State of the State

Infrastructure

In November 2006 California voters approved the historic $37.3 billion in bonds to finance the Strategic Growth Plan (SGP) and a $5.4 billion initiative for natural resource protection, water and parks. These funds make significant progress towards rebuilding California, but the job isn’t done. California faces over $500 billion in infrastructure costs to meet the demands of a population that is expected to increase by 23 percent over the next two decades. The Governor proposes a combination of new general obligation, lease revenue and self-liquidating revenue bonds totaling $43.3 billion and policy proposals to leverage existing resources to finance the SGP through 2016.

Fiscal accountability is a cornerstone of this proposal. In coming months, the Governor will establish policies and procedures to ensure that spending meet the voter’s goals.

With these augmentations, the SGP will fulfill the Governor’s comprehensive ten-year infrastructure financing plan to rebuild California.

Strategic Growth Plan

Corrections: $10.9 billion for state and local facilities ($9.5 lease revenue bonds, $0.3 billion existing funding sources, $1.1 billion new funding sources)
Education: $11.6 billion for K-12 educational facilities; $11.6 billion for Higher Education facilities
Resources: $6 billion for flood control, water supply and conveyance
Judiciary: $2 billion for the state’s courthouses
Other: $2.6 billion for other public service infrastructure
Transportation: New legislation to use public/private partnerships and design-build for transportation projects.

State and Local Correctional Facilities

California's prison and jail systems require significant expansion and rehabilitation to protect public safety, as well as ensure the safety of the correctional staff and rehabilitation and safety of inmates.

Local jails and juvenile facilities: $5.5 billion ($4.4 billion lease revenue bonds, $1.1 billion in local matching funds).

Funds 45,000 local beds (20,000 for local needs, 25,000 for state to shift prisoner populations) and 5,000 juvenile beds.

State prisons: $4.4 billion ($4.1 billion lease revenue bonds and/or contract authority, $300 million General Fund).

Funds 16,238 new state prison beds on existing sites; adds 5,000-7,000 beds in new secure re-entry facilities; builds a new training facility; and constructs a modernized Death Row at San Quentin.

Medical Facilities: $1 billion (lease revenue bonds)

Funds will go towards the construction of additional beds in medical, dental and mental facilities statewide. The court-appointed receiver has indicated he will use the state’s General Fund to pay for these facilities if necessary. This proposal protects the General Fund and the programs it supports.

K-12 Facilities
The state's K-12 schools need funding beyond the two years of financing provided by the current bonds to prepare for enrollment growth, reduce overcrowding, and repair dilapidated classrooms in compliance with the settlement agreement in Williams v. State of California.

New Construction: $5.061 billion (general obligation bonds)

Constructs 15,046 new classrooms to accommodate new students and reduce overcrowding.

Modernization: $2.539 billion (general obligation bonds)

Fixes 39,504 dilapidated classrooms serving more than 1 million students.

Charter Schools: $2.0 billion (general obligation bonds)

Establishes 1,219 new charter classrooms to serve more than 31,500 students and renovates 815 charter classrooms which will serve over 21,000 students.

Career Technical Education: $2 billion (general obligation bonds)

Constructs 5,897 new CTE classrooms to serve more than 152,000 students.

This proposal provides obligation bond assistance for funding school’s needs through 2012-13. But limits on state debt capacity will make it necessary for schools to plan for additional bond measures and alternative financing strategies for financially troubled districts to ensure that every student goes to class in a safe, adequate classroom.
The Governor’s proposal changes the state/local contribution ratio to 60/40 from the current 50/50. His proposal also reduces the cost of acquiring a school site.
Finally, the Administration proposes to review the overall financing structure for schools, including consideration of public-private partnerships, to ensure sustainable funding of school facilities in the long run.

Higher Education

The state's higher education systems need funding beyond the two years of financing provided by the current bonds to prepare for future enrollment growth and maintain the world renowned research capabilities of California's universities.

University of California: $2.85 billion (general obligation bonds), $70 million (lease revenue bonds).

