Creating an investment strategy for California’s economic recovery
May 20, 2020 by Micah Weinberg and Fred Silva
(Photo: Thomas Hawk/Flickr)
Originally published on Fox & Hounds
The May budget revision unveiled by Governor Newsom last week was prudent and showed the flexibility in the state’s budgeting process to quickly adapt to changing conditions. What remains largely missing from the fiscal agenda, though, is urgent stimulus to the California economy that invigorates job creation while rectifying the significant racial and geographic inequities that existed before the crisis.
Why during the longest recovery period in American history did so many fare so poorly?
Wages provide a clue. Almost 60% of the new jobs created in the last decade paid less than $18.00 per hour. While some workers moved into higher incomes during the recovery, the majority lost ground.
The pandemic magnified these inequities displacing those primarily in lower paying sectors. Now is the opportunity to reverse this vicious economic cycle by making major investments that will create tens of thousands of good jobs while creating infrastructure and housing that will improve our quality of life and bring down the cost of living for everyone.
We can start by doing four things.
Pass an Economic Recovery Bond Measure
A new proposal for the November 2020 ballot could specifically direct $20 billion in an infrastructure bond to meet regional and local infrastructure projects that are in the pipeline for the vast unmet infrastructure needs that plague our regional economies. A measure like this would be most successful if priorities are established before heading to voters for approval. Not only will it be important for voters to know what they are buying, but by setting priorities focused on eligible projects that can begin initial construction in a reasonable period of time, it can ensure the process moves quickly once approved.
Put voter approved but unsold infrastructure bonds to work
There are approximately $34 billion in voter approved unsold bonds that should be expedited for shovel ready projects that are in the approval pipeline. Of that, $24 billion sits in school, higher education and water resource related facilities. For example, K-14 school bonds already approved by voters can be used for school construction projects that are already in the queue.
Other unsold bonds for a variety of infrastructure projects are awaiting action by the Legislature since they rely on an appropriation for the Treasurer to set in motion the sale of the bonds. To avoid this situation, the Legislature should look to include a continuous appropriation to an administrative agency to consider projects on an emergency basis. It could require the administration agency to preclear projects that have CEQA certifications and related requirements.
Leverage state funds with local and regional funding by capturing growth in regional economies
Continuing what the state has done over the past 10 years will not address the economic damage of the pandemic nor will it correct the problems of the past decade.
A start would be accelerating economic and infrastructure development using the newly established Enhanced Infrastructure Financing District and reforming it into Public Investment Authorities, as well as creating a state partnership to accelerate investment activity. These resources could leverage the over $500 million the governor’s budget will make available in infrastructure funding dedicated to infill housing projects. The jobs created through these activities will be higher than the preponderance jobs created in the last decade.
Public Investment Authorities create the possibility of state and local revenues to be bundled together into financial and business plans that alter the economic performance of the region.
Invest in inclusive economic planning
Last year, the Governor launched the Regions Rise Together initiative. This was out of the recognition that not all communities benefitted equally from the economic expansion, and there needed to be an explicit, well-supported plan for Inland California as well as communities that are struggling with the high cost of living on the coast.
It is understandable that some new programs will have to be pulled back, but if we do not continue our strategic investment in regions all throughout the state and explicitly plan for economic equity, it will not happen. In fact, we are on a path now to having an even less equitable economy along racial and geographic lines in the wake of the crisis.
All of our state investments, from transportation to workforce development, should be directed to support an economic equity agenda such as the one developed by the Fresno DRIVE process last year. But without funding for plans to achieve economic equity, such as that proposed in AB 3205 by Assemblymember Rudy Salas from the Bakersfield region, we will not know how these billions of dollars should be spent to achieve different outcomes.
Ultimately, if we are to emerge stronger from this crisis, we need to focus on an economic renewal that will address the inequities in our state and not just a recovery that leaves us where we started.
This is a way to invest in getting Californians back to work that is worth pursuing.
Micah Weinberg is CEO of California Forward, a nonprofit organization that leads a movement to improve government performance and create inclusive, sustainable growth for all. Fred Silva serves as Director of Public Policy for California Forward.