June 2004

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Guest Commentary

Fred Aguiar is secretary of the State and Consumer Services Agency. Governor Arnold Schwarzenegger, in his May revision of the proposed 2004-05 state budget, estimates that the state will realize $50 million from this program in the budget year and $200 million in 2005-06. Cal-Tax has advocated more efficient use of state property for years and has urged the Legislature to support the governor’s proposal. Click here for Cal-Tax position letter in support of the governor’s executive order of May 12.

With a multitude of office buildings, land parcels, university campuses, highway lanes, prisons, and other facilities, the State of California has an asset portfolio worth hundreds of billions of dollars. Yet, our current asset management system is redundant, inefficient, and lacks the coordination necessary to make rational management decisions.

California's real property asset management structure is spread across more than 40 boards, conservancies, commissions, and departments that acquire, trade, develop, and dispose of real property assets for various state programs.

There are literally dozens of board members and department directors who govern the decisions regarding what property is added to and deleted from California's asset inventory.

Further, there is no one set of laws, policies, or processes that comprehensively governs and coordinates the activities affecting California's asset inventory.

That is why Governor Arnold Schwarzenegger recently issued an executive order directing his administration to implement a statewide asset management strategy.

Under the executive order, the California Performance Review in conjunction with the State and Consumer Services Agency and the Department of General Services will develop specific reform proposals to efficiently manage California’s core real property assets. State agencies within the Executive Branch will be required to catalogue their real property holdings and evaluate their nexus to service delivery.

The California Performance Review will have the immediate task of identifying potentially high-value, urban state properties that may be underutilized or not reflect the highest and best use, and report their findings by June 30. Proceeds from the sale of these properties will bring new dollars into state coffers.

This is a strategy that will lead to the effective tracking and management of California's assets. Without this first step of mandatory data collection, we are only guessing about the state's holdings – whether it's property that is essential to state operations or simply property that has been held without critical analysis since its acquisition.

In the world of retail sales, there is an adage that applies to suppliers who bring merchandise exactly when it’s needed –  “just in time” storage. In state government, there is another saying that applies to holding on to assets –  “just in case.” We need to change that culture.

California should manage its assets with more scrutiny and better coordination, with an eye on the bottom line. Our taxpayers deserve nothing less.