PPIC Report Excerpt Where Is Pat Brown When You Need Him?

Toward 2025: The governance Challenges of Public Investment

California is now potentially at a point of departure in its approach to infrastructure governance as important as that of the Pat Brown era. Although the state faces critical long-term infrastructure challenges, the solutions of the past-in particular, large-scale facilities expansion-are less feasible now. The following nine trends make it highly unlikely that another Pat Brown figure will lead the state in that direction. The overall theme that emerges is the increased level of complexity in state and local policymaking.

1. The decline of confidence in government. Not unique to California, residents tend to view government and politicians with distrust and suspicion. Residents are mildly more positive about their city and county governments but even at that level they believe that officials waste a significant proportion of revenues (Baldassare, 2004b, p.24). Politically, therefore, today's elected leaders are on a considerably tighter leash than were Governors Earl Warren or Pat Brown and are unlikely to expend sizable amounts of political capital on major (and potentially controversial) infrastructure projects. Even the current popular governor may be constrained in what he can accomplish; his appeal during the campaign rested in part on promises to restrain the power of politicians and entrenched interests in Sacramento.

2. Increased use of the popular initiative. The wave of citizen activism and anti-government criticism of the 1960s and 1970s found its institutional expression in the increased use of voter initiatives, many of which sought to bypass public officials in the policymaking process or to limit their power and discretion (Silva, 2000). Compared to the postwar era, deals cut with college presidents, water users, and elite state commissions are now more vulnerable to end-runs by aggrieved interests resorting to the direct democracy process. At the local level, too, efforts by local officials to coordinate planning with neighboring jurisdictions may be undone by voter-led ballot measures.

3. Reduced potential for "entrepreneurial" state policy leadership. A corollary of the above two trends is the reduced capacity of state policymakers to craft visionary solutions to California's infrastructure problems. Term limits and staff reductions (brought about by a voter initiative) limit the legislature's capacity to build substantive expertise in such areas as transportation or higher education. Likewise, gerrymandered districts and political polarization in the legislature impede "middle way" solutions that could appeal to Californians across partisan and regional divisions.

4. More interests at the table. Governance today is complicated by multiple state, regional, and local agencies-many of them with single functions and still insulated from public scrutiny. Interest groups and so-called stakeholder organizations (a term that did not exist during the Brown era) also have proliferated in recent decades, and many have full-time staffs and lobbyists in Sacramento. This trend has complicated the deal-making necessary to change infrastructure policies.

5. Fiscal constraints. In a state that is now much more built-up, the costs of constructing and improving public facilities are far higher than in the Brown era. Furthermore, voters have constrained government's ability to raise revenue. In this environment, governments have often focused on the need to meet basic funding needs of operational services, turning capital facilities into a luxury accessible only in years of bounty.

6. Reduced federal funding for bricks-and-mortar investment. For most of U.S. history, Congress lavished substantial attention on "internal improvements" such as dams and highways. The rise of federal programs geared toward assistance to individuals (Social Security, Medicare and Medicaid, welfare, and assistance to the disabled, among others) has shifted the federal budget increasingly toward transfer payments and away from physical infrastructure. Although federal infrastructure spending recovered in the 1980s and 1990s, federal involvement has splintered into new areas (such as homeland security equipment, and more emphasis on mass transit facilities). Moreover, federal infrastructure programs have faced the same cost-escalation pressures as have state programs, leaving little room for major new building programs.

7. Devolution and concern with regional and local control. As the federal and state governments seemed to disengage from grand approaches to infrastructure provision-in part because of contentious local disputes that spilled into state and national policy arenas-local governments, regional agencies, and more ad-hoc public-private assemblages increasingly stepped into the policymaking void. Federal and state policymakers sympathetic to devolution, or wary of centralized responsibility, have often funded, enabled, or encouraged such tendencies, notably through such efforts as Senate Bill 45 and CALFED. Any would-be Pat Brown in California would need to work in careful partnership with these decentralized policy processes and be comfortable with the lack of direct state control over many investment decisions.

