Three ways to ensure California’s prosperity emerge from Summit’s Capitol Day

150 150 Justin Ewers

Senate President pro Tem Darrell Steinberg (right) talked how the economy will benefit from the “sustainable communities” initiative. (Photo Credit: Skip Jones/Skip Photography)

Three big themes emerged from Tuesday’s California Economic Summit Capitol Day, where more than 250 civic leaders representing the state’s diverse regional economies met with lawmakers and state officials to discuss how to build on the success of the Summit’s statewide prosperity strategy. This action plan, shaped by participants in last November’s Summit, outlines how regional and state leaders can work together to support the training of California workers for the 21st-century economy, make the promise of sustainable, affordable communities a reality, and champion long-term investments in the state’s transportation infrastructure, water systems, and unparalleled working landscapes.

It’s a big agenda, and by necessity. “Your goal—economic prosperity, environmental quality, and expanding opportunity for everyone—is right on target,” Assembly Speaker Toni Atkins told Summit leaders Tuesday. “I believe one of our most important jobs in the Capitol is finding the right balance, a balance where California has a strong business climate that generates jobs and revenue, where we’re also safe, healthy, and financially able to live, work, and raise our families. That’s really it. The solutions aren’t so easy.”

Even so, over the last two years the Summit’s unique partnership between California Forward and the California Stewardship Network has steadily advanced these priorities. “But never more so than this year,” as Summit Steering Committee co-chairs Paul Granillo of the Inland Empire Economic Partnership and Eloy Oakley of Long Beach City College put it in a letter to attendees.

“Thanks to the efforts of all seven Summit action teams, the 2014-15 state budget is supporting a broad range of Summit proposals, several key bills have adopted Summit ideas, and great strides are being made in and outside the Capitol to create the partnerships California needs to be competitive in the global economy. Looking back on our goals for the year, every one of the major legislative proposals identified in The Summit Plan to Advance Prosperity in 2014 has been accomplished.”

Three big ideas for where to take the Summit next

While the state is beginning to turn more and more to regions to develop the strategies that will achieve state goals, Capitol Day’s focus was on what’s next: How can the Summit build on its work thus far—and continue to expand the unique platform it provides for civic, regional, and state leaders to set priorities, encourage innovation, and learn from each other?

Three big ideas emerged during discussions—all of them pointing the way to a set of policies that will encourage the combination of state action and regional collaboration that California’s long-term prosperity depends on:

1. Training workers for the new economy: Jobs may be roaring back in some California cities, but the recovery isn’t just uneven, it’s also not enough—not yet. Poverty rates have doubled over the last two decades in regions like the Inland Empire, where less than one in five residents have a college degree. Meanwhile, even fast-growing regions can’t always find the workers they need: The state is projected to face a shortfall of 2 million skilled workers in the next decade, especially in the expanding high-tech manufacturing sector.

“Workforce development is going to be critical,” said Kish Rajan, executive director of the Governor’s Office of Business and Economic Development (GO-Biz), who spoke on a panel of regional workforce training experts and private sector manufacturers. Rajan noted the state needs not just to support career technical education programs—an area state leaders, with the Summit’s support, have made strides in this year—but to build partnerships between schools, workforce training programs, and industry.

“We need more industry participation in helping to define the goals and recommendations for our teaching methodologies,” said Rajan. “That’s got to happen on the ground. We can’t rely on serendipity for companies to discover these programs. We have to reach out to people and do it deliberately. That’s one of the purposes of the Summit—to bring together these resources so we can do that.”

2. Making the promise of SB 375 a reality: With California’s population projected to swell to 50 million in the next three decades, it’s clear that cities must find new ways to grow. A 2008 law, SB 375, has fundamentally changed the way communities are thinking about “sustainable” regional growth—requiring regions to develop plans that tie together transportation, land-use, and housing for the first time. But paying for these projects—from transit stations to water systems and affordable housing—continues to pose problems, as does navigating the regulatory tangle of the state’s complex environmental laws.

What can the state do better to support the development of sustainable communities? Senate President pro Tem Darrell Steinberg, author of SB 375, joined Mike McKeever of the Sacramento Area Council of Government and Richard Lyon of the California Building Industry Association in noting three major policy opportunities in the years ahead:

  • Sustainable funding: While the state will use a portion of future cap-and-trade revenues for sustainable community development, there is still a need for more local infrastructure financing tools—including the tax-increment financing authority once available to redevelopment agencies. The Summit is supporting the enactment of one such tool before the legislative session ends, urging lawmakers to provide cities and local jurisdictions with a new Enhanced Infrastructure Financing Districts authority. A new long-term funding source for transportation will also be needed to replace the gas tax, a revenue stream that is failing to keep pace with rising infrastructure demands.
  • Regulatory relief: “We’ve made meaningful strides in the last few years,” McKeever said, pointing to CEQA streamlining for green projects and transit-oriented development in legislation including SB 375 and SB 743 (2013). Noting how rarely these exemptions have actually been used, given the complexity of the state’s environmental laws, he added: “We need to start hitting triples and home runs in this state. Some of this is CEQA, but some of is just cities and their zoning codes.”
  • Connecting workforce to regional planning: SB 375 began to pull sectors like housing and transportation into the same planning sphere. The next step, Steinberg believes, is bringing workforce and economic development into the mix: “We need to merge regional planning with our larger regional economic development strategies—including education and its relationship with modern economy.”

3. Ensuring California’s water sustainability: While much of the attention in Sacramento this summer has focused on the debate over whether to put a $7 billion water bond on the November ballot, the fact is, even that won’t be nearly enough to solve the state’s perennial water challenges.

“There’s no good reason not to pass a…water bond in the next few days,” said Mark Cowin, director of the Department of Water Resources, who joined a group of other current and former state officials, including Karen Ross, the state’s food and agriculture secretary and Celeste Cantú, former head of the State Water Board. “We’re going to need hundreds of billions of investments to achieve the kind of sustainability we want over the next decade or two. [It] may seem like a lot when we’re talking about it right now, but it’s still a pretty small piece of the puzzle.”

Californians spend about $30 billion each year on water, most of it at the regional and local level. And it is that model—water users paying fees to support local infrastructure—where many experts believe the state’s long-term financing solution may lie.

“We need this bond. It’s not nice to have; it’s essential to have,” said Lester Snow, executive director of the California Water Foundation. “We’ve got to break this cycle of episodic investment in water infrastructure. Doing this bond and waiting for the next one is not going to work. We’ve seen the public show more interest in paying fees to have that sustained type of investment.”

This, he noted, will have to be paired with efforts to integrate California’s highly decentralized water governance structure, as well—a point Summit partners including California Forward and the Water Fix Coalition have also recently made. “One of the fundamental problems we have in water management is the enormous fragmentation; we have literally thousands of local, regional, state, and federal governments that engage in some form of management or regulation,” said Snow.

“In my opinion, our hydrologic reality is changing faster than our institutions are capable of adapting. We have to get this mindset of integration. We can’t spend money within the boundary of each entity. Capturing stormwater coming from another city and getting it into your groundwater basin—that’s where we’re not investing. It will take breaking down siloes, looking at water on a regional basis. It can be done, but we’ll have to make some difficult decisions.”

For California to prosper, similarly difficult decisions lie ahead on a whole host of issues, from workforce and transportation to sustainable communities. In the year to come, the Summit will be working to help its expanding network of regional and state leaders make these hard choices—together.


Justin Ewers

All stories by: Justin Ewers