Summary:The November ballot reflects the pressing need to sustain and rebuild California's infrastructure, and for voters, the challenge will be to prioritize state needs and determine whether or not the bond initiatives will indeed solve the problems we face.
Los Angeles City Attorney Rocky Delgadillo introduced the panel and called for a coalition of business, community and government leaders to solve the state's infrastructure challenges. A solid infrastructure is essential to California being a global beacon of economic vitality, he said. Delgadillo also called for the elimination of the city business tax, which he called (along with the infrastructure deficit) the most significant impediment to business growth in Los Angeles.
Moderator Lew Feldman of Goodwin Procter provided background for the discussion by profiling the language of the different propositions relating to infrastructure: 1A (close the gas-tax loophole), 1B (state infrastructure bonds), 1C (housing), 1D (schools) and 1E (disaster prevention), as well as Proposition 90 (eminent domain). He also examined the history of infrastructure spending in the state and focused on why the bond measures were needed.
Infrastructure needs in California include education, transportation, energy, housing and water. State Sen. Don Perata noted that California ports receive almost half of the goods movement in the United States, and that if the ports and surrounding areas continue to be neglected, we run the risk of losing commerce to other states and Mexico. The fact that there is no organized opposition to Proposition 1A is a testament, he said, to how well most people understand this issue. "I'm delighted that it's bipartisan," he said. "This is the way it should be." In anticipation of the question, Sen. Perata stated that Prop. 1A does not create a new bureaucracy; the legislature's only responsibility would be oversight.
In opposition to the bond, Adrian Moore of the Reason Foundation cited the need to allocate funds for infrastructure rather than borrowing to pay the expense. "We make very little investment in our budget in infrastructure," he said. And once funds are allocated, it is up to the legislature to ensure that those funds in fact target their intended purpose. "We'd be fools to have that on faith," he added. Moore also noted that 50 percent of current expenditures in transportation by local authorities are going to mass transit, which transports a declining percentage of the overall population. He and Perata debated the fiscal prudence of the bonds, with Perata declaring that the continued failure of the state's infrastructure spending required that we act now. Perata also mentioned that the overall debt ratio of the state government would be manageable and far lower than those faced by most voters.
In a telling poll, when moderator Feldman asked the audience to select their top infrastructure priorities, education ranked No. 1, followed by transportation and disaster prevention, two of the bond measures.
James McNulty of Parsons Corp. spoke to the insufficient labor supply in California to support the infrastructure needs. "It doesn't matter what we pay the labor," he said. "There just isn't the labor available. Industry does not have the capacity to meet infrastructure needs — not only of California, but of the nation. It's going to be more costly because there aren't the resources to handle all of these infrastructure projects simultaneously." The increase in fuel prices has had an additional impact on construction prices, he added. Although the cost of lumber has gone down, the cost of copper and other supplies has been on the rise.
Kevin Klowden of the Milken Institute spoke to the needs of affordable housing and the impact on low- and middle-income families. As affordable housing is increasingly found further away from major urban areas, we experience an increase in commuting and traffic on our highways. Simultaneously, public transportation and infrastructure options are failing to keep up with new developments. Only the toll roads in Orange County actually preceded development, he said. The result to low- and middle-income families is that "affordable" housing is not actually affordable.
Lew Feldman showed a slide demonstrating that current affordable housing bonds are not being utilized to their full extent (at around 70 percent), and Klowden noted that this, along with the reduced fears over rising property costs, gave voters significant reasons to not support the housing bond, despite the clear need for affordable housing.
When asked what would happen if the infrastructure bonds do not pass in November, Stephen Heaney of Stone & Youngberg LLC answered that the state has continued to grow, despite insufficient investment in its infrastructure. However, he said, local governments cannot support the infrastructure needs on their own.
In two final polls, the audience answered that they anticipated $20 million to $30 billion being passed in bond measures and that the governor would prevail in his re-election campaign. More than 53 percent of the audience supported Schwarzenegger, with 25 percent behind Phil Angelides and the remaining 17 percent choosing "other" or "“uncertain." The audience was also asked about the likelihood of Proposition 90 passing, with around 60 percent believing it would fail.
