Photo Credit: shutterstock.com/MierCat Photography
By Egon Terplan
The last several years have marked a renewed interest in regionalism and regions-up planning and policy in California. As we noted earlier this year, this new era of regionalism came out of the Governor’s “Regions Rise Together” initiative, which launched in 2019 in partnership with CA FWD.
Today, state programs such as California Jobs First (creating a new funding structure and approach to regional economic development) and Regional Early Action Planning (REAP) grants (designed to implement already-adopted regional “Sustainable Communities Strategies”) are underway across every region. These programs—along with the new Economic Blueprint from the Governor’s Office of Business and Economic Development (GO-Biz)—underscore the growing appetite for more investment into regionalism and state/regional alignment in California.
The challenge is durability. Both California Jobs First and REAP 2.0 face upcoming sunset dates, with no clear ongoing structure to support this kind of state-regional collaboration to achieve long-term sustainability and economic goals.
California Forward, together with our partner regional organizations in the California Stewardship Network (CSN), has been working for several years on a set of recommendations to support greater regional capacity to achieve economic goals, including through the creation of a more durable, sustainable, and inclusive system for regional economic development and planning across California. Our work in this area has since expanded to include representatives from numerous California Jobs First regional convenors as well as other regional governance systems, including the K-16 Collaboratives, Councils of Government (COGs) and Metropolitan Planning Organizations (MPOs) represented by the California Association of Councils of Governments, and the Alliance of Regional Collaboratives for Climate Adaptation (ARCCA).
We see historic opportunity to build a stronger regions-up system in California, given the regionalism momentum of the past few years. Here are 8 reasons why:
1. Unprecedented regional economic development capacity now exists in all 13 economic regions.
Every economic region in California has built new and inclusive governance structures for economic planning and cross-sector civic and governmental collaboration as part of the California Jobs First process. Over 10,000 Californians have participated in the regional tables over the past four years. While there is no doubt that some stakeholder groups could have been more engaged (e.g., local governments or key employers in some regions; labor and community representatives in others), the overall program has touched a wide diversity of people and organizations—many of whom had not been part of economic development conversations in the past.
Each region has produced a strategic plan that outlines its key assets, challenges, and opportunities. Regions have also prepared more detailed implementation and activation plans to support up to three initial growth sectors of their economies (see example from North Valley Thrive here). These early results show an appetite for more coherent, long-term economic planning, and demonstrate the ability for regions across the state to plan holistically and pursue shared strategies.
We at CA FWD have a special investment in the success of this program. CA FWD was at the table from the beginning to help shape Regions Rise Together and pass and implement the Community Economic Resilience Fund or CERF, the precursor to California Jobs First. Today, nine of the 13 California Jobs First economic regions are currently led by a member of the CSN and all 13 regions have CSN members at the table.
2. California has created an initial framework for industrial development and ongoing regions-up planning through its new Economic Blueprint.
The state’s Economic Blueprint positions California Jobs First as an important foundation to move the state and its regions towards a carbon-neutral, inclusive economy. It identifies regions as the key point for economic development action and the place to align workforce, climate, and infrastructure strategies around specific sectors that are ripe for either strengthening, accelerating, or taking higher-risk bets for future success based on regional assets. The Blueprint identifies four key sectors where the state has promised initial focus and support:
- Agricultural technology (“agtech”) and farm equipment;
- Life sciences;
- Semiconductors and microelectronics; and
- Space, defense, and satellites.
While other sectors (such as clean energy) may also merit attention, CA FWD fully supports the state’s effort to establish priorities—something other states and countries have consistently done through strong economic development and industrial policy practices. The Blueprint also opens the door for a more durable strategy, calling for the need to build ‘institutional muscle’ to deliver lasting implementation.
3. Leveraging and going beyond California Jobs First, the state is working to align economic, infrastructure, and workforce actions, programs, and regions across agencies.