8. Disjuncture between the electorate and the population as a whole. In recent decades, a noticeable difference has emerged between the state's relatively young, increasingly foreign-born, and majority nonwhite population and the state's registered voters, who are older, predominantly native-born, and nearly 70 percent non-Hispanic white (Citrin and Highton, 2002). During the postwar era, in contrast, there was less of a demographic divide between voters and the general public; and overall rates of voter participation were higher. The current disjuncture highlights the challenges of state and local leaders building consensus around a collective vision of serving Californians' future needs.

9. Confusion about goals for growth-planning and investment. As Mark Baldassare and Jon Cohen show, Californians of all political stripes, ages and racial/ethnic backgrounds tend to feel pessimistic about growth and governments' ability to plan for the future. Voters demonstrate a continued willingness to issue bonds or increase taxes for such purposes as schools, transportation, open space, housing, and water projects, but they feel more comfortable if funding is carefully targeted. This trend may reflect a desire to regain a lost sense of control over the shape of future growth, but it also hampers the ability of elected leaders to craft comprehensive dialogues about the shape of future growth in the state. Growth planning is now a complicated balancing act among multiple, sometimes conflicting goals and objectives for efficiency, equity, quality of life, and environmental protection. Although some decisionmaking frameworks have emerged in which such deliberation can occur, they are not widely known, and Californians still indicate substantial confusion and disagreement about how the state should prepare for its future.

Infrastructure Governance in a Mature State

The transition from an approach emphasizing massive statewide engineering projects to a broader consideration of the costs and effects of potential investments across metropolitan areas ultimately seems a healthy one in a mature state. Complexity can hamper decisionmaking, but effective collaborative arrangements may balance policy objectives and state, regional, and local needs and concerns more effectively than either imposed top-down solutions or fragmented, laissez-faire localism. The protections now offered to environmental values, community self-determination, mitigation of the harms of projects, and fiscal restraint can be carried to excessive lengths in some instances, but they are also values that most Californians seem likely to embrace, at least in general terms. In any case, there is no putting the genie of policy complexity back into the bottle. Moreover, we suspect that the reasons for such complexity have much to do with democratic values of inclusiveness and full debate.

Given these challenges and constraints, what can state leaders do to set a more deliberate course toward meeting future needs? First, consider those models that help point a way forward. In the midst of all the current obstacles outlined in this chapter, new governance frameworks have emerged that reestablish deliberative, comprehensive decisionmaking on growth. Although they may not look like the great infrastructure engineering plans of the past, processes such as CALFED are, in their own way, equally impressive in scope and impact. As the vice president of the Metropolitan Water District of Southern California recently noted, "Though they are messy and difficult, participatory collaborative processes such as CALFED are the only way we are getting anything done in the state" (Quinn, 2004).

Second, consider the basic elements that make these models work. Leaders now must often secure political agreements not on how to allocate more services and facilities but on how beneficiaries of state services can make do with less. A basic incentive for participation in collaborative arrangements today is mutual gains through more efficient use of facilities or resources. Stakeholders are drawn to the negotiating table not just by the promise of new facilities but also often by the potential for gaining predictability in service delivery and regulation and by reducing transaction costs and regulatory requirements through a more deliberate and coordinated approach to conflict resolution. Government leadership is critical in helping align incentives and in mediating the allocation of costs and risks to support effective processes and outcomes.

Rather than being based on one-time political agreement of single-purpose blueprints meant to address public works needs for several decades, the new models are more apt to rely on gaining political support for stable, pluralistic, ongoing decision processes. We are not suggesting that long-range investment plans are less important today than in the past or that all cooperative planning processes will be ongoing. However, given the policymaking environment of constraint and complexity, today's plans are more likely to require periodic reevaluation. The goal is to accomplish this in a coordinated way rather than through defaulting to conflict and short-term crisis management. In spite of its weaknesses, California's transportation planning system provides the state's most well-developed model for such a purpose. By providing clear rules and incentives to guide a stable process of ongoing intergovernmental planning coordination, it institutionalizes the development of long-range yet evolving (regularly updated) investment plans. However, although the transportation sector succeeds at keeping stakeholders at the table, it still lacks sufficient policy focus to produce plans with clear, regionally oriented objectives.

