BILL ANALYSIS                                                                                                                                                                                                    




                     SENATE GOVERNANCE & FINANCE COMMITTEE
                            Senator Lois Wolk, Chair
          

          BILL NO:  SB 907                      HEARING:  4/27/11
          AUTHOR:  Evans                        FISCAL:  Yes
          VERSION:  4/25/11                     TAX LEVY:  No
          CONSULTANT:  Detwiler                 

                    MASTER PLAN FOR INFRASTRUCTURE FINANCING
                           AND DEVELOPMENT COMMISSION
          

                 Creates a temporary state commission to study 
                             infrastructure needs.


                           Background and Existing Law  

          Nearly a decade ago, the Legislature adopted three state 
          planning priorities:
                 Promote infill development and equity.
                 Protect environmental and agricultural resources.
                 Encourage efficient development patterns.
          These statutory priorities guide the state government's 
          actions relating to land use planning and infrastructure 
          spending (AB 857, Wiggins, 2002).

          Every four years, the Governor must prepare a State 
          Environmental Goals and Policy Report which looks at state 
          growth and development over the next 20 to 30 years and 
          includes approved environmental goals and policies.  The 
          Governor's Office of Planning and Research (OPR) prepares 
          the report, the Governor sends it to the Legislature for 
          review, the Legislature can study the report, and the 
          Governor must consider the Legislature's advice before 
          approving it (AB 2070, Assembly Select Committee on 
          Environmental Quality, 1970).   Starting in 2004, revisions 
          to the Environmental Goals and Policy Report must be 
          consistent with the state planning priorities adopted in 
          2002.  The last Environmental Goals and Policy Report that 
          a Governor approved was An Urban Strategy for California 
          (1978).

          State law intends the Governor's Environmental Goals and 
          Policy Report to be a "clear framework" for statewide 
          functional plans and capital spending.  A 1992 OPR study, 
          Statewide Plan Coordination in California, identified over 




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          two dozen state functional plans that affect growth 
          management, including plans for coastal resources 
          (California Coastal Commission), energy supplies 
          (California Energy Commission), housing (Department of 
          Housing and Community Development), transportation 
          (Department of Transportation), and water resources 
          (Department of Water Resources), among others.

          As part of the annual state budget proposal, the Governor 
          must submit a five-year infrastructure plan to the 
          Legislature.  This annual, five-year plan must identify:
                 Infrastructure projects requested by state 
               agencies.
                 Transportation projects identified in the State 
               Transportation Improvement Program.
                 K-12 school infrastructure needs.
                 Higher education facility needs.  
          The plan must estimate the costs of those infrastructure 
          projects.  The plan must also identify the criteria and 
          priorities for funding infrastructure, funding sources, the 
          effect on the state government's debt position, and 
          recommend specific projects for funding and capital outlay 
          appropriations (AB 1473, Hertzberg, 1999).  The criteria 
          for selecting state agencies' infrastructure projects must 
          be consistent with the state planning priorities adopted in 
          2002.  The State Department of Finance issued the 
          California Five-Year Infrastructure Plan in 2002, 2003, 
          2006, 2007, and 2008.  The Department intends to issue a 
          new five-year plan in January 2012.

          Governor Schwarzenegger issued the California Strategic 
          Growth Plan in 2007 and 2008, laying out the state's 
          infrastructure requirements for the next two decades.  The 
          2008 edition proposed $48.1 billion in general obligation 
          bonds and $2.3 billion in lease-revenue bonds to cover 
          projects through 2016.

          The U.S. Census counted 37.3 million Californians in April 
          2010.  According to a projection prepared by the State 
          Department of Finance in 2007, the state may reach almost 
          60 million residents by 2050.  Not only will California's 
          population grow, it will also see demographic changes 
          involving aging, immigration, race, and ethnicity.  
          Settlement patterns may also change as established 
          communities become denser.  By any measure, Californians 
          will need more housing and the public works that serve 





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          them.  


