By Bill Hauck
California has made great progress getting its fiscal house in order—with recent forecasts from the Governor’s Department of Finance and the Legislative Analyst providing a reassuring reminder of how an improving economy, fiscal restraint, and growing tax revenue can bring the state budget into balance.
But our state still faces a major challenge: Finding a way to pay for hundreds of billions in needed maintenance and upgrades to public facilities. The last generation invested heavily in public works that we take for granted. Our universities, highways, and water systems were built in the 1950s and 1960s as an investment for the future.
Now it is time for our generation to invest in projects that will enable economic vitality for the next generation.
There is a growing consensus that this task is urgent. According to recent estimates, the state will need to invest more than $700 billion over the next decade in public facilities to serve a growing population—upgrading school and university buildings, maintaining highways and public transit systems, and making the water system adequate, reliable and sustainable.
There’s just one problem: We don’t have that kind of money. Even with the economy improving and tax revenues climbing, the state’s needs are still far greater than our ability to pay for them.
A smart infrastructure strategy
California’s only option is to be smarter about how the state takes on this challenge. To his credit, Governor Brown has made investing in infrastructure a priority this year, and the administration’s much-anticipated five-year plan will be a good first step.
California Forward’s goal is to help officials make the best possible decisions—by encouraging the state to adopt an investment strategy that supports long-term economic growth, focuses on results, and provides financing methods that maximize public and private investment.
Beyond ‘business as usual’
The state cannot take on this challenge the way it did in the past: by adding up everything that lobby groups want and borrowing as much as the voters will stomach.
California must move beyond business as usual. The state has to figure out which spending choices will achieve the best return on the investment—and improve Californians’ collective well-being by sustaining a growing economy with increased job opportunities.
How to get there
To get there, California needs to set priorities for the state’s public works, define a clear sense of how local, regional and state agencies will coordinate efforts to achieve California’s goals, and a plan for how to pay for it.
Three principles should guide the public discussions that need to inform the state’s planning:
- Improve Results: California should spend its scarce resources on investments that support the state’s economy and long-term job growth.
- Integrate efforts: The state’s infrastructure investments should not be considered by walling off funding for each public facility sector. The state should look at how to spend every dollar—whether it is intended for community colleges or public transit projects—with an eye on achieving the state’s goals of economic sustainability, environmental protection, and community equity.
- Find new ways to pay for it: The traditional method of financing public facilities investments—with voters approving bonds and relying on existing tax revenues to pay off the debt—is putting too much pressure on the state budget. There simply isn’t enough money to do the job right. There is an urgent need to make changes in how infrastructure is financed: First, the state must attract more private investment. Second, it must link revenue-raising authority to the level of government responsible for accomplishing the task.
Join the conversation
The Economic Summit project – a partnership of California Forward and the California Stewardship Network – has been hosting a series of regional forums to seek input on the state’s infrastructure strategy. The last regional forum is scheduled to take place this week. This statewide conversation will come together at the second-annual Summit in Los Angeles on November 8.
We invite you to join the conversation.
Bill Hauck is a member of the California Forward Leadership Council and former president of the California Business Roundtable.