New bills propose creative ways to deal with California congestion and antiquated delivery systems, but money is tight
Laura Coleman
"When you're in a hole, the best thing to do is stop digging."
That's how Richard G. Little, University of Southern California Keston Institutecolor> for Infrastructure's director described California's current chasm between available capital and needed infrastructure improvements.
The state Department of Finance is in a multibillion-dollar hole, and it is calling for $54 billion just to start to climb out.
During a Feb. 25 symposium on infrastructure finance, Steven Spears of the Saredo Group cited the $54 billion need that the Davis administration identified in 2003 in its five-year infrastructure plan, which included $28.5 billion for transportation. Long-term, Little said, real progress probably will take hundreds of billions of dollars.
While officials agree that a sustainable, long-term infrastructure plan needs to be implemented, the state budget crisis, a rising interest rate environment and a skewed federal fiscal-reallocation process make capital too scarce to fund many of the costly solutions. Legislators and developers are trying to come up with more creative solutions to solve the growing problems without sending the state further into debt.
"It's pretty pathetic in terms of transportation infrastructure based upon the number of people, number of cars and the growth in California," said Howard D. Coleman, president of the Los Angeles Board of Transportation Commissioners. "Highway infrastructure has very much lagged behind growth."
But there's hope, Coleman said, citing GoCalifornia, a legislative reform package intended to improve the state's transportation system.
On Feb. 24, Transportation and Housing Secretary Sunne McPeak unveiled the trio of bills - Assembly Bill 850 introduced by Assemblyman Joseph Canciamilla, D-Pittsburg, Senate Bill 705 by Assemblywoman Sharron Runner, R-Antelope Valley, and Assembly Bill 1266 by Assemblyman Roger Nielloo, R-Fair Oaks - designed to save commuters time and the state money.
•AB850 would let Caltrans operate High Occupancy Vehicle lanes, allowing single-occupancy vehicles paid access to the underused thoroughfares. Additionally, the bill would allow for public-private partnerships to pay for building and maintaining the state's roads and highways.
•SB705 would allow Caltrans to use a design-build process, which involves the selection of one contractor to design and construct a project under a single agreement.
•AB1266 would enable Caltrans to use design-sequencing, allowing construction to begin as soon as the design is complete for each phase of a project.
"GoCalifornia will help improve our roads and highways so people spend less time sitting in traffic and commerce can get to the marketplace without costly delay," McPeak said.
Historically, much of the funding for state infrastructure has been procured by federal grants, from current revenues and by borrowing against the future, Little explained.
"Traditional sources will never be available in the magnitude needed to ensure sustainability of critical infrastructure," he said. "I don't believe we can look to purely traditional sources to do this."
For example, highway maintenance needs far outshine the money available from gasoline taxes, which traditionally have financed highways. Little said it was important to find other revenue sources outside of direct user charges, general fund revenues and debt financing. So what are the nontraditional finance sources that could help the state out of the hole? "They sound like taxes, and to some extent they are taxes, but if they're spread broadly enough, it's hard to feel them," Little said..
Implementing a direct-fee collection system or value-added taxes are two possibilities that could generate funds for infrastructure, he said.
Little cited the congestion pricing systems in London and Singapore, where an electronic device, not unlike an EZ Pass, affixed inside the car charges motorists for the time they spend in certain zones at peak congestion times. "The whole idea is that if you're going to impact the road network and society, you're going to pay," Little said.
However, in the state's congested areas, like Los Angeles, directly targeting consumers of a service and getting them to pay their "fair share" is complicated without the provision of a comprehensive mobility-management system, he said. "Society needs to provide alternatives," Little said.
By devising "a reasonable and equitable formula" for apportioning value-added taxes in an infrastructure fund, specific industries would help defray the costs of maintaining the public infrastructure. For example, Little cited something along the lines of a "penny roll" tax, which would add 1 cent to the cost of a roll of toilet paper to be used to fund infrastructure projects.
"All industries make use of public infrastructure to produce their products," he said. "Ultimately, there would be a way of recouping some percentage of the cost."
Infrastructure Issues
The state's infrastructure clearly is ailing. It's obvious from the long rush-hour commutes to the cracked concrete roads that further slow drivers. Although congestion is the No. 1 infrastructure consideration in Los Angeles, according to Little, the state also is addressing issues concerning floods, sewer overflows, ground subsidence, earthquakes and power outages. "If you look at California as a microcosm of the country, we have a lot of very old systems," Little said. Sixty years have passed since the building boom following World War II, when the federal grants program helped build much of the nation's 4 million miles of roads and highways.
But, said Little, "Fifty years is the expected lifetime of a basic system." According to Jack Kyser, chief economist with the Los Angeles Economic Development Corp., no easy answers will solve the state's infrastructure problems. "We haven't invested enough," Kyser said. "It's going to be tough to catch up because your population and business base is still growing."
Innovative Solutions
Kyser cited a need for more "innovations like the Alameda Corridor," particularly, he added, with railroads again becoming a growth industry. The $2.4 billion, 20-mile rail cargo line linking the ports of Los Angeles and Long Beach to the transcontinental rail line near downtown Los Angeles opened in April 2002. It is often cited as a model for infrastructure projects. Coleman lauded the Alameda Corridor's grade separation. "It allows trains to travel at faster speeds, which is very important in the shipment and movement of goods, while at the same time permitting vehicular traffic to move without railroad barriers," he said. Kyser said that infrastructure problems confronting railroads nationwide need to be reformed. "Basically, the United States has a screwed-up transportation system," he said. Kyser cited the paradoxical way that railroads operate: funded by debt financing and corporate profits but paying property taxes and taxes on purchases such as diesel fuel.
He called the railroad system's regulations, which traces its origins to the early 20th century, antiquated. "It's time to bring the transportation system into the 21st century," Kyser said. In addition to adding capacity to rail and investing in the Interstate 710 expansion to mitigate truck traffic, he said, it's crucial to invest in regular highways and roadways, as well as in the water supply and the electric power supply. "We have to come up with a plan and find out which one does the least damage to the most parties and get on with it," Kyser said.
"Infrastructure is very important, but there's no money for infrastructure," Little said. "Our infrastructure is going to take an enormous amount of investment over the next many years. It's a lot of years and a lot of dollars."