Clearing Away Roadblocks to Funding California’s Infrastructure
54 State Tax Notes 567 (2009)
12 Pages Posted: 2 Mar 2009 Last revised: 16 Jul 2012
Date Written: February 28, 2009
There is an enormous need for new investment in infrastructure in California. Purportedly novel proposals for financing infrastructure abound, often under the rubric of Public Private Partnerships ("P3"). This short paper contends that nothing will enable more infrastructure to be built than dismantling the various roadblocks that prevent traditional means of financing infrastructure to be utilized. In particular, California needs to rely more on charging appropriate fees for the use of scarce natural resources (like water), and it needs to levy assessments on properties that benefit from investments in nearby public improvements (like a transit station). Unfortunately, such modest and venerable methods have been rendered very difficult by changes to the California Constitution (particularly Proposition 218). After establishing a baseline sketch of how infrastructure can be best financed in California (and elsewhere), this paper identifies legal roadblocks and proposes solutions that are as narrow and non-ideological as possible. The paper concludes by noting that an oft-mentioned alternative, utilizing Public Private Partnerships, would not be nearly as effective.
Keywords: Infrastructure finance, public private partnerships, P3, assessment districts, demand management, Proposition 218
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