Governor Gray Davis - Digital Library
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Economy: Business

Governor Davis has given California the tools it needs to prosper by making investments in education and technology, job training, tax incentives, and tax relief.

California is well-positioned to continue its place as a major player in the global marketplace.

Tax Relief and Incentives

  • Increased the Research & Development tax credit from 12% to 15% and increased the alternative incremental research and development tax credit, saving more than $100 million over five years.
  • Eliminated the Minimum Franchise Tax for the first two years of incorporation.
  • In 2000, increased the NOL Carry-Forward for the first time since 1987, and extended the carry-forward period from five to ten years. As result of the 2002-2003 Budget, the NOL deduction will increase to 100% by 2004. This will save businesses over a billion dollars by the end of the decade.
  • Enacted an income tax exemption to help students pursue advanced degrees.
  • Made the capital gains exclusion for small business stock permanent.
  • Increased the number of inner-city Enterprise Zones, which provide state and local tax incentives and programs to spur business activity in economically disadvantaged areas.
  • Consistently opposed new taxes on the Internet.
  • Extend the income tax voluntary contribution to the CA Breast Cancer Research Fund, to allows the University of California to run and market the Breast Cancer Research Program.
  • In 2001, enacted a credit for taxpayers who purchase and install a solar energy system.
  • Supported technology projects to make income tax administration more effective and efficient, leading to the collection of $260 million in additional revenue from delinquent tax filers.

Investing for the Future

California has long been the top state for research - in its universities, and the private and public sectors. The Davis Administration has:

  • Proposed and created four world-class UC Institutes for Science and Innovation.
  • Provided more than $1.2 billion in financing to promote economic growth at the local level, creating more than 12,000 new jobs.
  • Actively promoted trade, resulting in an increase of 25 percent in California exports from 1998 through 2000, reaching a record high of nearly $120 billion in 2000. More than 737,600 jobs in California are dependent on foreign businesses, more than in any other state, and the Golden State's export market creates even more career opportunities for Californians, supporting more than 1.5 million jobs.
  • Provided $4 million over two years to help rural communities bridge the digital divide.
  • Invested $38.5 million to help small high-tech companies bring their products to market.
  • Provided $15.5 million in low-interest loans to businesses and local communities for economic development projects.
  • Signed the nation's first state law authorizing the use of electronic and digital signatures in brokerage agreements.
  • Launched a one-stop website that offers individuals and businesses a variety of state services, including income tax filing and DMV services.
  • Created California tourism promotional campaign, "Stay and Play," to encourage Californians to travel in-state.
  • Created "Buy California," $79 million campaign to promote California's high quality agricultural products.

Workforce Development

Over the past four years, Governor Davis has provided more than $2.5 billion for job training, employee recruitment, tuition assistance, career counseling, and job placement services for the California workforce.

  • Launched $25 million initiative to recruit and train health care workers.
  • Invested in the $10 million "Techforce" innovative training program.
  • Launched the $60 million Nurse Workforce Initiative.
  • Directed $14 million of federal Workforce Investment Act Funds to provide employment and training services for unemployed high-tech and dot-com workers.
  • Allocated $24 million to increase opportunities for employment and job training for veterans.

Governor Davis has helped to ensure a well-educated and well-trained workforce by leading a movement to reform schools, increase school funding and increase access to technology.

  • Introduced time-tested models from the business world, such as accountability, peer-review programs and growth targets - Student test scores have gone up 5 years in a row.
  • Increased the use of technology in the classroom statewide - Launched a widespread effort to wire every high school, cutting the computer-student ratio by more than half, from 12-to-1 to 5-to-1.

Small Business

To help small businesses flourish in the Golden State, the Governor has taken steps to ensure that state government and small business owners are partners in California's progress. These accomplishments include:

  • Enabled businesses to obtain a 5% state bidding preference when subcontracting with certified small businesses.
  • Proposed a comprehensive package of Workers' Compensation reforms designed to keep jobs in California and curb rising employer costs while maintaining benefits for injured workers.
  • Appointed the first Small Business Advocate to serve directly in the Governor's Office.
  • Reinvigorated the Small Business Council, which allows small business owners and advocates to advise government on its contracting and procurement practices.
  • Set a 25 % small-business participation goal for state contracts.
  • Streamlined the state certification process and eliminated a huge backlog of applications. Process has been reduced from five months to 30 days or less.
  • Expanded the pool of certified small businesses from 5,000 to 13,336 - or 167% since '99.
  • Increased state contracts to small business by $1.68 billion, or 390 % over three years.
  • Signed into law a simplified process for state agencies to contract with certified small businesses and certified disabled veteran businesses for less than $100,000.
  • Convened the Northern California Small Business Economic Summit in Sacramento on May 28, 2003 (Small Business Day) with 1,400 small business and state representatives in attendance.
  • Convened three Small Business Roundtables (Procurement, Workers Compensation, and Health Care) with statewide small business organizations to devise recommendations for legislative and regulatory reforms to benefit small businesses.
  • The Governor's Small Business Reform Task Force held four public hearings in Fresno, Los Angeles, San Diego and Palo Alto to gather small business input about needed regulatory reforms.
  • Worked with local governments on reciprocity agreements, which would enable state-certified small businesses to be given the same preference by cities and counties.
  • Provided over 200 loan guarantees through the Small Business Loan Guarantee Program, leveraging over $200 million in commercial loans to qualified small businesses who otherwise would not have received funding.
  • Established three new Financial Development Corporations to provide additional loan guarantees through the Small Business Loan Guarantee Program.
  • Increased access to capital for California small businesses (AB 716,Chan), to facilitate public and private investment into the Small Business Loan Guarantee trust fund.

In 2003, Governor Gray Davis signed a comprehensive workers' compensation legislative package that industry analysts say will give employers savings of more than $4 billion and protects benefits enacted last year for injured workers. Contained in the proposed package and signed by the Governor are reforms that include:

  • Implementing HMO-like utilization management tools;
  • Establishing a three-year pilot for an independent second opinion on recommendations for spinal surgery;
  • Prohibiting doctors from referring patients to outpatient surgery clinics where the doctors have financial interests;
  • Setting an outpatient surgery facility fee schedule based on the Medicare fee plus 20 percent;
  • Setting a pharmaceutical fee schedule based on 100 percent of the Medi-Cal fee and requiring greater use of generic drugs;
  • Increasing the penalty from 10 to 15 percent to insurance companies for late payment to health care providers;
  • Reducing fraud through increased penalties, information-sharing among state programs, consistent medical billing and fraud referral protocols;
  • Requiring insurance commissioner to adopt minimum standards of training, experience and skill for workers' compensation claims administrators and bill reviewers. Insurers are required to certify compliance;
  • Expanding alternative workers' compensation dispute resolution processes to other unionized industries besides construction;
  • Requiring listing of insurance companies and rates on the Internet.
    The legislation also provides a new supplemental job displacement benefit for training, education and skill enhancement to substitute for vocational rehabilitation, estimated to save $1.2 billion per year, a cap of 24 visits to a chiropractor, and a cap of 24 visits for physical therapy for the life of a claim unless authorized by the insurance carrier.