San Diego economy strong in life sciences and defense but faces permitting, housing and federal funding headwinds, panelist says

Eduardo Velasquez, senior director of research and development at the San Diego Regional Economic Development Corporation, presented a data‑driven overview of the region's economic assets and risks to the Assembly Committee on Economic Development. "As one of California's most globally connected regions, our economy is also fueled by world class universities, a highly skilled workforce, and those binational ties," Velasquez said.

Velasquez highlighted key industry clusters: aerospace and defense ("over $27,000,000,000 in Department of Defense contracts in the last fiscal year"), life sciences ("more than 60,000 jobs tied to that industry"), high‑tech and semiconductors (including ASML, Qualcomm and Viasat), fusion energy research and advanced manufacturing (about 240,000 manufacturing jobs, roughly 10% of the private workforce). He also noted $1.2 billion in venture capital funding in San Diego during 2024.

Velasquez warned of several headwinds. He said proposed federal research funding cuts and changes to indirect rates could create a roughly $500,000,000 economic impact in the region. He identified permitting delays, cross‑border trade uncertainty and grid‑resiliency permitting as persistent barriers that increase time‑to‑market and raise costs for local businesses. "We hear from companies that time to market is more important than any financial incentive that can be provided," he told the committee.

Housing affordability emerged as a central constraint on talent retention and attraction: Velasquez said only one in nine households can currently afford the median‑priced home in the region, making recruitment and retention the top concern employers report. Velasquez urged state‑level collaboration on stabilizing research investment, accelerating site approvals for biomanufacturing, supporting cross‑border logistics and investing in housing affordability to retain workers.

Committee members responded that the data and regional context underscore the link between state budgeting decisions and local economic outcomes. Velasquez said the San Diego region has submitted recommendations to state initiatives including the California Jobs First effort and suggested pilot regulatory sandboxes to test ways of reducing permitting friction without producing unintended consequences.

The testimony framed the discussion for later panels on small‑business concerns, workforce development and local procurement, and the panelists asked lawmakers to consider targeted policy actions to reduce delays and preserve the region's competitive clusters.