applying for state contracts. In
   addition to a new certification category, SB 605 also increased and codified the certification eligibility
   threshold for firms based on their three-year average of gross annual receipts. The microbusiness
   designation was increased to $5 million, and $15 million was set for the small business certification
   cap. The chart below displays data on the number of California-certified small businesses and
   DVBEs in all certification categories for 2019-20.

                                                                                           Percent of
                 Small Business, Micro Firms, and                                                          Percent
                                                                          Firm Count         Small
                   DVBE by Certification Type                                                             of DVBEs
                                                                                           Businesses
    DVBE (only)                                                                247              --         13.76%
    Small Business                                                            1,998          11.50%
       Dual Certifies Small Business and DVBE                                   82            0.47%         4.57%
       Dual Certified Small Business and Small Business-Public Works           164            0.94%           --
    Small Business Micro                                                     12,014          69.15%           --
       Dual Certified Small Business Micro and Small Business–Public
                                                                              1,311          7.55%            --
    Works
       Dual Certified Small Business Micro and DVBE                           1,283          7.38%         71.48%
    Small Business–Public Works                                                339           1.95%            --
       Dual Certified Small Business–Public Works and DVBE                      21           0.12%          8.36%
    Triple Certified Small Business, DVBE, and Small Business–Public
                                                                               12            0.07%          0.07%
    Works
    Triple Certified Small Business (Micro), Small Business–Public
                                                                              150            0.86%          1.17%
    Works and DVBE
    Total Small Business, Micro Businesses, and Public Works                 17,374           100%             --
    Total DVBEs                                                               1,795             --           100%
                                                                       Source: 2019-20 California Consolidated Report

   The new category of small business certification reflects the Legislature’s understanding that
   participating in public works projects can require slightly more robust small businesses.

4) COVID-19 and Supply Chain Disruptions Explained: To move forward, it is important to
   understand how pre-pandemic deficits affected California consumers and producers during the
   pandemic.
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At the beginning of the pandemic, businesses across the US held billions in unsold goods as
consumers abruptly reduced purchasing of new products. This caused the inventory-to-sales ratios to
spike for nonperishable goods. Over time, these businesses could liquidate inventories, and many
elected not to maintain pre-pandemic inventory levels. Pandemic-related worker shortages globally
also resulted in disruption and inefficiencies within the production and distribution sectors.

As the most significant economic restrictions due to the COVID-19 pandemic began to lift in mid-
2021, consumers in the US started making historical levels of purchases. Low inventories, workforce
shortages, and rapidly rising wholesale and retail demands created cascading issues all along supply
chains.

Figure 1 shows that the retail sector’s inventory-to-sales ratio was especially short. According to a
Small Business Pulse Survey (May 31 to June 6, 2021) administered by the US Census Bureau, 36%
of small business respondents reported delays with domestic suppliers, with delays concentrated in the
manufacturing, construction, and trade sectors.

Another impact of the shortages, as reported by the White House, has been abrupt price increases.
Between May 2020 and May 2021, prices of commodities tracked within the Producer Price Index
rose by 19%, the largest year-over-year increase since 1974. In May 2022, the unadjusted Producer
Price Index for goods and services rose 0.8% from the prior month and 10.8% year-over (see sidebar
for more details).

In addition to the direct impacts on retail and lack of component parts for manufacturers, supply chain
disruptions also limited business activity in other sectors. For example, the National Association of
Homebuilders reported that shortages of key materials such as framing lumber, wallboard, and roofing
impacted many homebuilders, which results in homebuilders delaying new construction.

The production and delivery of products is an integrated system – disruptions at any point in the
system impact the overall system’s capacity. According to data compiled by Sea-Intelligence, an
international research firm, nearly 13% of the world’s cargo shipping capacity was tied up by delays
during the fall of 2021. Below is a list of key features to supply chain disruptions that impacted
California:
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      COVID-19 shut down manufacturing and port operations in key trading partners, including
       Southeast Asia.
      Even as the Ports of Los Angeles and Long Beach processed record levels of cargo (throughput),
       dozens of ships remained waiting to be offloaded.
      There was a shortage of truckers to pick up the unloaded containers at the ports. In September
       2021, the LA Port estimated that 30% of truck appointments were not filled.
      Warehouses in Southern California were full, resulting in containers on truck chassis sitting for up
       to a week waiting to be unloaded. It was reported that warehouse capacity for offloading goods
       was down to 2% in Los Angeles and 4% in the Inland Empire.
      The lack of warehouse space resulted in:
          o Trucks entering and parking/idling in residential or other nonindustrial areas of cities.
          o A shortage of truck chassis on which to place new containers for distribution.
      While alternative temporary sites to offload products were pursued, some cities in Southern
       California refused to permit temporary offloading sites.
      Empty containers stacked up at ports and nearby sites, competing with space to offload full
       containers.

