BILL ANALYSIS
AB 2579
Page 1
Date of Hearing: April 21, 2010
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Cameron Smyth, Chair
AB 2579 (Evans) - As Amended: April 19, 2010
SUBJECT : Master Plan for Infrastructure Financing and
Development Commission.
SUMMARY : Creates the Master Plan for Infrastructure Financing
and Development Commission (Commission). Specifically, this
bill :
1)Makes findings and declarations regarding the projected growth
for California in the next 40 years.
2)Makes findings and declarations regarding the projected costs
for California's infrastructure needs over the next 20 years.
3)Declares that our state lacks information that is both
independent and comprehensive to assist policymakers to
analyze and prioritize the myriad of California's
infrastructure needs.
4)States that it is necessary to create a master plan to assess
infrastructure needs, establish priorities to guide future
decisions that relate to infrastructure projects, and assess
the viability of various financing mechanisms to meet the
state's infrastructure development needs.
5)Provides that it is the mission of the Commission to develop
and recommend a plan to be presented to the Governor and
Legislature that provides for financing, building, and
maintaining the infrastructure necessary to meet the needs of
Californians up until 2050.
6)States that the Commission shall provide long-term guidelines
for our state's infrastructure needs and a prioritized plan
that meets those needs by doing all of the following:
a) Project population, social, and economic trends through
2050;
b) Utilizing the projections to assess the state's capital
needs for transportation, education, housing, and water
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through 2050, including the need for private capital to
augment or complement public financing;
c) Assess the availability of private and public funds to
support jointly sponsored projects throughout the period
from the present to 2050;
d) Assess the status and fiscal value of dedicating future
revenues to specific infrastructure construction and
maintenance, including transportation and schools;
e) Recommend a financing plan for the capital needs through
2050, with a priority plan for each five-year interval,
including evaluation and recommendations of various
financing methods that are feasible and may be of benefit
to state and local government; and,
f) Incorporate the findings of ongoing state infrastructure
planning and or reporting requirements.
7)Prescribes the composition of the 11 member Commission as
follows:
a) The Treasurer or his or her designee who has a public
finance background;
b) Four members appointed by the Governor:
i) One private sector representative from organized
labor;
ii) One private sector representative from a statewide
organization representing California businesses;
iii) One member representing the public;
iv) One member of the administration who is a director
of a state agency or department;
c) Three members appointed by the Speaker of the Assembly
who have the following qualifications:
i) One member with expertise in transportation;
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ii) One member with expertise in natural resources and
conservation;
iii) One member with expertise and experience in the
financing of large public works projects;
d) Three members appointed by the Senate Committee on Rules
who have the following qualifications:
i) One member with expertise in education
infrastructure planning;
ii) One member with experience in housing, urban
planning, or financing; and,
iii) One member who is an economist with demonstrated
accomplishment in understanding and interpreting the
California economy.
8)Requires the Governor to appoint the chair of the Commission
and prescribes the chair's salary.
9)Provides that the Treasurer or his or her designee shall be
the vice-chair of the Commission.
10)Authorizes the Commission to take the necessary
administrative actions to do the business of the Commission.
11)Requires the Commission to follow the Bagley-Keene Open
Meeting Act and the Political Reform Act of 1974.
12)Requires funding for the operating costs of the Commission to
be appropriated by the Legislature.
13)Authorizes the Commission to have staff or obtained loaned
staff from state agencies, local governments, and private
non-profits.
14)Provides a per diem allowance of $50 per meeting, not to
exceed $300 per month, for Commission members and
reimbursement for all necessary travel expenses.
15)Requires that the Commission submit its final report to the
Governor and Legislature no later than December 1, 2012, and
to wind up 30 days after the issuance of the report.
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16)States that to the extent necessary the Commission shall
recommend a methodology to track the state's infrastructure
progress and to reassess the master plan periodically.
17)Requires the Commission, when developing its recommendations,
to utilize existing state and local infrastructure reports
that reflect current or future infrastructure needs, including
but not limited to the following:
a) The Governor's five-year infrastructure plan;
b) The State Environmental Goals and Policies Report;
c) The California Transportation Plan;
d) Sustainable communities strategies;
e) Greenhouse gas emissions reduction planning; and,
f) The California Water Plan.
18)Requires the Commission to establish working task force
committees to assess, inventory, and report on the state's
long-term needs and financing alternative.
19)Requires the Commission, at a minimum, to establish task
force committees on the following topics:
a) Planning and financing;
b) Transportation;
c) Housing;
d) Natural resources and conservation; and,
e) Education.
20)Requires that the chair of each task force committee have
expertise in the task force's study area and be a member of
the Commission.
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21)Requires each task force committee to include members who
have expertise in the study area and background in the areas
of public finance, local government, and state government.
22)Requires each task force committee to include representatives
from labor, business, environmental, building industry,
consumer organizations, taxpayer organizations, and any
additional expertise as needed.
23)Authorizes each task force committee to establish procedures
and develop work plans.
24)States that the chair of each task force committee shall
present the committee's final recommendations to the
Commission.
EXISTING LAW :
1)Defines "infrastructure" as real property, including land and
improvements to the land, structures and equipment integral to
the operation of structures, easements, rights-of-way and
other forms of interest in property, roadways, and water
conveyances.
