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Financing the Future: Rebuilding California’s Infrastructure

Financing the Future: Rebuilding California’s Infrastructure. David E. Dowall University of California, Berkeley. Persistent Population Growth. California’s Population 1930-1996, (thousands). Capital Outlay Trails Off. Real State Capital Outlays 1930-1996 (per capita in 1996 dollars).

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Financing the Future: Rebuilding California’s Infrastructure

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  1. Financing the Future: Rebuilding California’s Infrastructure David E. Dowall University of California, Berkeley

  2. Persistent Population Growth California’s Population 1930-1996, (thousands)

  3. Capital Outlay Trails Off Real State Capital Outlays 1930-1996 (per capita in 1996 dollars)

  4. VMT and State Lane Mile Trends, 1957-1970, Indexed 1957=100

  5. VMT and State Lane Mile Trends, 1970-2000, Indexed 1970=100

  6. Water Storage Capacity (Acre feet) and Population Trends, 1950-1970, Indexed 1950=100

  7. Water Storage Capacity (Acre feet) and Population Trends, 1970-2000, Indexed 1970=100

  8. California’s biggest infrastructure challenges • Failure to link strategic and capital planning • No multi-sectoral vision for investment planning • Lack of interest in demand management • Declining real user fee-base for many services • Unpredictable funding • Imbalanced state-local funding shares • Poor project execution • Failure to maintain investments

  9. Aligning tariffs with costs and benefits • Conventional wisdom • Foster consumption of merit goods • Redistribute income • Revisit the role of prices • Generate revenues to pay for services • Balance tariffs with consumption benefits

  10. Real Resident Undergraduate Student Fees (1999-2000 dollars) Indexed 1965=100 for UC and CSU and 1984=100 for CCC

  11. California State Gasoline Tax in Real 1997 dollars Indexed 1950=100

  12. Real Wholesale Water Prices from the State Water Project ($/AF), Indexed 1963=100

  13. Tariffs Should Match Costs • Use tiered pricing to reflect incremental costs • Price road use for peak and off-peak travel • Price educational services according to means • Tariffs should cover life cycle maintenance

  14. Tariff Setting Ideas • Water supply increasing block rates to reflect the incremental cost of providing water • Road Pricing should reflect full financial and social costs of travel • Pricing of educational services should promote access but there should be more emphasis on means testing • Life cycle costing and maintenance requirements should be used to determine tariffs • Equity concerns are best addressed through income transfers, not infrastructure pricing

  15. Financing Infrastructure • Infrastructure programs need to be based on sound long-term financing plans • Make funding more predictable • Rebalance state-local financing responsibilities • Make greater use of user and beneficiary fees

  16. Higher Education FTE Enrollment and Real Capital Outlay, 1970 to 2000 Indexed 1970=100

  17. What Should the State do? • Define California’s vision for the future use it to plan infrastructure investments • Introduce demand management • Review and adjust user fees and charges, develop ability to pay offsets • Make capital funding more predictable • Introduce accountability to project delivery • Introduce lifecycle costing and management

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