   Six months into 2022, some of these factors are resolving, while others like the lack of chasses and
   trailers continue. Another example of a continuing challenge is work stoppages attributed to China’s
   continued reliance on a “Zero COVID” policy, resulting in strict lockdowns across a growing number
   of economic regions, disrupting manufacturing and the delivery of parts, components, and finished
   products to foreign markets. New supply chain issues have also arisen including the escalation of the
   Ukraine-Russia war and failures in the domestic production of baby formula. Sanctions on Russia in
   response to its unprovoked attack on Ukraine are driving energy costs higher globally, including in the
   US.

5) Federal and State Actions to Address Supply Chain Disruptions: The earliest actions by the
   federal and state governments focused on addressing healthcare-related shortages, which later
   expanded to component parts to manufacturing, including semiconductors. As noted in the earlier
   comments, eventually, supply chain disruptions impacted the delivery of domestic goods to
   consumers. Below is a timeline of selected actions by the federal and state governments to assess and
   address these disruptions.
       February 2021 – President Biden signs E.O. 14017, directing a “whole-of-government approach”
        to assessing vulnerabilities in and strengthening the resilience of critical supply chains.
       June 2021 – The Supply Chain Disruptions Task Force releases 100 day reviews and
        recommendations to address the short-term disruption of the delivery of goods.
       o The review included four key industrial products: semiconductor manufacturing and advanced
         packaging; large capacity batteries, like those for electric vehicles; critical minerals and
         materials; and pharmaceuticals and active pharmaceutical ingredients.
       o The review found that COVID-19 amplified the impacts of decades of underinvestment and
         public policy choices, which have resulted in fragile supply chains across a range of sectors
         and products.
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    o The supply chain review reinforced the need for transformative investments to rebuild US
      manufacturing capacity in key sectors and value chains. Among other recommendations, the
      review called for establishing a new $50 billion Supply Chain Resilience Program at the US
      Department of Commerce to “monitor, analyze, and forecast supply chain vulnerabilities and
      partner with industry, labor, and other stakeholders to strengthen resilience.”
    o The second part of E.O. 14017 is due in February 2022, which includes the review of six
      “critical industrial base sectors that underpin America’s economic and national security,”
      which includes the defense industrial base, public health and biological preparedness industrial
      base, information and communications technology industrial base, energy sector industrial
      base, transportation industrial base, and supply chains for production of agricultural
      commodities and food products.
   August 2021 – Whitehouse names a senior-level “Port Envoy” to the Supply Chain Disruptions
    Task Force
   September 2021 – The Center for International Trade and Transportation at California State
    University at Long Beach partners with GO-Biz, CalSTA, and the Port of Long Beach to launch
    the California Supply Chain SUCCESS Initiative (Initiative). The Initiative used a solutions-
    based approach to re-engage a broad set of stakeholders with historical differences. According to
    a summary of the Initiative’s outcomes: “Not only was the Initiative meant to provide a broader
    framework for dialogue, but also to emphasize the need for individual stakeholders to identify
    what they could do as independent actors to add value to the supply chain with or without
    government facilitation.”
   October 13, 2021 – The White House announces actions aimed at relieving congestion in the
    supply chain.
    o This included a plan for the Port of Los Angeles to operate 24/7 and major US retailers to
      expand working hours. In addition, a virtual roundtable was held between the federal and state
      governments, the LA/LB Ports, labor, and the business community to discuss current logistic
      challenges.
    o In addition, the Whitehouse reported working with major retailers and domestic shippers,
      including UPS and Walmart, to increase hours of operation.
   October 20, 2021 - Governor Newsom issues Executive Order N-19-21 (EO N-19-21), which was
    the culmination of the state’s extended dialogue with businesses, freight operators, labor, and the
    White House and its federal Supply Chain Disruptions Task Force. According to the
    announcement, the Governor particularly singles out GO-Biz and its work of engaging with
    stakeholders on key challenges and identification of short-term and long-term solutions to supply
    chain disruptions. Among other directives, the EO stated:
    o The Governor's Office of Business and Economic Development shall identify non-state sites,
      including private, locally owned, and federally owned parcels, that could be available to
      address short-term storage needs to address the supply and distribution chain crisis.
    o The Department of General Services shall complete its review of state-owned property in
      proximity to impacted ports that may be made available to address short-term storage needs to
      address the supply and distribution chain crisis by no later than December 15, 2021.
    o The Department of General Services shall collaborate with other state agencies to expedite
      leasing to store cargo containers on state-owned parcels.
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    o By December 31, 2021, the California Labor and Workforce Development Agency shall take
      all necessary actions to constitute and announce the membership of the industry panel required
      by AB 639 (Cervantes). The Secretary of Labor shall convene the panel for its first meeting
      by March 1, 2022.
    o The Department of Finance shall work with state agencies and departments to develop longer-
      term proposals that support port operations and goods movement for consideration in the
      January 10 Governor's Budget. Proposals may include port and transportation infrastructure
      improvements, electrification of the goods movement system from port to delivery, workforce
      development, and other actions to support goods movement.
   October 28, 2021 – US Department of Transportation announces a strategic partnership with
    California to help facilitate innovative projects and financing opportunities for multi-billion
    infrastructure improvements. The agreement intends to facilitate the movement of imports and
    exports, upgrade supply chain processes, and “create resilience throughout the critical trade
    corridors of California and the US, including around San Pedro Bay and the Inland Empire.”
    Projects that could receive support through this agreement, according to Governor Newsom’s
    announcement, include:
       o Port-specific upgrades;
       o Expanding capacity for freight rail;
       o Developing inland port facilities for increased warehouse storage;
       o Railyard and truck electrification;
       o Highway upgrades to improve truck travel times;
       o Grade-separated crossings to reduce the number of rail-street intersections and improve
         safety and efficiency; and,
       o Land ports of entry to expand trade capacity and cross-border commerce.
   November 10, 2021 – The California Department of Motor Vehicles announces it will be doubling
    its capacity to conduct commercial driving licenses to address the national commercial truck
    driver shortage and support the efficient movement of goods between California’s largest ports
    and major distribution centers.
   November 17, 2021 – Governor Newsom toured the Ports of Los Angeles and Long Beach and
    announced that Caltrans would begin issuing temporary permits to allow trucks to carry
    overweight loads of up to 88,000 on state highways and interstate routes between the Ports of
    Long Beach and Los Angeles, other ports, and key distribution centers. Other participants in the
    tour included Port Envoy to the Biden-⁠Harris Administration Supply Chain Disruptions Task
    Force John D. Porcari, ILWU International President Willie Adams, port leadership, local
    legislators, and elected officials.