2)Requires, beginning in 2002, that the Governor annually submit
a five-year infrastructure plan to the Legislature. The plan
must contain:
a) Identification of infrastructure requested by agencies;
b) Aggregate funding for transportation;
c) Infrastructure needs for K-12;
d) Instructional facility needs for UC, CSU, and the
Community Colleges; and,
e) The cost of providing the infrastructure, sources of
funding, and impact on the state's debt position.
3)Contains three state planning priorities, which are intended
to promote equity, strengthen the economy, protect the
environment, and promote public health and safety in the
state, including in urban, suburban, and rural communities,
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4)Requires state agencies to ensure that their functional plans
are consistent with the state planning priorities by January
1, 2005, and to annually demonstrate how their requests
for infrastructure projects are consistent with these
priorities.
5)Requires the Governor to maintain and regularly review and
revise a State Environmental Goals and Policy Report (EGPR).
6)Requires that EGPR give priority to the development of
statewide land use policy.
7)Requires that EGPR provide a 20- to 30-year overview of state
growth and development,
a statement of approved state environmental goals and
objectives, including those directed
to land use, population growth and distribution, development,
the conservation of natural resources, air quality and water
quality.
8)Requires that EGPR be consistent with the state planning
priorities.
FISCAL EFFECT : Unknown
COMMENTS :
1)According to the Governor's 2008 Five-Year Infrastructure Plan
(plan), "an investment in infrastructure is an investment in
California's future. The state's schools, universities,
transportation systems, water systems, public safety
facilities, and natural resources are the framework for the
individual and collective quality of life enjoyed by
Californians. Without a strong framework, both the private
and public sectors of the economy will falter, and our quality
of life will be at risk."
Even with the importance of infrastructure funding, budgetary
resources are never unlimited and documented infrastructure
needs are too large to be addressed in total over a short
timeframe. Therefore, decisions must be made to determine
which infrastructure projects will be funded from available
resources. That decision-making process, and its result of
establishing priorities for infrastructure funding, must be
multifaceted.
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California and most other states have continuously used debt
financing as a tool for infrastructure investment. Bond
markets recognize it as a legitimate and appropriate funding
technique, as long as it is employed prudently. However, what
constitutes a "prudent" or "reasonable" debt position is
relative. Both the bond market and the bond rating agencies
consider a number of factors when reaching a conclusion about
the reasonableness of a state's debt position. The same level
of debt may be considered either reasonable or imprudent
depending upon the state's performance over a range of
factors.
2)The author states that "after confronting budget deficits
totaling some $60 billion in recent years, it is clear that
the state budget cannot support the direct funding or
borrowing that would be required to meet the estimated $500
billion California needs to build new and replace worn-out
infrastructure. The Legislative Analyst Office projects that
debt service
on general obligation (GO) infrastructure bonds is the fastest
growing part of our budget. Currently at nearly 7% of our
General Fund budget, debt service will approach and hover near
10% of our budget for years to come. The legacy of this debt
and the prospect of more debts to compete with other budget
priorities will exacerbate the gravity of already difficult
budget decisions. Therefore, we must look for alternate
methods to finance the infrastructure that we need. And, we
must make the best use of the GO bonds that we plan to use."
The author argues that "California needs to emerge from the
current recession more competitive than ever. While the
issuance of GO debt can provide an economic stimulus in the
short-term, we need a strategic infrastructure plan that
prioritizes investments while identifying new mechanisms to
finance construction over the long term. While a lot of
government-wide planning currently exists, it is typically
segmented by department or by the
type of infrastructure investment. It does not often account
for overarching goals like
AB 32 (Nunez/Pavley), Chapter 488, Statues of 2006, or SB 375
(Steinberg), Chapter 728, Statues of 2008, or rank projects by
need. This is precisely the kind of information needed to
efficiently and effectively appropriate or leverage the
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resources necessary to meet California's significant
infrastructure needs. This is the role to be played by
creating a commission of experts to craft a Master Plan for
Infrastructure Financing and Development as prescribed in AB
2579."
3)Support Arguments : The sponsor, State Treasurer Bill Lockyer,
deems that the Commission will help recommend a new and better
process for periodically adjusting and adapting the
infrastructure financing and development plan in future years
to meet changing circumstances. The sponsor believes that the
combination of short-and long-term estimates would provide
greater clarity on which projects to prioritizes, and finding
alternative financing options would alleviate financial strain
of the state's overstressed General Fund.
Opposition Arguments : It could be argued that the report
generated by the Commission via this measure will be very
similar to the many other infrastructure reports the state is
already statutorily required to do. The Committee may wish to
consider if it is economically feasible for the state to
create yet another commission and another report to basically
do the same thing that has been done many times over. The
Committee may wish to consider how the work prescribed to be
done in AB 2579 is any different than what is in the
California Strategic Growth Plan.
REGISTERED SUPPORT / OPPOSITION :
Support
Honorable Bill Lockyer, California State Treasurer [SPONSOR]
Associated General Contractors of CA (AGC)
Housing CA
Opposition
None on file
Analysis Prepared by : Katie Kolitsos / L. GOV. / (916)
319-3958