California Infrastructure Problems in California Research Paper
- Length: 10 pages
- Sources: 5
- Subject: Economics
- Type: Research Paper
- Paper: #52805097
Excerpt from Research Paper :
The author also specifically mentions California's increased need in terms of its high crime rate. High crime rates require an increase of police and corrections, and therefore higher revenues to pay for these. Low fiscal needs are generally exhibited only where populations are low. A high population would naturally have a high fiscal need in terms of infrastructure.
According to Tannenwald, California's index of fiscal need rose in the last decade of the 20th century, where economic growth rates lagged. Furthermore, an unfortunate fact is that fiscal need and tax capacity do not always coincide in all the states. California however shows both a high tax capacity and high fiscal need. This means that its potential fiscal comfort is considerable.
In obtaining possible infrastructure solutions to the above-mentioned problems, a correlation is required among governments throughout the state, as well as excellent governance by its leaders. Solutions have been offered in terms of raising revenues and implementing income capacities where these were non-existent before. According to Governor Schwarzenegger, the best way to handle the water capacity problem in the state is by reducing state-wide water use. He suggested this by means of a letter to the California State Senate.
Potential Solutions: Infrastructure Changes
According to his letter, the Governor is aiming to reduce the per capita water use in the state by 20% when reaching the year 2020. The aim with this is to ensure a sustainable water supply, to reduce the costs associated with supplying water to cities, and to protect the ecology of the Delta system. In order to explicate and promote the plan, the letter contains several components to suggest improvements to the water-related infrastructure.
The first of these is the protection of the Delta floodplain. In order to do this, the Blue Ribbon Task Force, established for this purpose, would maintain the current land use policy. In order to maintain this aim, the Task Force will require the cooperation of the Delta Protection Commission, as well as the Land Use and Resource Management Plan. The Department of Water Resources (DWR) will also be required to improve the flood protection and levee systems.
The Governor is also calling for Multi-agency disaster planning for the Delta. This once again requires considerable cooperation from state-wide agencies, including the DWR and the Office of Emergency Services, among others. Equipment and services will be contracted for by the DWR. Emergency equipment will be placed close to the Delta for the improvement of response capabilities during times of crises.
A further concern at the Delta is the environment. According to the Governor's letter, several agencies will work together to help ensure the protection of the Delta habitat while at the same time helping water users to have a sustainable water supply. Such agencies would include the Resources Agency, Dept. Of Fish and Game, and the State Water Resources Control Board. One of the initiatives in this regard is the Bay Delta Conservation Plan (BDCP). Meanwhile, water quality will be protected by implementations from the State Water Resources Control Board.
The letter furthermore states that the Delta water conveyance system will be improved by means of a public process of investigation and implementation to ensure both the preservation of the environment and the safety of drinking water for citizens.
Finally, the Governor's letter suggests a water storage system to ensure sustainability of water supply to citizens. In this regard, feasibility studies are to be conducted by the DWR for storage projects that include the Temperance Flat, Sites Reservoir, and Los Vaqueros expansion. The Governor mentions that there could be substantial public benefits from each of these projects, if they are managed and funded correctly. The deterioration of the Delta and water system requires substantial investment in state-wide improvements. This is something that can be easily accomplished with the state's tax capacity.
Thad Kousser mentions San Diego as an example of infrastructure changes that can occur to ensure that the mentioned pension fund needs are being met. The state and city governments are obliged to meet citizen needs in terms of not only water sustainability, but also in terms of their other needs.
One of the problems currently relating to the city's fiscal problems is the fact that there is no charge for residential refuse collection. This costs the city $8.64 per household per month. If a similar monthly cost is charged to households, there would be an annual city revenue increase of $47.9 million. Another option is to contract private services and charging the contractor a franchise fee.
In order to implement such a measure, politicians would have to change the city's charter and obtain voter approval. A strong argument in favor of the measure is that all other California residents pay collection fees, with San Diego being the only exception. On the other hand, there is no progressive tax option for this fee, and residents on a fixed income may suffer as a result.
Another possible avenue of tax income is residential transfer tax. Although San Diego residences were the highest-valued during 2002, the transfer tax only amounted to 0.055%. Four other cities charge the same for residential transfers in California, but others charge much more. This indicates that the city could viably increase its residential transfer tax. The potential increases in annual income from this would be in the order of $10.6 million and $48 million.
Approval for such a measure would be required by a majority of San Diego voters under
Proposition 218 (Kousser 6). The only argument against such a measure is that it could exacerbate an already significant problem in terms of house prices in the city.
Another possibility is charging surtax on utility use. According to Kousser (6), San Diego, Fresno and Anaheim are the only large cities in the state without a utility users tax charge. If collecting the average of other cities, at $92,21 per resident per year, the city could obtain an income of $112.6 million. Such tax would most likely be categorized as general tax, and would therefore be subject to approval by San Diego voters. While many cities have implemented this tax, it does not directly apply to a service by the city.
Another possibility is to increase the transient occupancy tax in the city. San Diego charges a lower room tax rate than the average of other large cities in the state. An annual revenue increase of $9.9 million would be possible with an increase of the transient occupancy tax rate to 12.4% from the current 10.5%. This is one type of income from visitors outside the state and the country. Although the argument against indicates that higher rates may drive away potential visitors, the proposed increase would still be lower than most other large cities in the state. Implementing this measure would require a two-third majority of San Diego's voters.
Finally, Kousser is suggesting a daily fee for rental cars in the city. According to the author, no such fees are currently charged by rental care dealership. A daily charge of $2 to $3 would increase the city's annual revenue by $1.2 million to $5.9 million. This could therefore be an important avenue of infrastructure revenue, particularly as it fluctuates according to the rates of renting. According to Kousser, the wording of this option is important. If worded as a fee rather than a tax, the measure could be implemented only with the approval of citify officials as opposed to a voter majority. The advantage of the system is that San Diego citizens themselves would not be responsible for rental fees. Instead, the fees would be paid by out of town visitors or by insurance companies. Although one argument against this implementation is that it would discourage visitors from out of town. However, if the city has enough to attract visitors, surely matters such as car rental fees and room tax raises would not discourage them. Tourism is one avenue where the city could substantially increase its income without having to consider the disadvantages to its own citizens.
Conclusions and Recommendations
Six changes were suggested to increase the efficiency of infrastructure and income in the state of California. These include water infrastructure, charging for residential fuel collection, charging utilities taxes, increasing residential transfer taxes, increasing room taxes, and charging daily fees for car rental.
Water infrastructure, residential fuel collection, residential transfer taxes, room taxes and fees for car rental are considered viable in terms of increased revenue and infrastructure improvement. Indeed, water infrastructure is one of the most important considerations for the state of California, as it is a water-scarce area. Utilities taxes are considered one of the less viable options, as these revenues are not directly applied towards paying for a service by the city. Furthermore, it is considered more important to obtain income from tourists than it is to obtain from residents. It is therefore recommended that the room and car rental prices be modified first. After review…