The California Jobs First Council, created in 2024 to bring state agency leads together to support implementation of the priorities identified by regional leads, marked a significant step toward coordinated state action on economic development. Jointly led by the Governor’s Office of Business and Economic Development (GO-Biz) and the Labor and Workforce Development Agency (LWDA), the Council coordinates economic development efforts across nine state agencies and is tasked with aligning implementation across sectors such as workforce, housing, transportation, and climate resilience. The Council does not necessarily create a durable coordination structure, given it is not codified in legislative language (unlike the Strategic Growth Council). However, it has created a formal inter-agency mechanism specifically designed to support regional implementation. Future efforts will require exploring the California Jobs First Council’s relationship with the Strategic Growth Council and what could/should be combined.
This interagency approach recognizes that regional action to coordinate economic and workforce strategies goes far beyond the California Jobs First program. K-16 collaboratives now match the geographies of California Jobs First regions. The Labor Agency’s Employment Development Department’s Regional Planning Units will also become aligned with the California Jobs First regions and help coordinate labor market planning with regional economic priorities.
This geographic recognition of California Jobs First regions in existing state policy and programs helps to stitch together the beginnings of a more durable structure for coordinating workforce development with regional economic priorities. Importantly, this represents the first time California has systematically aligned workforce planning geographies with economic development regions.
Institutionalizing California Jobs First, K-16 collaboratives, and other successful regional plans and processes into state policy where appropriate could provide a long-term and enduring way to maintain the linkage between the workforce and economic development systems.
4. California Jobs First and REAP 2.0 have demonstrated the value of regional block grants.
California Jobs First and REAP 2.0 are both examples of regional “block grants” where regions receive guaranteed investment and do not have to compete for initial planning funds. REAP 2.0 funds were distributed to metropolitan regions based on their projected 2030 population (which varied based on their size), while each California Jobs First region received the same amount for both planning and catalyzing new economic development strategies ($19 million total). This is a similar approach to the federal Build Back Better Regional grants under the Biden administration, or the longer-standing system of sending funding to multi-state regions through the Regional Commission structure.
During our years of conversation with regional and philanthropic leaders, CA FWD and CSN have highlighted several key opportunities to learn from these programs and improve the revenue model, funding delivery, and structure of regional block grants going forward. Key improvements (which will be fleshed out in formal recommendations later this year) include: speedier investment or more upfront funding from the state as opposed to reimbursement, less micro-oversight of spending, more consistency and reliability (e.g., no mid program cuts or temporary work stoppages), increased coordination with other governmental bodies, aligned funding across state agencies, and more.
While some may argue the downside to block grants—in particular, the state loses direct control over which types of projects get funded—California Jobs First and REAP 2.0 have succeeded in their delivery on the idea and theory of regional block grants. Specifically, the state identifies the broad goal (i.e., climate forward economic transition or infrastructure to support infill and reduced driving) and places some restrictions on where funds can be spent; then the region gets to select the precise way it goes about meeting the broader goal.
In a reflection of the support for the block grant approach and the value of regions-up identification of projects, the recently adopted 2025-2026 budget included an extension of the time Metropolitan Planning Organizations have to expend their REAP 2.0 funds.
Further, California Jobs First plans are now federally recognized as Comprehensive Economic Development Strategies (CEDS) by the U.S. Economic Development Administration (EDA), making all 13 regions eligible for EDA funding. This federal recognition provides a foundation for sustained regional capacity that exists independent of state funding cycles. It is also further evidence that the California Jobs First regional boundaries and strategic plans are forming a new basis for regional economic analysis and planning.
On balance, the initial success of these two programs, and similar programs at the federal level, demonstrates the need to further explore using block grants as a state/regional partnership and a more efficient way to deliver funds closer to where they will be spent.
5. On the ground, these programs highlight the importance of allowing for institutional variety—and avoiding a “one size fits all” approach to regional economic development.
Across California Jobs First regions, there has been great variety in institutions and organizations taking the lead on planning and implementation. This variety demonstrates the possibility for a range of institutions to continue the work. Some are community foundations, others longstanding regional civic organizations or economic development groups, and others are new coalitions that may evolve into long-term civic organizations.
