(photo credit: PJ Mixer)
It’s not a new problem. That, at least, everyone can agree on.
Much has been said about infrastructure being California’s next big budget challenge: To meet the needs of a growing population, the state will need to spend an estimated $765 billion in the next decade on everything from upgrading school buildings to expanding public transit. The governor has put two projects, in particular, at the top of his list: Investing in the state’s water system (originally built for a population of 17 million; now serving twice that number), as well as developing a first-of-its-kind high-speed rail system across the state.
But there is more–much more–that must be done to rebuild the long-neglected backbone of the state’s economy. California’s transportation network alone is expected to need more than $500 billion in investments over the next decade, from maintaining the state’s more than 12,000 bridges and 50,000 lane-miles of highways to investing in its fast-growing public transit system. State officials have acknowledged, however, that they only have the resources to cover about half of that.
So, what to do? For the last 15 years, experts have wrestled with how to solve this problem, offering proposals that range from creating new state agencies to dramatically changing the state’s tax structure.
In a new paper summarizing these findings, California Forward outlines three things they have in common: From former state treasurers to the members of the recent Think Long Committee for California, experts believe California must find new ways to pay for vital infrastructure projects, the state’s efforts to take on this challenge should be integrated, and a long-term state infrastructure plan must be focused on a set of measurable results.
California Forward’s new report, How Experts View the Problem, highlights the variety of different ways experts have proposed to get there. The newly-created 2013 California Economic Summit Infrastructure Action Team will consider this array of different proposals at their first meeting in August. Then the Team will produce its own recommendations this fall at the Economic Summit in Los Angeles–building off these key elements from past proposals to move the state toward a comprehensive infrastructure plan:
1. Find new ways to pay for infrastructure. The state’s traditional method of financing public facilities–with voter-approved bonds repaid by existing tax revenues–is putting too much pressure on the state budget and cannot provide enough funds to meet priority needs. Over the last 15 years, experts have considered two different funding sources that could help close this gap:
- Public funding: Tax revenues alone may not be able to pay for the state’s infrastructure needs, but experts have suggested a range of state, regional, and local revenues that could still help close the gap. Supporters of this approach have included Think Long, the California Business Roundtable, and the new Transportation Coalition for Livable Communities.
- Private financing: Experts agree that there simply isn’t enough public money to do this job right. Instead, the state must examine ways to attract more private investment. Ideas include strengthening the state’s already-established financial tool for funding infrastructure projects, the state Infrastructure Bank, as well as an array of other financing mechanisms. (Some of the most innovative can be found here.)
To reduce the risks associated with private financing, last year’s Economic Summit Infrastructure Action Team proposed creating a new state “center of expertise,” an advisory group staffed by financing and engineering professionals with expertise in assessing and minimizing risk. This approach was also recently championed by the former director of the Southern California Association of Governments.
2. Assign responsibility and integrate efforts. Infrastructure investment is a shared responsibility among governments, and experts agree that the state must find ways to clarify who is accountable for which infrastructure projects. A range of different approaches have been identified to accomplish this: In 2011, Think Long, for example, proposed a Public Infrastructure Advisory Commission, a state body that would be tasked with establishing a framework for innovating funding mechanisms and developing local and regional infrastructure partnerships.
Other experts have suggested encouraging the development of more Public Benefit Corporations at the local level. These quasi-public entities (the Presidio Trust in San Francisco is an existing example) can be established by state and local governments, access the financial tools of the private sector, and then be operated as nonprofits, giving them the flexibility they need to collaborate with both public and private partners.
3. Focus on Results. Experts agree that California should spend its scarce resources on investments that support the state’s economy and long-term job growth–and many have pushed for the creation of a new investment strategy that not only assesses and identifies these priorities, but is also guided by desired results.
As State Treasurer Phil Angelides put it in a 1999 report: “Good investment policy dictates that the nature and exact level of public investment should be driven by a set of principles guiding California’s future economic growth, not by a ‘magic’ percentage of the State’s budget or a laundry list of capital projects desired by various agencies.”
California Forward’s report highlights the state’s 2004 GoCalifornia Action Plan as one example of how this can be done, with its strategy to decrease congestion, improve travel times, and preserve and enhance the state’s existing transportation networks. The Transportation Department’s 2011 Statewide Transportation System Needs Assessment largely adopted this approach, developing an extensive set of performance measures that allow the state to monitor whether the transportation system is meeting its goals.