                                   Proposed Law  

          Senate Bill 907 creates the 11-member Master Plan for 
          Infrastructure Financing and Development Commission.  By 
          December 1, 2013, the Commission must submit a final report 
          to the Governor and the Legislature which contains a 
          long-term plan and strategy for the state's infrastructure 
          needs and a prioritized plan to meet those needs.  The 
          Commission must also submit periodic progress reports.

          The Commission dissolves 30 days after it issues its final 
          report.  Further, the bill's provisions automatically 
          terminate when the Commission dissolves, unless legislators 
          extend the date.


































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          The Commission's plan must:
                 Project population, social, and economic trends 
               through 2050.
                 Identify the type and distribution of 
               infrastructure needed through 2050.
                 Incorporate the findings of existing state 
               infrastructure plans and reports.
                 Assess the state's capital needs for infrastructure 
               projects through 2050, including private capital and 
               public financing.
                 Assess the availability of private and public funds 
               for joint projects through 2050.
                 Recommend a financing plan for capital needs 
               through 2050, by five-year intervals, along with 
               feasible financing methods.

          The Commission must recommend a method to track the state's 
          infrastructure progress and periodically reassess the 
          master plan.

          The Commission's final report must contain a plan that 
          identifies the types, distribution, and priority for 
          developing infrastructure projects through 2050, and a 
          measureable process to implement this plan.  The plan must 
          also include a process to periodically adjust these 
          projects to meet changing circumstances.

          When developing its recommendations, the Commission must 
          use existing state and local reports on infrastructure 
          needs.  SB 907 specifically lists:
                 The Governor's annual, five-year infrastructure 
               plan.
                 The State Environmental Goals and Policy Report.
                 The California Transportation Plan.
                 The sustainable communities strategies.
                 Greenhouse gas emissions reduction planning.
                 The California Water Plan.

          The Commission consists of:
                 The State Treasurer or a designee with a public 
               finance background.
                 Six members appointed by the Governor:
                  o         A representative from organized labor.
                  o         A representative from a statewide 
                    business organization.
                  o         A public member.





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                  o         A state agency or department director.
                  o         A member with large-scale public works 
                    financing expertise.
                  o         An economist accomplished in interpreting 
                    the state's economy.
                 Two members appointed by the Assembly Speaker:
                  o         A member with transportation expertise.
                  o         A member with natural resources and 
                    conservation expertise.
                 Two members appointed by the Senate Rules 
               Committee:
                  o         A member with education infrastructure 
                    financing expertise.
                  o         A member with housing, urban planning, or 
                    financing expertise.

          The Governor appoints the Commission's chair who serves 
          full-time at an unspecified salary.  The Commission's vice 
          chair is the State Treasurer (or designee).  The other 
          Commissioner members may receive a per diem of $50, not to 
          exceed $300 a month, plus travel and other expenses.

          The Commission's chair appoints the executive director who 
          receives an unspecified salary.  The executive officer must 
          examine ways to borrow staff from state and local 
          governments and private nonprofit organizations, subject to 
          the Commission's approval and direction.  The Commission 
          can ask experts for help.  The Commission may delegate 
          contracting authority to its staff, subject to relevant 
          state law.

          SB 907 requires the Commission's products to incorporate 
          opportunity for public comment and participation.  The 
          Commission's chair must appoint at least five task force 
          committees to assess, inventory, and report on long-term 
          needs and financing alternatives:
                 Planning and financing.
                 Transportation.
                 Housing.
                 Natural resources and conservation.
                 Education.
          A Commission member may chair each task force committee 
          which must also include topical experts and representatives 
          of industry and trade groups.  The chair of each task force 
          committee must develop a work plan with deadlines, and 
          convene meetings.  Each task force committee's chair must 





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          present its findings to the Commission.

          SB 907 becomes operative only if the Legislature 
          appropriates funds through the Budget Act to support the 
          Commission.  The bill declares that the Legislature will 
          appropriate funds for the Commission's operating costs.  
          The bill indicates that funds will be appropriated from the 
          existing California Debt and Investment Advisory Commission 
          fund.

