Prepare and planning for growth

What will it take to keep the economy healthy, and to broaden opportunities for participation? A commitment to prepare for growth, plan for growth and build for growth, so as to reap the benefits of growth while ameliorating its trade-offs. According to the California Business Roundtable, there are 3 crucial issues to consider in addressing the state's future: infrastructure development, education and business climate.

Infrastructure development

Infrastructure development means expanding and improving transportation, bridges, tunnels, rail lines, ports, airports and highways. After all, the new economy is based on mobility and justin-time distribution of people, materials and information. Without world-class infrastructure, the engine that drives both standard of living and quality of life will stall.

According to the California Transportation Commission, the state will need to invest more than $100 billion over the next 10 years in its transportation system to cope with a growing population and economy. In good part that's because California's highway system has not kept pace with population growth over the past few decades. Between 1967 and 1997, travel on California's roads increased by 184%, but lane mileage expanded just 29%. And although the population rose by 70%, the number of vehicles increased 130%.

The California Taxpayer Association, the state Chamber of Commerce and Californians for Better Transportation all support more highway funding. The Commission's inventory of needed projects includes widening of several major arteries, reconstruction of critical interchanges, completion of unfinished freeways, and building of access roads to accompany the expansion of Los Angeles International Airport.

Education

It is now widely recognized that while California is a world leader in advanced education, its system of primary education is failing in its mission to both produce students with real skills and to provide a functional education for students who are either a) not college-bound, b) first- or second-generation immigrants, or c) do not speak English as a first language. Yet the future of the state's desirability and vitality is dependent on the quality of its students, workforce and citizenry.

In response to this recognition, California legislators are seeking both more spending for traditional schools and more freedom for nontraditional educational efforts such as charter schools. This year's state budget includes more than $1 billion in new spending for K-12 education, including a dramatic expansion of reading programs, a new mandatory high-school exam, a new peer-review program for teachers, and a new school-accountability program to require, measure and reward school efforts at improving educational quality (and to punish those that fall behind).

Meanwhile the issues of school vouchers, educational privatization, teachers' union contracts, etc. are sure to keep the subject of education in the forefront of state concerns.

Business climate

A favorable business climate is a prerequisite for attracting and retaining both corporations and entrepreneurial, fast-growing small companies. Besides economic diversity, a high caliber workforce and quality of life, the elements of a favorable business environment include low-cost of doing business; low barriers to business entry and operation; access to suppliers, business services and transportation; minimal taxes and regulation; and the support of local governments and populations.

In these regards, California has improved its business climate but still could be doing a lot better. Although, according to research by Arthur Andersen & Co., California contains 2 of the nation's top 10 cities for doing business - San Jose (#2) and San Francisco (#7) - this may be said to be in spite of, not because of, the state's attitude toward business taxation and regulation.

It's a mixed picture. For example, over 1,000 new state laws came into -effect on New Year's Day. Some are beneficial to business climate (elimination of new business incorporation fees); some are detrimental (regulations restricting business' autonomy in personnel decisions).

Of concern is the fact that Los Angeles and the southern California region - a national leader by so many measures and locus of half the state's $1 trillion economy - is not known for its favorable business climate. According to a recent report from the Los Angeles Economic Development Corporation, because of taxes, zoning and onerous environmental regulation, L.A. County suffers an acute shortage of suitable and available land for residential and industrial construction. This is preventing the County from attracting and/or retaining desirable employees and employers both.

Copyright FutureScan Jan 17, 2000
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