Builds and renovates classrooms, laboratories and support facilities to accommodate 50,000 more students.
Constructs facilities for research and development of sustainable energy sources, in support of the Governor’s Innovation and Research Initiative: $30 million for the Helios Project, a groundbreaking initiative by the University of California’s Lawrence Berkeley National Laboratory to create sustainable, carbon-neutral sources of energy; $40 million to the University of California for UC Berkeley or UC San Diego in the event that either wins a global competition for the British Petroleum (BP) Energy Biosciences Institute grant.

California State University: $2.75 billion (general obligation bonds).

Build and renovate classrooms, laboratories and support facilities to accommodate 80,000 more students.

California Community Colleges: $6 billion (general obligation bonds).

Build and renovate 342 CCC facilities.

Flood Control, Water Supply and Conveyance
The state's water supply and management systems must be expanded to meet the needs of population growth and manage the effects of climate change on California's hydrology and water delivery systems.

Water Storage: $4.5 billion ($2.5 billion general obligation bonds and $2 billion revenue bonds)

Provides up to 3 million additional acre feet of surface storage, and up to 500,000 acre feet of annual supply.
Provides 500,000 acre feet of ground water storage.

Delta Sustainability: $1 billion (general obligation bonds)

Funding will leverage significant water user investments in upgrading water conveyance infrastructure through the Delta.

Water Resources Stewardship: $0.25 billion (general obligation bonds)

Provides for Klamath River and Salton Sea restoration activity, areas of the San Joaquin and Sacramento rivers and the Delta.

Water Conservation: $0.2 billion

Conserves 200,000 acre-feet.

Judiciary

California's court system needs substantial expansion and repair to address significant caseload increases and reduce delays.

New Construction and Renovation: $2 billion (general obligation bonds)

California’s judicial branch has $9.5 billion in overall facility needs. This $2 billion will be used to renovate or replace scores of outdated, unsafe and dilapidated court buildings to increase public safety. In addition, this state funding may be used to leverage substantial additional resources for court facilities through public-private-partnerships.

Other
Many state owned facilities require infrastructure improvement in order to continue providing critical services to Californians.

Department of Justice: $0.4 billion for a new DNA laboratory.
Department of Forestry and Fire Protection: $0.6 billion to replace or renovate 75 fire stations and related facilities.
Seismic Retrofits: $0.3 billion to complete the seismic retrofit of 29 state buildings.
Sustainable Buildings: $0.5 billion to replace or renovate office buildings to comply with the Governor’s Executive Order on Energy and Sustainable buildings.
Department of Mental Health: $0.5 billion to build additional capacity as a result of Jessica’s Law.
State Special Schools: $0.1 billion to replace or renovate classrooms and dormitories for the schools for the blind and deaf.
Department of Food and Agriculture: $0.1 billion to replace agricultural inspection stations and laboratories.
Veterans’ Homes: $0.1 billion to renovate the Yountville Veteran’s Home.

Transportation
The Governor proposes legislation to improve the outcomes for projects that will be built with Proposition 1B transportation funds.

The Governor’s proposal includes new public/private partnership and design/build legislation. Current state and local funding provides an 11 percent congestion reduction. By leveraging Proposition 1B funds with public-private partnerships, California can achieve:

A minimum of 14.5 percent congestion reduction.
$17 billion in private funding for the Goods Movement Action Plan, to construct high occupancy/toll lanes and fund air pollution reduction projects associated with goods movement.
Up to an additional 3.5 per-cent reduction in congestion and 210 highway lane-miles.

This proposal also includes design-build legislation to ensure that projects using Proposition 1B bond funding can be delivered more quickly, saving $1 billion.

Accountability
Governor Schwarzenegger intends to establish guidelines and procedures for spending bond funds efficiently, effectively and in the best interests of Californians. The Governor will enact policies that hold state departments and local governments responsible for bond funds at the outset, during and following fund disbursement. The state Department of Finance will also launch a web site to give the public access to information on bond spending.

Just the Facts
Bonds a “substantial down payment” on California quality of life. “In November 2006, California voters passed one of the biggest spending packages in the state’s history. The bonds in that package represent a substantial down payment on repairing and building the infrastructure and increasing the public services required to preserve California’s quality of life. But these funds are just a down payment. More will be needed. Equally important, the state needs to undertake much more comprehensive and systematic planning for the future than it has in recent decades. The population growth and other challenges facing the state are huge—and we all have a stake in the outcome.” Source: Public Policy Institute, “California’s Future In Your Hands,” October 2006.

