By Justin Ewers and John Guenther, December 30, 2013
It's been a bit of a blockbuster year for news about California's road, rail, schools and water systems with the state's controversial high-speed rail project to the controversial Delta tunnel project taking up a lot of ink.
While the price tags for projects make the headlines, less attention is paid to finding the smartest ways to pay for these and other infrastructure projects and making sure they are carried out with the best results and return-on-investment in mind.
The state of infrastructure and its importance to the economy here prompted Californians active in the California Economic Summit to put up the issue as one of their tent pole initiatives for the past two years.
We talked to Fred Silva, California Forward's senior fiscal policy advisor and expert in state and local finance, about the past year in infrastructure news and a look ahead to 2014.
High-speed rail and the Delta tunnel projects are the most high-profile and controversial infrastructure topics in California. Why is that?
When we think about infrastructure we think locally and regionally. We drive on it, ride in it and drink it. We also see the cost in our gas tax, sales tax and fees that we pay for it. Infrastructure that has statewide importance such as our state water system is simply more costly and always controversial because of its scale. When the state water project was conceived 60 plus years ago it was not without controversy. The current proposal carries the burden for meeting "co-equal" goals: preserving the Delta and securing the state's water supply for agriculture and urban users. Since most of the cost will be financed with borrowed money it is likely that the water rates that agriculture and urban users will have to pay to finance the project will produce significant sticker shock.
High-Speed Rail has a similar problem. Transportation infrastructure is primarily an urban system. The state got out of the business of financing major urban transportation improvements long ago. Most of our investment in transportation at the local and regional level relies on voter-approved sales taxes. The High-Speed Rail project is the state's attempt to connect Northern, Central and Southern California economies and it is not cheap. The project confronts the same problems that big expensive projects always confront: They take time and with time comes added cost and they are very disruptive.
What does the state need to do better that doesn't get talked about as much? Finding a way to make sure there California has enough clean water is important; a transportation system that will let us all move around without contributing to climate change is, too. Right now, though, a lot of towns say they don't have the money to fix streets with potholes.
The answer is short and not easy to implement: Build public confidence by focusing on improving results. In the case of clean drinking water the state has missed opportunities to improve water quality of underserved communities. It can do better. Investing in basic maintenance and safety of the existing highway system should be the first priority if the underlying objective is to improve public confidence. Driving on a smooth and safe road will help restore public confidence. The gas tax we all pay at the pump is insufficient to meet basic needs to keep the system operating. It is time to consider additional revenue sources that can be dedicated to keeping the highway and transit systems operating and potholes filled.
The Summit's infrastructure team has more than 70 experts from across the state on it. What brought all of these diverse people and groups together?
They were brought together from regions across the state with one goal in mind: find new ways to increase investment in state regional and local infrastructure.
What will be the top infrastructure stories in 2014 in California?
From a statewide perspective High-Speed Rail and the Delta Tunnels will dominate the state news. Although most of the fighting will be done in courtrooms, the big news is likely to center on the true costs of the projects when financing is taken into account. If you look behind those stories you are likely to see regional and local infrastructure investment in actual projects increasing. As the state's major regional economies continue to grow (the central valley and Island Empire growing slower) more investment in differed local infrastructure will likely grow.
There are likely to be two infrastructure measures on the November ballot--an initiative to borrow billions of dollars to pay for water projects and a measure to raise billions more for road repairs. Developing a replacement for redevelopment--a tool for driving local economic development--is also gaining momentum. How do these ideas fit into the Summit's strategy?
Both subjects, statewide measures for additional investment in water and transportation, and replacement tools for local economic development are high on the priority list for action in 2014. The proposal coming out of the Summit is that State, regional and local investment tools are needed to provide support for the state's regional economies.
It sounds like the Summit has a comprehensive plan for taking on these challenges. Some of these new ideas will be on the legislative calendar this summer--and on voters' TVs next fall--while some are likely to take a lot longer to become reality. How will we know when the Summit is making a difference?
The November 2013 Economic Summit was not an end in itself. It was a mobilization of civic leaders throughout the state focused on increased prosperity by advancing economic, social and environmental progress. Participants at the Summit made personal commitments to advance the proposals developed by the 2013 Action Teams. Their energy will translate into action at the legislative level and at the November ballot box.