The Need for Infrastructure Investment in California
In 2006 Governor Schwarzenegger estimated California's infrastructure needs at $500 billion over the next 20 years.
Most of California’s Infrastructure was built in the fifties, sixties and early seventies for approximately 17.5 million Californians. California’s population has more than doubled since that time.
One way to raise money for California’s infrastructure needs is by issuing bonds. However, there are issues associated with bonded indebtedness:
- Infrastructure requirements often greatly exceed bonding capacity
- Excessive bonding can negatively affect credit rating
Infrastructure funds are often diverted to other areas with budget shortfalls such as pension obligations, public safety, labor costs and social/health services. Construction costs inflate faster than CPI, due to world economic pressures and more stringent design/construction standards.
The only way California and its political subdivisions will both renovate aging infrastructures and develop green technologies and facilities will be through close intercourse with the private sector and private capital.