Effective state reforms for public investment should accomplish three interrelated goals: align incentives and costs (responsibility and authority), provide a policy focus, and foster strategic, coordinated decisionmaking processes for implementation. At the level of state departments and agencies, reforms can be more mandate-driven. The state government can clarify growth policy goals and priorities, translate them into quantifiable outcome-oriented policy objectives, and require more integrated planning to model alternative program scenarios. State investments and program priorities then should be made congruent with this strategic process.

However, the state also needs to foster more strategic, coordinated planning across levels of government and, in particular, within regions. A more coherent approach by the state toward its own investment policies will help greatly in this endeavor. Even without intergovernmental planning, the state can promote preferred regional outcomes through more strategic targeting of its own investments and by aligning fiscal incentives. Similarly, ensuring greater funding stability would help stabilize planning processes and possibly make them less contentious. Going further, quantifiable growth policy objectives also could be used as the basis for new mandates or preferential grants or loans to local and regional agencies that aim to meet standards. Even further, state incentives might be made available on a regional basis contingent on collaborative development of regional growth plans that further state priorities.

Models for this sort of strategy exist. In particular, the new approach to environmental regulation that emerged by the 1990s emphasizes a clear policy focus coupled with collaborative implementation at a bioregional scale. Programs such as ISTEA (in conjunction with the Clean Air Act) and watershed initiatives focus regional planning on attaining clear health and environmental standards, but implementation is left to collaborative processes among multiple actors. These programs helped propel many of the collaborative planning innovations of the past decade, especially because they relied on building closer links with local land-use and infrastructure planning.

Other states have gone further in applying this approach to policy areas other than environmental protection. For example, a transportation planning rule passed in Oregon in 1991 mandated that regional plans work to reduce congestion and per capita vehicle miles traveled and that local governments orient land-use designations and densities to support multiple transportation modes, infill development, and a jbs-housing balance. Along with other growth policies and programs, including urban growth boundaries and protections of agricultural land, the new transportation rule prompted a dramatic shift in Portland's approach to development (Calthorpe and Fulton, 2000).)

Today, the state is less in need of new large-scale physical infrastructure systems than coordinated governance and fiscal systems to help guide strategic investment. Specific reforms to establish a clearer framework might include the following:

• Establishing performance-oriented state growth objectives to guide state and regional plans and investment;

• Reconsidering the governing arrangements of regional transportation agencies;

• Establishing incentives for local governments-through tax base sharing, tax increment financing, targeted grants, loans, or mandate relief-to promote state and regional growth objectives and neutralize the adverse fiscal consequences of land-use policies that promote the objectives;

• Raising gasoline taxes and other user fees to better align costs and benefits;

• Providing regional revenue-raising authority, contingent upon and linked to coordinated capital investment and land-use plans;

• Integrating local government planning requirements and the California Environmental Quality Act to promote more "up-front" consideration of the large scale environmental effects of development choices;

• Strengthening groundwater management regulation;

• Resolving how the beneficiary pays principle is interpreted and implemented;

• Setting performance goals for institutions of higher education and students; and

• Promoting cooperation across higher education institutions within each region, with a focus on emerging needs of the labor market.

Also key to effective growth planning will be to acknowledge and address voter skepticism and desire for fiscal constraint. Strategies might aim to promote more comprehensive dialogue and debate on integrated investment plans, while also respecting voters' expressed preferences for local control, intergovernmental cooperation, and targeted investment. In spite of certain drawbacks, ballot and bond measures on new investment and development often form the most effective forums for dialogue and deliberation on growth concerns. One way to incorporate voters in integrated investment decisions would be to authorize regional revenue-raising authority, subject to voter approval, to fund coordinated environmental and infrastructure improvement plans. Such plans might include parks and open space along with transportation improvements and incentives to local governments to orient land use toward regional goals and objectives.

Given fiscal and political pressures and constraints, lawmakers face a substantial incentive to ignore long-term fiscal and governance concerns in favor of short-term political victories or because they are busy "putting out fires." However, the price of political expediency is rising. Meeting infrastructure needs will require concerted governance and fiscal reforms that may not be as dramatic as grand facilities programs of the past but could be just as far-reaching. State leaders must meet this challenge if future quality of life is to be fostered thoughtfully and not by default. Postwar policymakers rose to a similar challenge, adapting governance and fiscal arrangements to met changing needs. Should we ask less from our leaders today?