(Photo Credit: Violeta Vaqueiro)
As the recovery lifts California out of a decade of financial crises, the state’s inherent economic strengths and lingering fiscal weaknesses are being revealed. Jobs are coming back, bringing a new wave of tax revenues with them. But in twenty counties—mostly inland—double-digit unemployment and a scarcity of skilled workers still cloud the horizon.
State leaders, meanwhile, are being confronted with tough questions about how to avoid the fiscal pitfalls of the past—and what it will take to build a sturdier foundation for lasting prosperity.
A report released today by California Forward for consideration by the California Economic Summit takes aim at these challenges, highlighting a set of investments in human capital and infrastructure that will be essential to growing economic opportunity across the state—and identifying a range of options for funding them. The report, Where California needs to invest—and how to pay for it, is the second installment in CA Fwd’s Financing the Future series, an effort to broaden the public conversation about the stability, adequacy, and equity of the state’s revenue system. (The first chapter is available here.)
While California’s tax debates often focus first on identifying new sources of funding, Financing the Future adopts a different approach—urging state leaders to consider the problems these dollars are trying to solve, identify funding gaps, and then target public investments, old and new, where they are needed most. CA Fwd’s report focuses on two areas Summit leaders believe are critical for the state’s long-term prosperity: California’s human capital—the workforce that must compete in the 21st century economy—and the state’s aging infrastructure, including the transportation systems, water projects, and school facilities needed to support sustainable communities.
A new funding framework
Highlighting where investments in these areas could make the biggest difference—from K-12 and career technical education programs to governance reforms that will allow communities to invest in infrastructure—the report provides a new framework for paying for these priorities, highlighting in particular funding options outside the state budget.
“Financing the future will require looking beyond the state General Fund,” said Jim Mayer, president and CEO of CA Fwd. “California needs to connect local revenues to economic regions, where they can enable innovative policy-making, transparent funding, and more accountable decision-making. CA Fwd has identified how to make these connections, while showing how this approach can lead to everything from more effective workforce training and K-12 education programs to more sustainable transportation and water investments.”
These are not the only programs worth investing in, of course, but economic development experts applauded the report’s focus on the priorities identified in the Roadmap to Shared Prosperity, the Summit’s five-year plan for advancing sustainable growth.
“The Roadmap highlights two goals shared by every region in California: preparing the workforce for the 21st century economy and building the sustainable infrastructure communities will need to thrive,” said Eloy Oakley, superintendent-president of Long Beach City College and co-chair of the California Economic Summit Steering Committee. “Now CA Fwd is helping us understand what it will take to pay for these investments. Whether you care about schools or local roads, this is a debate you should be engaged in.”
Broadening the conversation
In political circles, this debate has already begun, with stakeholders focusing on a range of measures that could appear on the 2016 ballot—from oil severance and tobacco taxes to the extension of higher income tax rates on the wealthiest Californians. The Legislature is also considering broadening the sales tax base. Financing the Future offers civic-minded Californians a way to engage with all of these ideas—and join a thoughtful conversation about the comprehensive changes needed to build a stable, reliable, and fair revenue system.
“There may be no more important conversation for business and community leaders to participate in than this one,” said Carl Guardino, president and CEO of the Silicon Valley Leadership Group and a member of the California Transportation Commission. “Growing our economy requires smart investments in transportation and housing, and it demands a concerted effort to reduce poverty and close the income gap. Financing the Future outlines a range of options being considered for accomplishing these goals. I encourage civic leaders to engage with these ideas—and to join in this conversation about how to build a revenue system we can all rely on.”
While CA Fwd’s report does not offer specific policy recommendations, it does introduce a set of considerations for ensuring revenue changes make the system simpler and more transparent, while advancing the Summit’s “triple bottom line”—promoting economic growth, environmental quality, and opportunity for all.
“Financing the Future offers a comprehensive assessment of the strategies we need to think about as we plan for funding economic development, but even more important, it shows us how we can begin to address the issue of the complexity of the system itself—which is often the biggest impediment to change and the biggest obstacle to engagement in these issues,” said Deborah Nankivell, CEO of the Fresno Business Council. “The real question is: How do we untangle all of our systems and redeploy money into investments in people, infrastructure, and communities? That is the conversation we need to have.”
For California to succeed in the decades to come, it is one that must begin now.
To join the conversation, please share your ideas for financing California’s future by clicking here.