Prison overcrowding fuels violence. “Crowding, and the tremendous increase in the prisoner population that underlies it, fuels violence. Crowding severely limits or eliminates the ability of prisoners to be productive, which can leave them feeling hopeless; pushes officers to rely on forceful means of control rather than communication, and makes it harder to classify and assign prisoners safely and identify the dangerously mentally ill.” Source: “Confronting Confinement," John J. Gibbons, Nicholas de B. Katzenbach, The Commission On Safety And Abuse In America's Prisons. June 2006.

200,000 prisoners released “solely due” to lack of space. In 2005 alone, 233,388 individuals avoided incarceration or were released early from jail sentences due solely to a lack of jail space. Currently, 20 jails are under court-ordered population caps and 12 counties have established self-imposed caps. Source: “Do the Crime, Serve the Time? Maybe Not In California,” California State Sheriff’s Association. June 2006.

Climate change impacting water storage. “Rising temperatures, exacerbated in some simulations by decreasing winter precipitation, produce substantial reductions in snowpack in the Sierra Nevada Mountains, with cascading impacts on California winter recreation, streamflow, and water storage and supply.” Source: Proceedings of the National Academy of Sciences of the United States of America, “Emissions pathways, climate change, and impacts on California,” August 16, 2004. (Note: This report is classified as being “Current as of January 2007”) http://www.pnas.org/cgi/reprint/101/34/12422.pdf

Reduced snowpack, water supplies affect agriculture. “Declining Sierra Nevada snowpack, earlier runoff, and reduced spring and summer streamflows will likely affect surface water supplies and shift reliance to groundwater resources, already overdrafted in many agricultural areas in California. This could impact 85% of California’s population who are agricultural and urban users in the Central Valley, San Francisco Bay Area, and the South Coast, about half of whose water is supplied by rivers of the Central Valley.” Source: Proceedings of the National Academy of Sciences of the United States of America, “Emissions pathways, climate change, and impacts on California,” August 16, 2004.

Water storage provide important benefits for agriculture, environment. “…potential reservoirs could provide a wide range of type and geographic scope of benefits including agricultural uses, CALFED Environmental Water Account and Environmental Water Program and water supply for refuges. Additional potential benefits include urban uses, improvement of Delta water quality for the ecosystem as well as Delta users and exporters, improvement of streamflows during times critical for fisheries and other ecosystem
processes, flexibility for changing the timing of existing diversions to protect fisheries, and other water management purposes.” Source: California Department of Water Resources, “California Water Plan Update 2005,” April, 2005.

“Urgent need” for court construction and renovation. “There is an urgent need for construction and renovation of California's courts…There is just one courtroom per 15,432 Californians; Due to lack of courtroom space, 23 court facilities are in trailers; 1/4 of courtrooms have no space for a jury; 41% of court facilities have no way to bring in-custody defendants into courtrooms without using public hallways; 68% have inadequate security; 78% do not have adequate access for people with disabilities.” Source: California Courts Web site, www.courtinfo.ca.gov.

Proposition 1B “a down payment on a $200 billion problem” “..despite the expectations among policy makers and the general public that transportation funding is adequate for the foreseeable future, we must take Proposition 1B for what it is - a down payment on a $200 billion problem - and not treat it as any sort of long-term solution. Estimates of unmet transportation needs vary by source and duration but range from $150 - $250 billion over the next ten years.” Source: Keston Institute for Public Finance and Infrastructure Policy, University of Southern California, “Moving down the road: Toward a long-term funding strategy for transportation in California”, November 2006.

California needs more transportation investment. “Regional Infrastructure Report Cards across California defined an annual local transportation need of $5.9 billion. This figure combined with the CTC defined annual need for State-Wide Transportation needs, amounts to a funding need totaling $17.9 billion per year. California, along with states across the nation, needs more investments for improving her transportation system.”
Source: American Society of Civil Engineers, “California Infrastructure Report Card: A Citizen’s Guide”, September 2006.