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Amidst Predictions for Slow Economic Recovery, California Takes Measures to Spur Economic Development

California is confronting its economic challenges head on as it continues to be a state of superlatives in terms of its potential for growth. The big gold rush ahead may just lay in green tech.

Apr/May 10
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Incentives For New and Existing Business
Several incentives should pique the interest of potential project developers and retain interest of existing firms.

The California Jobs Initiative includes a $500 million employer hiring incentive that will retain Californians' jobs and give employers increased flexibility to adapt to the changed economy. The incentive is equivalent to the state paying half the payroll tax for each new employee for a year. This is expected to result in up to 100,000 new or retained jobs and provide training to 140,000 individuals to qualify them for better jobs.

Another incentive, the Innovation Hub (iHub) initiative is expected to enhance the state's national and global competitiveness by stimulating partnerships, economic development, and job creation around specific research clusters in locations including Livermore, Orange County; San Francisco; Sacramento; Sonoma County; and Coachella Valley. The iHub designees will provide a foundation for research clusters, startup companies, government entities, business groups, and venture capitalists by leveraging assets such as research parks, technology incubators, universities, and federal laboratories to foster innovation and job creation statewide.

"Green" Initiatives
The national focus on cleaner industry has been a long-term consideration for Californians, and the solar industry recently has provided some rays of hope. A report funded by the U.S. Commerce Department's Economic Development Administration (EDA) in collaboration with the University of California Berkeley's Center for Community Innovation, noted that businesses in renewable energy and alternative fuels, green building and energy-efficiency technology, energy-efficient infrastructure and transportation, and recycling are growing faster than the rest of the economy.

While California's green economy accounts for just 1 percent of jobs in the state, it is growing about 50 percent faster than the rest of the economy overall. The report goes on to say that green and cleantech innovation is highly concentrated in several California regions, including the Silicon Valley, San Diego, the East Bay, and Los Angeles, and that green job growth is fastest in the more distressed inland regions.

In contrast to traditional firms that often seek larger subsidies, green industries rely more heavily on local markets and networks, grow in response to regulation, and expand with the support of state and city programs; therefore, "they need to build their own green markets with the support of state and city programs, rather than trying to attract big firms through large subsidies," says the report.

Legislation has recently been enacted for a green-tech manufacturing equipment sales tax exemption. SB 71, part of the Governor's California Jobs Initiative, is a legislative package that hopes to create or retain 100,000 jobs statewide. Solar cell-supplier Calisolar has benefited from this legislation for its new manufacturing facility in Sunnyvale. The firm plans to expand its work force from 150 to 250 employees. The project has also been awarded a 48C Clean Energy Manufacturing Tax Credit of $51.6 million as part of the American Recovery and Reinvestment Act and $4 million in National Renewable Energy Laboratory (NREL) support through the Photovoltaic Technology (PV) Incubator program.