On Infrastructure, California Goes Back to Basics
The state's transportation chief calls a new $54 billion transportation package monumental. But the projects it funds will be more mundane than monumental.
For the first time since 1989, California lawmakers this year passed a gas tax hike. The increase -- by 12 cents a gallon on gasoline and 20 cents a gallon on diesel -- will pay for a decade-long building program that will cost $54 billion.
California is one of many states this year to raise its fuel taxes, but the state's sheer size makes the new transportation funding law significant. The Trump administration, by comparison, has broadly outlined a $1 trillion investment in infrastructure over a decade -- only $200 billion of which would come from the federal government.
In other words, over the next decade, California will spend a quarter of what the federal government would spend on the entire country under Trump’s plan.
The new California law, though, isn’t primarily about building flashy roads, bridges and transit systems. Instead, the new money will primarily go toward fixing up the state’s existing transportation network.
Governing spoke with Brian Kelly, the secretary of the California State Transportation Agency, about how the new money will be spent, along with the potential for high-speed rail and the mixed legacy of San Francisco's new Bay Bridge.
The following transcript has been edited for clarity, context and brevity.
Why is California’s new transportation law, SB1, such a big deal?
It achieved something we’ve been trying to do in California for the better part of three decades now, and that is stabilizing transportation funding in California. It sounds like a huge number, and it is a lot of money. But the needs in California have been estimated even higher.
Importantly, it means we will put our pavement and our bridges in conditions that they haven’t been in for decades while we’ve ignored funding for them. That’s primarily what SB1 does. About 65 percent of the money will go to “Fix It First.”
For example, we’re going to be able to repave 17,000 miles of highway in California over the course of the next 10 years. We’re going to fix some 500 bridges that, because of their age, are no longer up to today’s standards. There are thousands of culverts under bridges that need repair or replacement.
There’s always a tension in transportation bills between building new projects and fixing existing infrastructure. Why did California leaders agree to the Fix It First approach over expansion?
Our pavement condition was ranking in the bottom five or six states in the country. It became a natural place to say, “We have to fix some things before we start talking about grand expansion.”
California’s transportation system is pretty diverse. You can’t pass a transportation funding bill through the legislature without it being diverse. So Fix It First was the focus out of necessity. But it also has some of the other things people were looking for. We have funding for public transit, funding for trade corridors, funding for congested commuting corridors and funding for bicycle and pedestrian facilities.
California is one of six states this year to raise its fuel taxes and one of 24 states to raise those taxes in the last four years. Why are so many states moving in this direction?
To me, that is the story: With inaction at the federal level, there is great action at the state level. While our numbers are big, we are doing what a lot of other states have done. These states are red and blue. The reality is that for infrastructure investment, all states -- red and blue together -- are saying, “We have great needs, and this infrastructure is vitally important. While the federal government hasn’t touched the gas tax since the early 1990s, we have to act.”
Now what we hope is because so many states have stepped up, maybe the federal government will get to infrastructure as a top priority.
Are you expecting or planning for a major federal infrastructure bill, like the one President Trump has discussed, in the near future?
We’ve taken care of our own side of the street by stabilizing our own money dedicated to transportation improvements here in California. That puts us in a great place to provide match money for whatever federal dollars may come. If Congress says they want to invest in trade, California is well-positioned to match.
President Trump and his advisers have talked a lot about using more private money to build infrastructure. How effective do you think that strategy could be? How far does that get you?
Public-private partnerships (P3s) need to be put in the proper perspective. There’s no free money here. When you talk about a P3, you have to have a project that is raising its own revenue. When a private partner comes in, what they’re really doing is helping you finance it, which means you have to pay them back with that revenue stream.
So there is clearly a time and a place for them. We think we have one of the largest P3 projects on the horizon with our high-speed rail project. We’re trying to finish the public part of that project, in terms of getting all of the environmental [studies and permits] done. Then there will be a combination of public and, we hope, private investment that will see that project through.
I get P3s as a tool. [But] I don’t think they’re a viable answer in totality for our transportation needs. You have to have public investment and get some of the “fix it first” things done. P3s are by no means the overall answer to our transportation challenges.
But there are still a lot of questions about the public funding for your state's high-speed rail line. How is the state going to pay for its part once federal stimulus money and the 2008 state bond money runs out?
This is a place where we’ve heard positive things from the Trump administration, about a focus on faster trains and high-speed rail. Nowhere is high-speed rail as far into construction as it is here in California. We’ve got 1,200 tradesman working in the Central Valley now, building parts of the system.
You’re right, we don’t have all the funding in hand for the entirety of the project, but we think with a coming deal on our cap-and-trade program [Gov. Jerry Brown is pushing to extend California's cap-and-trade system, which took effect in 2012, for another decade, which would generate more state revenue], plus the federal money we have already received and the state bond money, we are well-positioned to start the first operating leg between the Central Valley and the Silicon Valley.
I think once that it is operational, that is going to have a net surplus of operating funds. Once people see the service in action, they will see the benefits of it, and we’ll still be able to find federal assistance going forward, as well as private interests, to expand it.
Let’s talk about the reconstruction of the eastern span of the San Francisco-Oakland Bay Bridge. The construction phase constantly encountered troubles. The cost went from $250 million in 1995 to $6.5 billion by the time it opened in 2013. It took 12 years to build, and even after it was completed, engineers had to re-grout rods* that anchored the tower to its foundation. But the process for demolishing and removing the old span is going smoothly, and may even be under budget and ahead of schedule. Why was there such a big difference in the phases of the project?
That project has a 20-year history now. We made some changes to the oversight and delivery of that project back in 2005 that really changed the governance of the project and how it was reported. It will come in very close to on that schedule and on that budget that were developed in 2005.
The governance changes in 2005 also shifted the risk for any additional overruns to be borne entirely by toll payers [instead of the state, which footed the bill for previous cost overruns], which put some discipline into the system. There were also personnel changes in the management of the project that occurred in 2012.
I give credit to the team down there now, particularly on the demolition. They’ve really brought in some innovative approaches. Rather than spending months underwater cutting down these piers, they came up with the idea to implode those piers. Rather than it taking six months, it really took six seconds to demolish them. The result of that is a much-improved schedule, probably some cost savings and --importantly in the Bay Area -- improved environmental impact.
*CORRECTION: This story has been updated to reflect the fact that the rods on the new span were re-grouted, not replaced.
*CORRECTION: A previous version of this mistakenly reported that $200 million of Trump's infrastructure plan would come from the federal government. In fact, it would be $200 billion.