Viewpoints : Shoring Up the Infrastructure : What role should the business community play as California recovers from the quake and plans for the future?
S hould business take a greater role in helping to upgrade California’s roads, bridges and other infrastructure after the devastating Bay Area earthquake? If so, what should business do? Privatize government services? Coordinate real estate development? Fund research programs on improved highway construction? Pay user fees?
To get answers to these and other questions, Times researcher Melanie Pickett conducted separate interviews with Jane Pisano, president of the L.A. 2000 Partnership; Jack Kyser, chief economist for the Los Angeles Area Chamber of Commerce; Nelson Rising, senior partner with Maguire Thomas Partners, a Santa Monica-based real estate developer; Tom Schumacher, executive vice president and general manager, California Trucking Assn., and Robert W. Taggart, vice president - public affairs, Southern Pacific Transportation Co.
Excerpts of the interviews follow: How can business become more involved in upgrading California’s infrastructure?
Pisano: The best thing the business community can do is be supportive of the investment that will be required to both retrofit existing infrastructure and also provide the infrastructure we will need as we anticipate (future) population growth . . . What we’re seeing now is a failure of our entire community--of which the business community is only one part--to invest in our infrastructure over a long period of time, dating at least back to the passage of Proposition 13.
Schumacher: It’s time for local governments to say, “Hey, we can’t have any more growth in this area because if we have a disaster we’re going to be unable to cope.” Maybe it’s time for business to sit down with local entities (to) geographically balance our employment and investment programs so that we don’t have these high densities along these corridors that get so seriously disrupted in times of disaster.
Rising: The biggest problem we face in this state is we have been living in a fool’s paradise for 20 years. The gas tax has been almost static, with one slight raise, while inflation has taken things completely out of kilter. In the post-Proposition 13 era, we haven’t been able to spend for important public works projects, and as a result our infrastructure is woefully inadequate, and that’s one of the reasons we have the terrible traffic problems that we have.
How can business get involved?
Pisano: You already see discussion of some innovative solutions. The prospect of a toll road in Orange County (or privatizing) either the building or operation and maintenance of some infrastructure services, whether it’s a sewage treatment plant or whatever. But there is a limit to what the business community can and should do.
Taggart: One of the many lessons that we’ve learned from this earthquake is how fragile our highway system really is (and) how we really have to concentrate on alternative modes (of transportation) . . . A lot of what is included in the Rail Bond Initiative (a measure on the June, 1990, ballot that would raise money to purchase existing railroad rights of way in California to be used for public transportation corridors) perhaps deserves even more attention now.
Kyser: We (in California) are very strong in architecture and engineering, and I think architecture and engineering firms are in for a lot of business in the years ahead. It was announced (recently) that a research program (funded by the construction industry) at USC School of Engineering (will) look at how they can improve concrete structures. The business community is going to have to get more involved, educate their constituency.
(Business can’t afford to be) so inward looking, it’s going to have to have a more public face. They will have to get out and take stands on this. . . . Infrastructure is going to be a key need in the ‘90s. It’s going to be a burden for us, but it will also be an opportunity because we have the strength in architectural and engineering firms here and the engineering schools.
How do you assess the various proposals to raise revenues for these projects: gas tax increase, user fees, higher sales tax?
Kyser: The big challenge for all industry in Southern California is several things on the June, 1990, ballot. One is the split-roll tax initiative (in which residential and commercial property would be assessed at different rates for tax purposes). The other is the proposal to increase the gas tax to provide more money for our transportation infrastructure--both freeways, regular highways and mass transit. They also want to make alterations so we aren’t so constrained by the Gann limit.
Do you think that business is going to go for the split-roll tax?
Kyser: No. I think everybody in the business community is saying this is not the way to go. Because (it will) really put a tax burden on business and would serve to make California a less attractive place for business. And we’re already fighting the image of having high operating costs and high housing costs. We are just a high-cost place in which to do business. And that puts us at a competitive disadvantage.
Rising: At some point there is going to be a recognition that there are important functions of government that should be carried out and should be encouraged. And people are going to reject the politician who blindly says “I won’t raise taxes no matter what.” If somebody had said, “Look, we need to have an intelligent rebuilding or continuing upgrade of our transportation infrastructure” and just had the gas tax go up with inflation, nothing more, then we’d have a lot of our problems solved.
Because industry relies so heavily on infrastructure, can an argument be made that it have a greater share of the responsibility for maintaining and upgrading those facilities?
Kyser: Everybody has to pay their fair share. And I think that’s what you want. The favorite trick is to try to say we’re going to load all the cost on business and they can afford it. Maybe they can’t. Because 94% of the businesses in Southern California are small businesses with 50 or fewer employees.
Rising: The real fair way to do it would be to say that if it’s a transportation-related item then why not have those who use transportation services pay for it in the form of gas taxes. . . . I think the same thing goes for sewer fees or for the use of any other utility.
Do you see business opposing user fees since, as larger users, they would pay more?
Rising: If the business community looks intelligently about how they can prosper in California, it’s going to be with a state that has adequate infrastructure. One of the reasons California grew and prospered in the ‘50s and the ‘60s was because we were far-sighted. Because there was enough foresight to build the California aqueduct project and the freeway system and the university system. There is no magic solution, there is no quick fix other than an approach and a philosophy to government that would say there are certain valid functions of government we should tax in order to have those dollars.
