(March 11, 2010) Members of the Senate Rules Committee expressed support yesterday for a concept long advocated by the California Chamber of Commerce—subjecting proposed legislation to an economic impact analysis.
The forum for the discussion was a hearing of the Senate Rules Committee on SBX8 60 (Harman; R-Huntington Beach), which expands the assignment of an existing joint legislative committee to include the economic review.
CalChamber President and CEO Allan Zaremberg suggested creation of an economic impact committee in an April 2009 commentary.
‘Laudable Goal’
Senate President Pro Tem Darrell Steinberg (D-Sacramento), chair of Senate Rules, said the goal of the legislation is laudable but he questioned the need to create another layer of government for the economic review.
He asked whether the assignment to analyze the economic impact of a proposal could be made part of existing reviews, such as that done by the Office of the Legislative Analyst. Another suggestion was that the economic impact be part of the Appropriations Committee analysis.
Harman said he was willing to work with committee members on how to conduct the economic analysis. He emphasized the importance of having an organized, distinct process for the economic review.
Qualified Analysis
In testimony to Senate Rules, Marc Burgat, CalChamber vice president of government relations, commented that the place where the economic analysis is conducted is not necessarily as important as making sure the analysis is done by staff members qualified to conduct an economic impact review.
The earlier in the process the analysis is done, the better, Burgat said. “Given the current economy and recession, the economy and jobs have to be a litmus test in which all analysis is based.”
Harman’s proposal called for the economic review to be done on any proposal estimated to generate a fiscal impact of $10,000 or more on small business or $50,000 or more on any other business. The joint legislative committee also would be required to report on such proposals each year.
In a letter to Harman and Senate Rules, the CalChamber noted that the creation of an economic impact committee that reviews all bills to determine their statewide economic impact is “a good first step to determining whether the state as a whole can afford any new proposal.”
Currently, both the Assembly and Senate have Appropriations committees that review the fiscal impact of proposals on government and reject legislation that the government can’t afford.
Prudent Action
“Because cost is the most important indicator of whether a business will add future jobs here or somewhere else, a similar process to assess the impact of proposed legislation on business and therefore the economy seems prudent,” the CalChamber said.
“The Legislature must create and seize economic development opportunities, reduce the cost and risk of keeping and growing jobs, and jump-start public and private infrastructure and commercial projects,” the CalChamber wrote. “As they consider any new legislation or regulation, our leaders must fully and realistically assess the impacts of any proposed mandate on the private sector. SBX8 60 provides a tool to meet this goal.”
Steinberg and others on Senate Rules committed to working with Senator Harman on an appropriate forum and specifics of how to conduct the economic analysis. Harman’s SB 954 contains language identical to SBX8 60, which was introduced as part of the Eighth Extraordinary Session of the Legislature. Steinberg said the special session “probably” would close on Friday, March 12.
Staff Contact: Marc Burgat