Metropolitan Planning Organizations and Councils of Government have also seen a wide variety in programs and investments selected for REAP 2.0 funding. Some regions have focused on water/sewer infrastructure upgrades to support infill while others have invested in transit fare coordination and a housing preservation pilot and others in a regional housing trust fund.
Overall, REAP has also encouraged more of the state’s metropolitan planning organizations—many of whom have historically focused mostly on transportation planning—to become more actively involved in supporting state housing goals.
But there has generally been little coordination between MPOs, COGs, and California Jobs First convenors (with some exceptions such as in the Sacramento region where Valley Vision and the Sacramento Area Council of Governments work closely together, such as on strengthening rural economies).
The variety of organizations and approaches provides precisely the groundwork to enable regions to best select their own ongoing institutional structure. For regions with MPOs there is great opportunity to strengthen this coordination as the success of REAP 2.0 funding demonstrates metropolitan planning organizations (MPOs) and councils of government (COGs) can play a lasting role by aligning state infrastructure investments with regional land use and transportation plans. California Jobs First plans and investments can leverage the decades of knowledge the MPOs have in economic and land use projections, spatial analysis, and regional coordination of priority projects. And MPOs can leverage the California Jobs First plans and their identification of priority industry sectors. MPOs can also help shape California Jobs First project investments in ways that align with adopted regional land use and transportation plans.
6. Strong appetite for regional priority projects demonstrates the growing awareness and importance of identifying new investment to move these plans from theory to action.
Investor sessions and oversubscribed state grants show strong readiness to move from planning to execution across the California Jobs First regions. The state’s $125 million in implementation support aims to accelerate projects emerging from California Jobs First planning. While the funding for implementation is less than originally proposed (due to program cuts of $150 million that were not restored) demand reflects strong regional capacity and interest for continued project investment. At the same time, the state’s inherent budget volatility and the dramatic reduction in available federal funds for many of these priority projects underscores the need to look much more seriously at the private sector.
In partnership with the GO-Biz, CA FWD recently convened two Investor Exchanges intended to connect regional partners and project leads with investors and capital partners, and to showcase emerging industries in the state grounded in regional priorities. Nearly 115 state and regional leaders participated in these sessions, underscoring the appetite to look beyond traditional state grants toward public-private partnerships, loan opportunities, and other more durable funding structures.
7. New state agency reorganization offers the opportunity to better centralize and align economic development activities.
As Governor Newsom approaches the end of his term, he has used his political capital to drive a reorganization of state agencies, specifically through creating a new Housing and Homelessness Agency. These functions were originally part of the broader Business, Consumer Services, and Housing (BCSH) Agency, meaning that pulling out housing has created a standalone business and consumer services hub that sits at the cabinet agency level. We see an opportunity to use this moment of state agency restructure to envision a broader state economic development agency that would allow for stronger coordination and integration of state economic and workforce development activities, including strategic sector support, data provision, and investment alignment, under a Secretary confirmed by the legislature.
8. Fiscal realities and federal uncertainty are creating the urgency for action—and regional coordination and funding solutions are potential solutions.
The state and its regions face mounting fiscal pressures from multiple directions. Federal retrenchment from infrastructure investments following the IIJA and IRA creates uncertainty about continued federal support, while potential tariffs and trade policies plus new tax provisions threaten the stability of key industries that undergird regional economies.
The state’s gas tax—a major source of transportation revenue—is declining due to the shift to zero-emission vehicles, requiring new and potentially additional regional approaches to transportation funding.
Climate resilience investments are placing additional strain on state and local budgets just as regions face increasing wildfire, drought, and extreme weather costs.
These converging fiscal pressures make regional funding solutions and coordination not just preferable but essential for managing limited resources effectively.
The eight factors above provide optimism for continued efforts in regionalism. We now need to build on the current energy and momentum to institutionalize a durable regions-up system. We look forward to continuing this work with our Regions-Up workgroup, and plan to bring a set of key recommendations for discussion during our Regions-Up track and breakout sessions during our annual California Economic Summit October 21-23 in Stockton.