Shaking Up State’s Economy

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Since a peak in early 2008, the California economy has shed more than 1.1 million jobs. At 12 percent, the state’s unemployment rate is double what it was in January 2008. While the pain has been felt throughout the economy, the construction industry has been particularly hard hit. A third of construction jobs have disappeared and unlike previous economic downturns, it is highly unlikely that the housing industry will ride in to save the day anytime soon.

Gov. Jerry Brown recently named former Bank of America executive Michael Rossi as the state’s jobs czar to bring business, labor and the administration together to address the crisis. I would like to suggest that the state’s infrastructure would be a good place for Rossi to start.

There are billions of dollars in bonding authority for infrastructure already approved by voters but as yet uncommitted to projects. There are also billions available to help counties through sales tax measures such as L.A.’s Measure R. Many more billions in private capital could be leveraged by these state and local funds through public-private partnerships authorized by the Legislature and governor in 2009.

Putting these billions to work now on long-overdue infrastructure projects would not only revitalize construction and related industries, but would ensure that other important sectors of the economy would have the infrastructure in place to support their activities in the future.

So, if infrastructure could be a way out of the job-starved, quasirecovery we find ourselves in, what’s holding the state back? Unfortunately, over the years, California has put in place myriad processes for procurement and project review that although ensuring open, transparent and inclusionary decision-making, also ensure that nothing gets done quickly.

Forget “shovel-ready.” Environmental clearance on noncontroversial projects can take years, many times that duration if anyone objects. Public agencies routinely plan for projects to take 10 years from planning to completion! This is an absurd situation for a state that has the tools in place to build itself out of recession.

Disaster recovery

Fortunately, California is well-experienced in recovering from natural disasters. The 1994 Northridge Earthquake left much of the Santa Monica Freeway in ruins. Preliminary estimates to repair the numerous damaged overpasses and on-ramps anticipated up to a year’s effort. However, by committing to get Los Angeles up and running again, Gov. Pete Wilson and Mayor Richard Riordan got the freeway opened in only 66 days; a feat that is still studied in the disaster management community. The current economic situation in California looks every bit as dire as January 1994, and we would do well to study that old playbook.

All that was required to achieve that construction miracle was agreement the city and its people were suffering hardship and financial loss every day the freeway was closed. As a result, decisions were made to get the freeway open as soon as possible. Public employees were empowered to execute incentive-based contracts, review processes were compressed or eliminated, procurement times were slashed, and the unthinkable was achieved: The freeway reopened in little more than 2 months.

The same sort of construction magic was repeated in 2007 when a section of the Arthur H. Breed Jr. (I-580) Freeway in Alameda County collapsed due to a tanker truck fire. Again, a commitment to fix the problem and a willingness to work outside the box resulted in a critical urban freeway reopening in only 25 days and at far less cost than the state had estimated.

California is enmeshed in an economic crisis of epic proportions and building more infrastructure more quickly would help. We know how to get construction projects moving quickly because we’ve done it many times before. We still have many talented, creative and dedicated people throughout the public sector. All we really need to do is recognize the situation for what it is, an economic version of Northridge that threatens the safety and welfare of all Californians.

If the governor were to declare a statewide emergency and make a commitment to modify or suspend cumbersome procurement and regulatory processes to get construction going at full steam to address it, Rossi would have an easier time getting people back to work and California back on the road to a brighter future.

Richard G. Little is director of the Keston Institute for Public Finance and Infrastructure Policy, a nonpartisan research center at the University of Southern California.

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