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Infrastructure, Vital Services and More: 2008 Priorities

The League board of directors met in November 2007 to set the organization’s strategic priorities for 2008. This process helps us focus our efforts and use our resources in the most effective and efficient way to serve all California cities. The strategic priorities set the agenda for the coming year and provide the entire organization a framework within which to take action and move forward.

The League is committed to supporting sustainable communities that help build a strong economy and improve the quality of life for all Californians. An overarching theme of building sustainable communities guides the 2008 priorities:

1. Protect funding for vital community services;

2. Support green and sustainable cities;

3. Expand infrastructure investment; and

4. Enact honest and responsible eminent domain reform.

(See "2008 League Priorities in Detail")

This column examines the infrastructure priority in detail.

Focusing on Infrastructure

Implementing the 2006 infrastructure bond package was a major priority for the League in 2007. While cities successfully secured a significant portion of these funds for FY 2007-08, in 2008 we are still focusing on the need to increase infrastructure investment, because much work remains to be done to meet new and ongoing needs.

The American Society of Civil Engineers (ASCE) summed up California’s infra structure problems very succinctly in its California Infrastructure Report Card 2006:

A well-designed and maintained infrastructure anchors our economy and lifestyles and secures the public health and well-being. In the past 40 years, our capital investment has plummeted precipitously. In the 1950s and ’60s, California spent 20 cents of every dollar on capital projects. By the 1980s, that figure dropped to less than 5 cents on the dollar. Current estimates put infrastructure investment at around a penny on the dollar -- despite ever-increasing demands presented by population growth and economic de velopment. Much of the state’s public infrastructure was designed and built to serve a population half the size of California’s 35 million residents.

California Earns Poor Grades

The ASCE publication also presented a report card on the condition of the state’s infrastructure. California, with an aggregate grade of C-, barely did better than the nation’s score of D.

The report card listed nine types of infrastructure, graded them and offered comments, including the following:

Water: C+. Significant investments are needed to address renewal and replace ment, maintenance, security and reliability funding for the state’s water infrastructure. These investments will increase sustainability and will ensure water supply and infrastructure reliability into the future. The annual investment needed to raise our water infrastructure grade to a B is $4 billion.

Wastewater: C+. California’s 100,000 miles of sewers and 200 wastewater treatment plants generally perform adequately to protect the water resources of the state by managing the 4 billion gallons of wastewater generated every day by its residents and businesses. Nevertheless, the condition and performance of California wastewater infrastructure (sewers, treatment plants and effluent disposal) are quite variable. The age of the systems, topography, ongoing investment in new capacity, upgrades and rehabilitation, and rainfall-related flows contribute to this variability. Recently adopted statewide waste discharge operating requirements for sanitary sewers should result in improved statewide performance. However, this will require long-term local commitments for equipment, rehabilitation projects and staff in all parts of California.

Transportation: D+. Highways, local roadways and bridges are some of California’s most valuable assets. California is home to some of the most recognizable bridges in the nation and the world. Additionally, the state’s mass transportation and transit systems are multimodal systems that provide alternatives to private cars. The overall grade of D+ reflects concerns about capacity despite investment in seismic upgrades and ongoing maintenance. Significant investment, estimated at $17.9 billion annually, is needed to raise our transportation infrastructure’s grade to a B.

Levees and flood control: F. There is a real potential for catastrophic disaster to life and property in California. This is due to the fragile condition of our levee systems, which protect thousands of homes and billions of dollars in critical infrastructure. Annual investment of $4.2 billion is necessary to reduce the impacts of potential catastrophic failure.

To see all nine infrastructure categories graded in the report, visit www.westerncity.com/reportcard.

Infrastructure Funding Challenges

As this assessment demonstrates, investment in infrastructure is urgently needed. The $49 billion in funds from the 2006 infrastructure bonds are just a drop in the bucket given California’s needs. However, the bonds are a good start, serving to focus public attention on an area of critical concern that affects every California resident and business.

We face a number of challenges in making substantial investments in our various infrastructure systems. As Michael Coleman, the League’s fiscal consultant, noted in his article "The Road Ahead for Fund ing Infrastructure," November 2007, Western City online at www.westerncity.com/fundinfrastructure:

Today’s public works improvements must meet much higher standards than ever before. New designs, materials and quality controls help improve public safety and reduce environmental and public health impacts of human activity. These higher standards also make public works improvements much more expensive.

One of the many harmful effects of the state’s continued inability to repair its fiscal holes is how these continuing problems constrain California from taking on more responsibility for infrastructure financing. State bond measures are easier to pass than local bond measures because state measures require a simple majority voter approval. Local bond measures require two-thirds supermajority voter approval, except for most local school bond measures, which require 55 percent approval. If the November 2006 state measures had to achieve these voter approval thresholds, all would have failed -- except the school measure.

Tools to build public infrastructure to serve new development are varied. To pay for public infrastructure to serve new development, local governments rely on a combination of Mello-Roos special taxes and assess ments charged to property owners, and exactions, dedications and impact fees charged to developers. In addition, state subventions from bond issues and special revenue provide critical fund ing, and public works enterprises utilize user-fee supported revenue bonds to finance improvements.

