Equitable Economic Development across California

California Must Do More to Facilitate Inclusive Regional Economic Development, the Little Hoover Commission Finds

California has an opportunity to catalyze more inclusive and sustainable regional economic growth. However, in order to have a meaningful impact on regional economies, the state must do more, including providing greater strategic clarity and prioritizing resources for underserved regions, the state’s independent government watchdog finds in a new report.

The report, Equitable Economic Development across California, examines how state government can promote inclusive economic development in California’s less prosperous regions.

This is the Commission’s third publication on equitable economic development and the first to include policy recommendations. It previously released two Issue Briefs on the topic, Major State Programs That Can Support Regional Economic Development and Using Data Tools to Compare Regional Economic Well-Being in California, which offer important resources to state leaders as they seek to address regional economic disparities.

In its report, the Commission highlights the disparities in income, employment, and opportunity that exist between California’s coastal cities and its rural and inland regions. 

“In recent decades, knowledge-based economies in California’s coastal cities have surged ahead, while less-diversified economies in the state’s rural and inland regions have not shared in this prosperity,” says Commission Chair Pedro Nava. “California must do more to address these regional disparities and support the communities in our state that have been left behind.”

The Governor and Legislature have already taken bold action to support inclusive regional economic growth, including through the $600 million investment in the Community Economic Resilience Fund (CERF). California is poised to support regional collaboratives as they develop and implement inclusive development strategies.

The Commission outlines several challenges that threaten CERF’s ability to significantly impact regional economies, including balancing among CERF’s different outcome goals, ensuring that regions receive the scale of investment necessary to change their economic trajectories, and coordinating the range of state programs that can support inclusive regional economic development.

“The Commission applauds CERF’s emphasis on inclusive and community-centered economic planning,” says Commissioner Bill Emmerson, who serves on the Commission’s subcommittee on equitable economic development. “Yet with such a broad range of goals and limited funding, CERF risks losing its ability to tackle any of its priorities effectively.”

To provide greater strategic clarity to the program, the Commission calls on the state to focus CERF more clearly on the creation of quality jobs in sustainable industries with high growth potential. The state should also prioritize connecting members of disadvantaged communities with the high quality jobs created.

To better support regions as they seek to execute economic development strategies, the Commission urges the state to help align resources, incentives, stakeholders, and regulatory agencies around regional opportunities. The Commission further recommends that the state create a single, senior point of leadership for regional economic development to provide efficient and coordinated support for regions in the long term.

In addition, the Commission finds that some regions and subregions need substantially more support for inclusive development than others. In recognition of this need, the Commission calls on the state to prioritize historically disadvantaged regions within CERF and relevant programs.

“California’s is a story of two economies,” says Commissioner Gil Garcetti, who also serves on the Commission’s subcommittee. “In order to better address longstanding inequities and close regional disparities, state leaders must direct CERF and related resources to the regions that need them the most.”

The Commission outlines additional recommendations, including investing in regional capacity for inclusive development and institutionalizing the reporting of metrics relating to the health of regional economies and the extent of regional economic disparities.

“CERF offers California a tremendous opportunity to strengthen and expand existing grassroots coalitions and accelerate more inclusive and sustainable regional economic growth,” says Chair Pedro Nava. “By adopting the Commission’s recommendations, the state can sustain and advance this equitable regional economic development in the long term.”

About the Little Hoover Commission

The Little Hoover Commission is America’s only permanent, independent citizens commission working to improve state government. A nonpartisan oversight agency created in 1962, the Commission includes 13 Commissioners appointed by the Governor and legislative leaders. The Commission’s mission is to investigate state operations and promote efficiency, economy, and improved service.