          The bill contains five legislative findings and 
          declarations regarding California's population growth and 
          the need to plan for infrastructure.


                               State Revenue Impact
           
          No estimate.


                                     Comments  

          1.   Purpose of the bill  .  The early 20th Century architect 
          and urban planner Daniel Burnham admonished his colleagues, 
          Make no little plans.  They have no magic to stir men's 
          blood and probably will not themselves be realized.  Grand 
          societies need grand plans to stimulate public support, 
          gather financial resources, and motivate political 
          commitment.  The Commission created by SB 907 will focus on 
          the demographic changes that Californians must embrace by 
          2050, translating long-range infrastructure needs into 
          feasible implementation programs over five-year intervals.  
          By blending executive branch participants with four 
          legislative appointees -- along with public participation 
          and vigorous efforts by broadly based task forces -- the 
          bill brings the affected parties together in ways that the 
          previous infrastructure planning exercises have not.  A 
          century after Californians endorsed Governor Hiram 
          Johnson's Progressive principles, it's time again to 
          challenge the experts to help state government get ready 
          for the future.

          2.   Just do it  !  State planning priorities guide state 
          officials' land use and infrastructure planning.  The State 
          Environmental Goals and Policy Report is the Governor's 
          quadrennial duty to look ahead 20 to 30 years.  Scores of 





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          state agencies and departments have their own long-term 
          statewide functional plans.  The Strategic Growth Plan lays 
          out the state's public works funding scheme until 2016.  
          The Governor's California Five-Year Infrastructure Plans 
          annually links public works funding to State Budget 
          spending.  If California doesn't lack from statewide 
          planning for public works, what's the need for another 
          state commission and another statewide infrastructure plan? 
           What the state government needs is long-term leadership 
          that's committed to turning these existing plans into 
          political and fiscal realities.  Constitutional officers 
          like the Governor and State Treasurer have the resources 
          and powers to accomplish that goal without a bill.  One 
          quick executive order can galvanize state departments into 
          action.

          3.   Long horizon, short deadline  .  SB 907 charges the new 
          Commission to look forward, in five-year intervals, to the 
          state's needs in 2050, reporting by December 1, 2013.  The 
          Commission must reach for that 37-year time horizon in just 
          23 months.  Between the bill's effective date of January 1, 
          2012 and the Commission's dissolution by December 31, 2013, 
          that's a lot of work for a part-time Commission and its 
          multiple task force committees.  If the commissioners want 
          their task force committees to generate new demographic, 
          fiscal, and infrastructure research, and then engage the 
          wider public, they may not have enough time.  However, if 
          the Commission's executive director and borrowed staff rely 
          on current studies, reports, and recommendations, they can 
          probably help the task force committees sort through the 
          existing information and still meet the statutory deadline. 
           The Committee may wish to consider whether SB 907 gives 
          the new Commission enough time to fulfill the bill's 
          ambitious goals.

          4.   Fill in the blanks  .  The new Commission's stars are its 
          full-time chair and full-time executive director.  The 
          other commissioners, task force committees, and borrowed 
          staff play supporting roles.  SB 907 provides modest per 
          diem payments and expenses for the other commissioners.  
          The Commission's chair and executive director will receive 
          salaries, although the bill does not say how much.  The 
          Committee may wish to consider amendments that either fill 
          in those blanks or remove them, leaving the salary 
          decisions up to the Commission itself.  The Legislature 
          retains budgetary control because it appropriates the 





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          operating funds.

          5.   Legislative history  .  SB 907 is similar to AB 2579 
          (Evans, 2010) which died in the Assembly Appropriations 
          Committee.


                         Support and Opposition  (4/21/11)

           Support  :  State Treasurer Bill Lockyer; American Council of 
          Engineering Companies; American Society of Civil 
          Engineers-Region 9; Associated General Contractors of 
          California Chapters; California Alliance for Jobs; 
          California's Coalition for Adequate School Housing; 
          California Tax Reform Association; Engineering & Utility 
          Contractors Association; Transportation California; 
          Self-Help Counties Coalition.

           Opposition  :  Unknown.