It is notably more difficult to fund improvements to existing aging systems and facilities in urban areas. Redevelopment, using property tax increment financing, has been an extremely effective tool to address these needs. But the use of redevelopment is strictly limited to blighted areas. With complex procedures and limitations imposed by the state’s voters, local communities face two-thirds supermajority vote requirements for special taxes, including parcel taxes or any tax dedicated to a specific purpose.

  • Assessments and property-related fees have their own cumbersome restrictions and are not easily applied to address existing infrastructure deficiencies.
  • In addition to directly addressing infrastructure needs, cities can expect to experience a positive ripple effect of public works projects in their local economies. Various studies have shown that for every dollar of public infrastructure investment, personal income and employment increases by 10 to 20 percent or more. A billion dollars of public capital improvement project spending will increase direct and indirect employment by about 15,000 jobs.

Examining Alternatives

Creating more public-private partnerships for major transportation projects and relying on more demand-management and other tolling programs could be a viable option for future infrastructure invest ment beyond the 2006 bonds.

In the goods movement arena, creating a statewide container fee might be a fair and viable option to raise money for our ports and related infrastructure needs.

Finally, while I’m not a fan of raising taxes, it’s hard to believe that less than two years ago we were paying only half the cost per gallon of gas compared to what we pay today -- prices have risen by more than $1.50 per gallon. Had the gas tax been raised by just 10 cents per gallon, it would have raised more than $18 billion for transportation projects in only 10 years. Increasing the gas tax is a user-based approach to fund vital transportation infrastructure. In fact, if the gas tax had simply been indexed (that is to say, increased with inflation over the past 20 years) it would have raised nearly $20 billion -- the same amount as Proposition 1B.

Unfortunately, transportation funding in our state is seriously broken. A significant portion of every state and federal transportation dollar received in California is spent on just maintaining the existing street and highway system. Of critical importance to cities are Prop. 42 funds, which cities receive directly to maintain and make storm damage and rehabilitative repairs to local roads, but these funds aren’t enough to cover unmet needs. As California’s population continues to grow, it is discouraging that so few dollars are available to improve our crumbling transportation infrastructure.

Addressing the Issues

California encompasses spectacular natural beauty, innovative industries and diverse people with remarkable talents and abilities. However, the poor condition of its infrastructure is draining the state’s vitality and directly impacts the quality of life. In the case of bridges, roads and flood control, public safety is at stake. The cost of leaving these issues unaddressed is much greater than just monetary -- and it affects us all.

As city officials, we understand that our future depends on making strategic infrastructure investment now. We have a responsibility to our residents to examine our communities and take stock. Make an inventory of the greatest infrastructure improvement needs in your community and familiarize yourself with it so that when you meet with your legislators, you have specific information to share.

Last year, the League made significant progress on implementing the 2006 infrastructure bonds. In 2008, it’s critical that allocated funds reach city treasuries and that we address the issues still on the table, including the development of allocation criteria for the remaining funds generated from the 2006 bonds.

Working together, we can ensure that these infrastructure funds are used to shore up our aging systems. Read Priority Focus for breaking infrastructure funding news. Also, talk to your League regional public affairs representative about how to participate in League calls to action on infrastructure issues. While the 2006 bond proceeds aren’t enough to cover all our infrastructure needs, utilizing this money is the essential next step in protecting and preserving the quality of life for all Californians.

Excerpts from ASCE California Infrastructure Report Card 2006 reprinted with permission. For more information about ASCE, visit www.asce.org .

2008 League Priorities in Detail

The League’s strategic priorities for 2008 (listed below) are guided by an overarching theme of building sustainable communities. For more information, visit www.cacities.org/priorities .

1. Protect funding for vital community services.

  • Vigorously oppose efforts to erode funding for vital community services that:
  • Keep California families safe from crime;
  • Support transportation mobility and economic growth;
  • Provide housing and important after-school recreation opportunities;
  • Ensure orderly development; and
  • Protect the environment.

Funding for local community-based services and programs should not be sacrificed again to meet state revenue needs.

2. Support green and sustainable cities.

Lead in the development of state and local policies, strategies and programs to protect the environment and reduce greenhouse gas emissions through:

  • More efficient and sustainable land use and building practices;
  • Increased energy efficiency and use of alternative/renewable energy sources;
  • Improved water supply and wastewater treatment system efficiencies;
  • Expanded public transit opportunities; and
  • Innovations in other city operations.

3. Expand infrastructure investment.

Support continued implementation of the 2006 infrastructure bond program and the development of new funding sources and programs to meet the infrastructure needs of our rapidly growing communities in a sustainable way for:

  • Water supply;
  • Wastewater treatment;
  • Public transit;
  • Streets and roads;
  • Stormwater management; and
  • Other critical infrastructure.

4. Enact honest and responsible eminent domain reform.

Support enactment of eminent domain reforms that protect homeowners, such as the Homeowners Protection Act, and oppose proposals that would cripple the ability of state and local agencies to:

  • Manage development;
  • Develop new water supplies;
  • Protect the environment; and
  • Develop affordable housing.