Two big wins for California Economic Summit in governor’s revised budget

150 150 Justin Ewers

Welding demonstration at Cerritos College. (Photo Credit: John Guenther)

In the flurry of questions faced by Gov. Jerry Brown as he announced his revised state budget today, one subject was noticeably absent. Reporters pressed the governor about his plans to expand health insurance for millions of low-income Californians and his strategy for paying down debt. He was queried about federal reimbursement rates, his views on pre-kindergarten, and, as expected, high-speed rail and the Delta tunnels project.

What no one asked about, though, was the economy—the subject most Californians still say is the state’s most pressing issue.

So how will the governor’s $156 billion spending plan for the state expand California’s economic recovery—and lay a foundation for long-term prosperity? Earlier this year, the Economic Summit identified nine specific actions the state could take this year that regional leaders believe will do just that—from making housing more affordable to supporting a campaign for manufacturing that will provide a source of sustainable middle-income jobs for years to come.

Not all of the Summit proposals require support from the state budget, but two recommendations, in particular, were included in the May Revision: These include a plan to increase funding for programs training workers for jobs in the new economy and a proposal to expand the use of new financing tools to help the state meet its growing infrastructure needs. More details on these important parts of the Summit’s prosperity strategy can be found below:

Workforce – Training workers for the new economy

The Summit’s Workforce Action Team has made reversing a decade-long slide in state support for career technical education in community colleges a top priority this year—citing studies that show the median wages for graduates from these programs ($66,600) are nearly double those of other graduates ($38,500).

The governor’s budget not only sets aside $50 million this year specifically for career tech, it also acknowledges the higher costs associated with these programs—and proposes a new “shared investment” funding model along the lines the Summit has recommended.

The budget also acknowledges the vital role these programs play in regional economies—pointing out that CTE programs should be used to “build upon existing regional capacity to better meet regional labor market demands.”

Workforce development leaders welcomed the governor’s support. “We are grateful for the governor’s recognition of the workforce needs of California’s regional economies,“ said Van Ton-Quinlivan, vice chancellor of Workforce and Economic Development in the California Community Colleges Chancellor’s Office, and co-lead of the Summit’s Workforce Action Team. “The targeted investment in career technical education in the May Revise will allow community colleges to better respond to the needs of jobs and the economy.”

And business leaders agreed that the program’s expansion will help community colleges support regional workforce needs. “The regional framework embodied in these new funds puts California in leadership with other states focused on expanding the number of skilled workers trained to fill high-need labor market shortages,” said Alma Salazar, vice president of education and workforce development at the Los Angeles Area Chamber of Commerce, who is also a co-lead of the Workforce Action Team.

Infrastructure – Finding new ways to meet the infrastructure needs of a growing population

Ensuring the state’s water and transportation systems have the capacity to handle a growing population remains one of the Summit’s top priorities, and the governor’s budget includes a Summit proposal to dramatically increase the scope of a local financing authority known as Infrastructure Financing Districts (IFDs).

In its January budget, the administration portrayed IFDs as a potential replacement for the hundreds of local redevelopment agencies disbanded in 2011—popular, if sometimes controversial, programs that were responsible for billions of dollars of investment in economic development and infrastructure. The governor proposed allowing IFDs to pick up where redevelopment left off, broadening their authority to allow cities to invest in local infrastructure projects from affordable housing and transit facilities to sewage treatment and water reclamation.

Cities and affordable housing advocates, though, worried about the scope of the proposal—and whether it would adequately replace redevelopment.

In today’s revised budget, the administration has adopted several Summit recommendations for strengthening this new program—including a provision that will roughly double the size of the pool of revenues IFDs can tap. The budget’s “Enhanced IFD” proposal clarifies that all of the property tax growth cities receive would be accessible to IFDs—including property tax revenues caught up in a complicated tax “swap” with Vehicle License Fee funds. The Summit has estimated that this step alone would nearly double the property tax share available to IFDs, making about $400 million available each year for local infrastructure development.

The budget includes several other Summit proposals for making IFDs more effective. It expands their authority beyond just incremental growth in property tax revenue—the financing tool used by redevelopment agencies—and includes user fees and assessments for benefit, as well. The proposal also includes a requirement that Infrastructure Financing Districts report on their progress every two years by conducting a performance audit—something the Summit pushed for, as well.

“These are all positive steps, and they will make financing infrastructure at the local level easier than it is today,” says Mark Pisano, a co-lead of the Summit Infrastructure Action Team and longtime director of the Southern California Association of Governments. “The tax increment program may not be as big as redevelopment but when combined with the additional financing provisions of IFDs, it will provide the tools we need to deal with our continued growth. We applaud the administration for creating what will be a very effective, comprehensive financing tool that should stand the test of time.”


Justin Ewers

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