    As the state’s lead on economic development activities, GO-Biz Director and the Governor’s
    Senior Economic Advisor, Dee Dee Myers, played a pivotal role in the state’s supply chain
    mitigation activities. She participated in the federal Supply Chain Disruptions Task Force and
    represented California in other national, state, and regional meetings.
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       AJR 30 expresses the Legislature’s support for the Ocean Shipping Reform Act to alleviate and
       remedy the congestion of California’s ports and to ensure that the state’s importing and exporting
       capabilities return to pre-pandemic levels.

6) California Goods Movement Investments: Additional funding has been provided through the 2021-
   22 budget, with $250 million awarded for ports, $280 million for infrastructure projects in and around
   the Port of Long Beach, and $1.3 billion over three years for zero-emission trucks and buses,
   including funding for more than 1,000 zero-emission port drayage trucks. Governor Newsom
   proposed an additional $2.3 billion for supply chain investments in his 2022-23 January budget.
   According to the Governor’s Budget Summary, these funds will address congestion and bottlenecks
   across the West Coast. The proposed supply chain investments in the January release of the 2022-23
   budget include:
      Port Infrastructure and Goods Movement: $1.2 billion for port-related high-priority projects that
       increase goods movement capacity on rail and roadways serving ports and at port terminals,
       including railyard expansions, new bridges, and zero-emission modernization projects.
      Zero-Emission Equipment and Infrastructure: $875 million for zero-emission port equipment,
       short-haul (drayage) trucks, and infrastructure.
      Workforce Training: $110 million for a training campus to support workforce resilience in the
       face of supply chain disruption and accelerate the deployment of zero-emission equipment and
       technologies.
      Commercial Driver’s Licenses: $40 million to enhance California’s capacity to issue Commercial
       Driver’s Licenses.
      Operational and Process Improvements: $30 million for the GO-Biz to provide funding for
       operational and process improvements at the ports. This could include enhancing the movement of
       goods and improving data interconnectivity between the ports to enable efficient cargo movement,
       reduce congestion, and create opportunities to increase cargo volume by promoting and building
       supply chain efficiency.
      Supply Chain Policy Unit: $1.15 million ongoing and three positions to the California
       Transportation Agency to establish a freight policy team to oversee and coordinate freight policy
       across the state, including freight transportation research projects.

