SECTION 1.
The Legislature finds and declares the following:(a) An investment in California’s infrastructure is an investment in California’s future. The quality of life in California depends on the quality of our children’s education and on the condition of the state’s transportation network, water system, and parks.
(b) California’s education, transportation, and resource infrastructure is critically underfunded. The State Department of Education estimates a thirty-six billion dollar ($36,000,000,000) need to build classrooms for our school children. While the population of the state has increased by 50 percent, and the number of vehicles on the road has doubled, the state highway system is the same size today as it was 25 years ago. The California Transportation Commission has documented one hundred eighteen billion dollars ($118,000,000,000) in unmet transportation needs.
(c) Over the course of the next 10 years, California faces an eighty-two billion dollar ($82,000,000,000) to ninety billion dollar ($90,000,000,000) shortfall in its infrastructure investment, as estimated by the Department of Finance and the California Business Round Table.
(d) California has often used bonds to pay for infrastructure investments. However, bonds alone can not dent the magnitude of California’s infrastructure investment deficit. According to the Department of Finance’s 1999 Capital Outlay and Infrastructure Report, if California issued thirty-two billion dollars ($32,000,000,000) in new bonds, 6 percent of the state’s future annual budgets would be committed to repay the debt.
(e) In addition, bonds are the most costly and most dangerous way to pay for improvements. For every two dollars ($2) California raises to improve our infrastructure, an additional one dollar ($1) must be spent to pay the bankers and investors who finance the bonds. The total cost to repay thirty-two billion dollars ($32,000,000,000) in bonds would exceed fifty billion dollars ($50,000,000,000). If California’s economic growth again slows down, bonds must still be repaid, squeezing out investments in education, child care, and other important programs.
(f) According to the Legislative Analyst’s 1998 report, Overhauling the State’s Infrastructure Planning and Financing Process, the state needs to take two main steps to provide a more stable funding source for our infrastructure needs: dedicate a given level of General Fund resources for infrastructure, and reserve a greater proportion of the spending for pay-as-you-go financing.
(g) In the 1960s, when California created the nation’s finest education and transportation systems, the state routinely committed 7 to 10 times more of the General Fund to capital outlays than we do today.
(h) Establishing a California Twenty-First Century Infrastructure Investment Fund and slowly increasing the amount of the General Fund committed to capital outlays is the only realistic prospect California has to reverse 25 years of neglect of our infrastructure. Such a program could conservatively be expected to raise over seventy-five billion dollars ($75,000,000,000) in the next 20 years.
(i) The California Twenty-First Century Infrastructure Investment Fund will also protect against the risks of bonded indebtedness. By limiting the annual growth of the Infrastructure Investment Fund to no more than 25 percent of annual General Fund growth, education, child care, and other necessary services will be protected during periods of economic recession.