This article is from Cal-Tax Digest, published
by the California Taxpayers' Association.
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An essential function of government is to provide basic public facilities - land, streets and highways, schools, parks, water and sewer systems - that are integral to delivering public services. Failure to do so threatens economic growth and a satisfactory quality of life for every Californian.

We owe our modern prosperity in large part to the legacy of the last generation of Californians who had the vision and will to build the public facilities we enjoy today.

But our prosperity may be in danger. This is true for at least two reasons: First, the state's infrastructure is aging and much of it is in need of repair and renovation. Second, our population is expected to grow from 33 million to nearly 50 million in the next 20 years.

Examples of our aging facilities are numerous:

• Forty-five percent of the total building space in the three public higher education segments was built or renovated before 1970.
• Most of the 9.5 million square feet of buildings in the state's hospitals and developmental centers was built before 1960.
• One-third of the state highway system is in need of corrective maintenance or rehabilitation.
• Over half of the state's highway bridges are more than 30 years old.

In terms of a national perspective, the U.S. Bureau of Census ranks California's infrastructure investment 40th among the states based on personal income. This puts the state at a serious disadvantage relative to its domestic competitors. It is a fact that we have not been investing in public facilities nearly enough to maintain existing inventory - not to mention building for a growing population. Consider the following:

Between 1968 and 1993, the amount California spent on capital improvements fell from 20 cents on the dollar to a nickel on the dollar.

The state ranks 48th of all states in per capita highway spending.

Between 1970 and 1995, vehicle miles traveled, personal income and population all saw dramatic increases while transportation revenue remained flat (figures adjusted for inflation).

It's no wonder 49 percent of our freeway system is listed as "seriously congested".

Further illustrating this point is the fact that fuel tax revenues were at one dollar per 100 miles of travel in 1970, declining in 1992 to slightly more than 40 cents. This dramatic reduction is attributable to inflation and federal fuel economy standards.

In short, we have more cars per family (1.2 in 1960 to 2.5 in 1990); we are driving more miles each year, and we are contributing far less fuel-related revenue to maintain the state's highways.

Beyond transportation, the California Business Roundtable, in its report issued last August entitled "Building a Legacy for the Next Generation," identified total capital facilities needs over the next 10 years of $90.5 billion.

Business leaders agree that meeting these needs is critical to continued economic growth and to a satisfactory quality of life for all Californians. Accepting the assumptions outlined below, the Roundtable argues that the need can be met without a tax increase. Revenue sources include existing bond funds, federal and special funds, prudently increasing state bond debt, local financial support for school construction and the dedication of a small portion of the existing sales tax to this purpose.

Critical assumptions include:

• Taking the percentage of the state general fund that is devoted to bonded debt to 6 percent from the current 4.5 percent.
• Establishing for the first time a state fund dedicated to "pay-as-you-go" financing of capital facilities.
• Requiring local school districts to provide a 50 percent match to state funding in the construction of new schools.

In addition to the fiscal challenges that must be met in this area, there are significant planning problems that must be dealt with by the governor and Legislature. Most importantly, the following problems must be addressed:

• Neither the executive branch nor the legislative branch of government has evaluated statewide infrastructure needs and investment as a program in itself.
• As a consequence, programmatic goals are not clearly defined.
• No criteria exist for setting statewide priorities.
• There currently is no requirement in law that the state enact a "Capital Facilities Plan."

No stable funding source exists for this purpose. Use of general obligation bonds is always subject to voter response and, even if approved, the state cannot "bond its way out" of the problem.

Local infrastructure needs and financing suffer many of the same problems.

Thus, having briefly described the infrastructure challenge facing our citizens, what must be done to be sure that we meet these basic public facilities needs? The Roundtable, the state's non-partisan Legislative Analyst's Office, and Governor Gray Davis have suggested the following:

• Comprehensively review California's capital facilities needs over the next 10 years, with the establishment of a clear set of priorities and adoption of a rolling three-year plan for financing these priorities.
• Determine which local government infrastructure programs the state will continue to fund and obtain information on needs for those programs.
• Provide a steady funding source for the plan.
• Utilize the State Infrastructure Bank to assist in financing state and local infrastructure.

Specifically, the Roundtable is sponsoring legislation to implement its recommendations for stable funding and for the enactment of a capital facilities plan. The legislation will set aside one-fourth of 1 percent of the existing state sales tax for 10 years for a state infrastructure fund. The effect of such a dedication of sales tax revenues would reduce overall general fund revenues by only 1.63 percent.

Second, a separate bill will provide for the governor to propose and the Legislature to adopt a prioritized capital facilities plan on a rolling three-year basis. The legislation should be carefully reviewed by a variety of interest groups and by the governor's proposed Commission on Building for the 21st Century.

There is no question the task ahead is one of considerable scope. It can only be accomplished if voters and opinion leaders are mobilized throughout California. Action occurs today in Sacramento when the constituencies of enough members of the Legislature convey to them the importance of any particular problem or issue.

This process does work! Last year's adoption of Senate Bill 50 and the subsequent passage of Proposition 1A, a $9.2 billion education related bond, would not have been possible without considerable pressure on the Legislature and the governor from outside the state Capitol.

This effort is essential to assure that the current generation does no less than our fathers and mothers in assuring a continuing high quality of life in California for our children.