   In the May Revise, the Governor proposed additional actions to address rising fuels prices and utility
   bills:
      Energy Mitigation: $9.5 billion from various fund sources over four years, which brings the total
       proposed funding for climate actions to $32 billion, including climate solutions and support
       energy reliability.
      Inflation Relief: $18.1 billion in direct payments to help address inflation, help people pay their
       utility bills and rent, and reduce costs like health care and child care.

   The LAO has completed an analysis of the Governor’s budget proposals on supply chain and the $4.1
   billion Transportation Infrastructure Package, which provide additional details on his strategy for
   integrating state and federal funds to meet important California needs. This includes: $3.4 billion that
   was agreed to in concept in the 2021-22 budget package but reverted to the General Fund when
                                                                                                 AJR 30
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   subsequent legislation was not enacted; and $1.5 billion that would be allocated between programs
   from last year’s package and a new set of proposed programs.

7) California’s Trade Dominated Global Economy: International trade and foreign investment are
   important components of California’s $3.0 trillion economy (2020 most recent data), supporting
   nearly 5 million California jobs. The importance of trade to the state economy increased as a
   growing number of California businesses accessed new global markets. In the last three decades, the
   percentage of California jobs tied to trade more than tripled, moving from 10.6% in 1992 to nearly
   30.3% in 2020.

   In 2020, the state’s diverse group of business owners and workers produced and/or exported $155.8
   billion in goods, representing 10.9% of total U.S. exports, and imported $396 billion, representing
   16.9% of total US imports. In 2021, California exported $175.1 billion in goods, representing 9.9% of
   all US exports.

   Many of the jobs associated with these major industry sectors are also associated with high wages.
   Research by the U.S. International Trade Commission undertaken in 2010 and updated in 2015 found
   a significant earnings premium in jobs within export-intensive manufacturing industries – a 19%
   premium for blue-collar workers and a 9.9% premium for white-collar workers.

   Manufacturing has many economic advantages and is often considered the “gold standard” for jobs
   because of its high wages, the inclusion of small businesses within its global supply chains, and
   having a high multiplier effect on related jobs. The Milken Institute estimates that for every job
   created in manufacturing, 2.5 jobs are created in other sectors. In some industry sectors, such as
   electronic computer manufacturing, the multiplier effect is 16:1.

   As noted earlier in the analysis, California’s largest industry sector by employment is Trade,
   Transportation, and Utilities, which encompasses everything from major retail outlets, to import-
   export businesses, to transportation and warehousing. These industry sectors support the flow of
   goods across the US, as well as globally. For their part, California manufacturers have reaped the
   short-term benefits of global supply chains and just-in-time delivery models.

   Advances in transportation and communication technologies encourage the development of previously
   undeveloped markets and expand multinational business opportunities for California firms. With
   more than 95% of consumers located outside the US and emerging economies experiencing a
   growing middle class, accessing global markets has been key to California’s continued economic
   growth. Manufacturers have also reaped benefits from global supply chains and just-in-time delivery
   models. Today, four of California’s top five exports include component parts, which leave the state to
   be combined and assembled into final products in foreign countries.

