Policy Today magazine cover
February 1, 2006 - California Ed.

Can the governor and Democrats join forces to build bridges to somewhere?

If you build it, they will come. The "it" in this case is the state's public infrastructure, a vast and intricate network of roads, highways, schools, levees, hospitals, bridges. "They" are the thousands of people who move to California each year. Many are hoping that Governor Schwarzenegger's California renovation plan succeeds, because if history tells us anything, it's that "they" are coming whether "it" gets built or not.

Public infrastructure has become the rallying cry around which the governor and state policy makers have hitched the hopes of California's future, not to mention their political solvency. It is an election year, after all, and the people are watching. 

Sometimes a little election year magic is all it takes to make messy situations disappear. As legislators and reporters fall under the spell of bricks-and-mortar, all of the hand wringing and abuse of last year's special election has melted away from the public forum. And in a state badly congested by traffic and underachieving schools, legislators waving the bond wand make their reform-minded colleagues look like mere muggles. It looks like Californians will be hearing about infrastructure for some time to come.

So whose plan gets the nod?

Governor Schwarzenegger's State of the State speech earlier this month served as the launching pad for an ambitious proposal to pour $70 billion of borrowed money into the state's infrastructure as part of a 10-year, $222.6-billion strategic growth plan, nearly half of which would be spent on transportation projects.

The other half would be spent on an assortment of education, public safety, courts, environmental and flood control projects, financed by what the governor explained would be a combination of general obligation bonds and other funding sources like federal and local funding and private investment.

"We are in the process of going through the strategic growth plan that was posted on the governor's Web site and are trying to produce a more detailed analysis of that plan," says League of California Cities spokeswoman Megan Taylor. Taylor says there was some question whether the governor was proposing to cap Proposition 42 funds after 2007, which "would be a loss of about $2.5 billion over the next 10 years to local governments, going instead to the state."

It's a concern, adds Taylor, because that's money communities rely on for local road improvements.

Of course, the roads and Californians' time spent on them has become a major hot-button issue. People may worry about the environment and argue over gay marriage, but they hate, hate sitting in traffic. It's a message constituents have made resoundingly clear to their elected officials, and policy makers are quick to admit that not enough has been done.

"Despite record borrowing, (the state has) nothing to show for it, and despite record spending, we can't seem to scrape together enough money to build more roads or educate our kids," Senator Tom McClintock, (R-Thousand Oaks), said a few hours before the governor's speech.

This "historic paradox" has made him wary of infrastructure plans like the governor's and the Democrats' that rely heavily on borrowing to finance ambitious proposals. Of the governor's proposal, the fiscally conservative senator said he applauded the governor's renewed commitment to public works, which he called "overdue," but said it was vital Schwarzenegger extend the same fiscal discipline that typified the Pat Brown administration decades ago, in which the state's debt service ratio was a third of what it is now.

In the other corner are two bills driven by legislative leadership. Senate Bill 1024 by Senate pro Tem Don Perata, (D-East Bay), and Senator Tom Torlakson, (D-Antioch), and Assembly Bill 1783 by Speaker Fabian Nunez, (D-Los Angeles), are two relatively modest proposals that would borrow between $10-12 billion in general obligation bonds for many of the same projects.

One criticism of the governor's plan is that it includes no funding "that would address the state's urgent need for more housing, and particularly more affordable housing," according to an article posted on the League's Web site. Both Democratic bills include such funding.

"It's great to have the governor on board so we can get these overdue investments accomplished," Perata said in a statement following the speech. "However, the governor's proposing a lot more spending than we are. It's unclear how he plans to pay for it."

"Perata's bill is changing almost hourly," McClintock remarked, saying its general provisions fail all the tests of sound fiscal discipline. "Bonds are not free money," he added.

And how. The senator points out that it takes $2 to repay every dollar of debt. "The insidious thing about debt is that you have to pay it back," seconded Senator Dave Cox, (R-Fair Oaks), who spoke before the governor's speech. "It's extremely difficult to recognize that we're saddling generations of children with debt."

But Cox is also quick to say that infrastructure improvements are increasingly critical.

"There's no question that relative to California infrastructure…we certainly need improvements and upgrades, but there is a real question as to how we would pay."

Cox recommends a pay-as-you-go strategy complemented by streamlining the environmental review process and keeping down prevailing wage increases.

Roads to somewhere—more debt?

But the state didn't just fall behind on infrastructure improvements during the last couple of years, notes Cox. The growth problems California is facing have been percolating for some time. McClintock agrees, saying state money has been frittered away.

"The money currently being collected for road improvements is not being used on road construction," says the senator. "We've pretty much turned over our state highway projects over to local control." It's a notion McClintock characterizes as a great folly, because the process to accommodate growth is paralyzed by the private interests of those who don't want to open their back doors to a bustling new highway.

Regarding how transportation money has been spent up until now, Torlakson says that the $2.3 billion of Prop. 42 monies siphoned off into the state's general fund should be returned. "That money should be returned to transportation," the senator argues. "Transportation money should be spent on transportation." Misuse has been evident in other areas as well, according to lawmakers.

"The revenue sources for transportation just haven't been increased," says Torlakson, pointing to the gas tax, which hasn't been raised since 1994. Coupled with the fact that there are more fuel efficient cars prowling the motorways, the senator estimates the state's revenue from the gas tax has been halved from what it once was. "There has not been the will to find other sources of revenue," Torlakson says.

As someone who represents a largely rural district, Cox says that his constituents are often asked to pay for projects they don't see a direct benefit from, something McClintock warns could continue with the obligation of general revenue bonds.

"Projects that exclusively benefit local communities ought to be paid for by those local communities," notes McClintock. "State fund bonds should not be used for local purposes, and local bonds should not be used for state purposes."

As for whether the Democrats and Republicans will be able to make nice and join forces on such an ambitious proposal, Torlakson said those "are part of the discussions lined up ahead of us."

Although the bitter special election has given way to a kinder, gentler governor, given that this is an election year, how long will the bipartisan coalition building last? Will Democrats feel comfortable endorsing a plan Schwarzenegger could end up using as reelection fodder, and will Republicans back a bond measure that embraces many of the Democrats' core issues?

State Treasurer Phil Angelides and State Controller Steve Westly—both running as Democratic challengers to the governor—have already questioned Schwarzenegger's sincerity regarding his 10-year plan, yet others remain more open, albeit guardedly.

"As long as we can uphold the central values we stand for—including justice, equity and opportunity—Democrats are prepared to meet the Governor half way," Nunez said in a statement following the speech.

"I'm glad the governor is speaking out about this," says Torlakson, adding that both plans share "some common goals to invest in infrastructure." Asked if future negotiations could give way to political one-upmanship, Torlakson responded, "That does not concern me one bit. This is not about next year's elections."

Strange bedfellows or not, in a society where "bridge to nowhere" has entered the national lexicon, the bigger question may not be whether an agreement can be reached, but at what cost. Numerous groups, including trade unions and major contractors, will have their lobbyists going full-tilt for a piece of the massive public works pie. Will this be another example of a major infrastructure project meant to build schools and roads being picked apart by special interest lobbyists with their hands in the pockets of every elected official with a campaign to run? In other words, would the money mishandling that has been prevalent everywhere from Iraq to New Orleans kick the legs out from California's next big shift toward the future?

"All of that will be taken into consideration," is all Cox would say regarding the issue of political compromise. "We're trying to stick to proven formulas," answered Torlakson. "This should not be a chance for a lot of pet projects."

About Raheem F. Hosseini

Raheem F. Hosseini is a reporter and columnist living in Folsom, California.