   Chart on the next page shows data on the export of goods to the state’s top six trade partners, based
   on the origin of movement. [Please note that federal reporting separates data from China and Hong
   Kong.] California’s largest export market in 2021 was Mexico, which received over $27.3 billion in
   California products. Top-ranking export destinations not shown on the chart include Germany, the
   Netherlands, and the United Kingdom.
                     California Exports of Goods 2013-2021 (billions of dollars)
        Partner     2013     2014     2015     2016      2017       2018       2019    2020     2021
       World       $168.1   $173.8   $165.3    $163.2    $171.9    $178.1     $173.7   $155.8   $175.1
                                                                                                                       AJR 30
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   1   Mexico       $23.9     $25.4    $26.7     $25.2     $26.7           $30.7          $27.8        $24.0          $27.3
   2   Canada       $18.8     $18.3    $17.2     $16.2     $16.8           $17.6          $16.6        $16.0          $17.8
   3   China        $16.2     $16.0    $14.3     $14.3     $16.4           $16.3          $15.8        $15.0          $16.7
   4   Japan        $12.7     $12.2    $11.7     $11.7     $12.8           $13.0          $11.8        $10.5          $11.8
       South                                                $9.5            $9.9           $9.1         $9.7          $11.6
   5                 $8.3     $8.6     $8.6      $8.2
       Korea
   6   Taiwan        $7.5     $7.4     $7.7      $6.9       $6.3            $6.8           $7.2         $7.3          $8.9
                                                                   Source: International Trade Administration, accessed 3/26/22


   Many of California’s top exports are parts and components. Research shows that California
   businesses participate in large expanded global supply chains, with components leaving and arriving
   in the state assembled and/or partially assembled before becoming available for retail and wholesale
   distribution.

   California’s top seven exports in 2020 were: computer and electronic products ($37.5 billion);
   transportation equipment ($17.3 billion); machinery, except electrical ($16.8 billion); chemicals
   ($14.3 billion), agricultural products ($13.3 billion); miscellaneous manufactured commodities ($11.0
   billion); and food manufactures ($9.7 billion).

   Imports into California were valued at $395.8 billion in 2020, representing 16.9% of total US
   imports and ranking the state as one of the top 20 largest importers in the world. China (including
   Hong Kong) is the largest source of imports to California, valued at 130.6 billion in 2020. Chinese
   imports totaled $130.1 billion, followed by Mexico ($47.8 billion), South Korea ($21.1 billion); and
   Canada ($26.5 billion).

   The largest amount of products imported in 2020 by dollar: computer and electronic products
   ($113.0 billion); transportation equipment ($55.9 billion); miscellaneous manufactured commodities
   ($24.0 billion); electrical equipment, appliances and components ($26.7 billion); and machinery,
   except electrical ($19.7 billion); oil and gas ($10.8 billion); and apparel manufacturing products
   ($16.9 billion).

8) Related Legislation: Below is a list of bills from the current and prior sessions.
  a) Current Session Legislation:
       i) AB 1678 (V. Fong) Blue Ribbon Commission: This bill, an urgency measure, requires the
          Department of Food and Agriculture to establish and convene the Blue Ribbon Commission on
          Port Congestion and Supply Chain Deficiencies. Status: Held on the Suspense File of the
          Assembly Appropriations Committee, 2022.
       ii) AB 1679 (Fong) Supply Chain Coordinator: This bill establishes the position of the Supply
           Chain Coordinator within the California Business Investment Services Program at GO-Biz.
           Status: Held in the Assembly Committee on Appropriations.
       iii) ACR 140 (O’Donnell) Freight Transport and Supply Chain: This bill memorializes the
            Legislature’s declaration that the state is currently suffering a supply chain crisis and therefore
            urges the state’s public agencies, departments, and local governments to provide all due and
            proper assistance to carriers, cargo owners, public seaports, terminals, workers, and facilities
            to facilitate the essential service of delivering goods to Californians. Status: Pending in the
            Assembly Committee on Jobs, Economic Development, and the Economy.
                                                                                                  AJR 30
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    iv) AJR 29 (Mathis) Ocean Shipping Reform Act: This bill memorializes the Legislature’s
        support for the Ocean Shipping Reform Act to alleviate and remedy the congestion of
        California’s ports and ensure the state’s importing and exporting capabilities are returned to
        pre-pandemic levels. Status: Pending in the Assembly Committee on Jobs, Economic
        Development, and the Economy.
    v) AJR 30 (Gipson) Freight Transportation Federal Funds: This bill memorializes the
       Legislature’s request to the US Congress to pass legislation and the US President to sign into
       law a statute providing for the fair allocation of federal transportation funding for freight
       projects in California, specifically, and on the Pacific Coast of the US, generally, based on the
       volume of containerized freight moved. The Legislature further calls on the US Department of
       Transportation and all federal agencies implementing any federal statute or regulation related
       to federal funding for ports or multimodal freight transportation to similarly provide a fair
       allocation of in California and other states on the Pacific Coast of the US. Status: Pending in
       the Assembly Committee on Jobs, Economic Development, and the Economy.
    vi) SB 1104 (Gonzales) GO-Biz Office of Freight: This bill establishes the Office of Freight
        within GO-Biz to serve as the coordinating entity to steer the growth, competitiveness, and
        sustainability of freight and ports across the state and to promote and assess the continued
        economic vitality and sustainability of the freight sector. The bill also requires GO-Biz, in
        coordination with specified state agencies, to prepare an assessment of statewide economic
        growth, competitiveness, prosperity, resiliency, and sustainability for the state’s ports and
        freight sector. Status: Pending in the Assembly Committee on Jobs, Economic Development,
        and the Economy.

b) Prior Session Legislation:
    i) AB 886 (Allen and Ian Calderon) Importer-Exporter Tax Credit: This bill would have
       authorized a five-year $500 million tax credit program for importers and exporters that
       increase cargo through in-state airports and seaports, hire additional staff, or incur capital costs
       at a California cargo facility. Status: Held on the Suspense File of the Assembly Committee
       on Appropriations, 2013.
    ii) AB 962 (Allen and Quirk-Silva) Port Infrastructure Financing: This bill would have
        established a process by which a harbor agency can monetize the future financial value of
        installing and operating a port using technology and processes that result in the reduction of
        mobile source emissions. This valuation would be used to establish the amount of a future
        state appropriation, the repayment of which occurs through the payment of state taxes and fees.
        Status: Held in the Assembly Committee on Appropriations, 2018.
    iii) AB 1561 (Quirk-Silva) Logistical Hubs and Inland Ports: This bill expands and updates the
         mandatory elements of the state's international trade and investment strategy to include the role
         of logistical hubs and inland ports and streamline reporting requirements. The bill also
         authorizes the California Infrastructure and Economic Development Bank to finance inland
         port facilities. Status: Signed by the Governor, Chapter 313, Statutes of 2018.
    iv) AB 2841 (Allen) Port Infrastructure Finance: This bill would have established a process by
        which a harbor agency can monetize the future financial value of installing and operating a
        port using technology and processes that reduce mobile source emissions. This valuation
        would be used to establish the amount of a future state appropriation, the repayment of which
        occurs through the payment of state taxes and fees. Status: Held on the Suspense File of the
        Assembly Committee on Appropriations, 2016.
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       v) SB 63 (Hall) Seaport Infrastructure Districts: This bill authorizes cities and counties to
          establish Seaport Infrastructure Financing Districts and allows these districts to finance certain
          port or harbor facilities, as specified. Status: Signed by the Governor, Chapter 793, Statutes
          of 2015.
       vi) SB 308 (Seymour) Infrastructure Financing Districts: This bill authorizes cities and
           counties to create infrastructure financing districts (IFDs) and issue bonds to pay for
           community-scale public works: highways, transit, water systems, sewer projects, flood control,
           child care facilities, libraries, parks, and solid waste facilities. To repay the bonds, IFDs can
           divert property tax increment revenues, which are revenues generated from increases in
           property values within the IFD above property values in the base year when the IFD was
           formed. However, IFDs cannot divert property tax increment revenues from schools. Status:
           Signed by the Governor, Chapter 1575, Statutes of 1990.
       vii) SB 628 (Beall) Enhanced Infrastructure Financing Districts: This bill authorizes local
            officials to create Enhanced Infrastructure Financing Districts (EIFDs), which augment the tax
            increment financing powers that are available to local government under the IFD statutes. City
            or county officials can create an EIFD, governed by a public finance authority, to finance
            public capital facilities or other specified projects of communitywide significance that provide
            significant benefits to the district or the surrounding community. Status: Signed by the
            Governor, Chapter 785, Statutes of 2014.

REGISTERED SUPPORT / OPPOSITION:

Support

California Association of Port Authorities (co-sponsor)
Pacific Merchant Shipping Association (co-sponsor)

Opposition

None on File

Analysis Prepared by: Toni Symonds / J., E.D., & E. / (916) 319-2090


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