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Spending a Windfall Wisely


The State surplus of 2021 caught nearly everyone by surprise. At this time last year, facing the uncertainty of a global pandemic and the obvious economic impacts therein, as well as the reality of a recalcitrant federal funding partner, our state leaders responsibly passed a budget expecting a reduction in tax revenue and reciprocal slimming of programs.


But, due to many factors, including the state’s progressive tax structure and a change in the White House, California has found itself in the position of having a significant budget surplus and billions of one-time federal funding to direct in ways our leaders believe will provide the most economic and social benefit. Unfortunately, it appears that the Governor’s recall election is playing into his funding decisions. While the Legislative alternative proposal seems to be driven by some policy priorities, it too is less than cohesively developed in targeted ways. Sadly, politics and an understandable lack of planning just make it difficult to wisely spend a once-in-a-lifetime windfall.


For example, it is clear to anyone paying attention that the state has phenomenal unfunded future liabilities to mitigate against the impacts of climate change on its transportation systems. The estimated future transportation tax revenues are not enough to even maintain the existing systems under current conditions, let alone as sea levels rise, wildfires spread, flash floods wash away infrastructure, and subsidence disrupts rights of way. In its 2021 State Highway System Management Plan, Caltrans estimates a need of roughly $10 billion by 2030 just to mitigate against seas level rise; this is above and beyond what Caltrans needs for maintenance of the state system, does not consider any other climate adaptation needs, nor takes into consideration the impacts on local streets and roads or transit.


The Governor’s budget includes no funding for climate adaptation of the state’s transportation system. It does include, however, $1.5 billion over three years to remove litter on the highway system and add public art installments. The Governor also proposes adding 548 new engineers to Caltrans’ 20,000-person workforce, despite his administration’s efforts to build no more capacity into the state highway system. The Legislative alternative at least gives a nod to the impending crisis by including $400 million for state and local transportation adaptation grants; but given the enormous need, this may have little impact.


Its wholly understandable that, even with a $100 billion windfall, priorities must be made and not everything can be fully funded. However, a unifying strategy – one that ensures the funds are being spent on one-time needs that most warrant immediate attention and do not duplicate existing efforts – must be from where unexpected funding is directed. Otherwise, we end up with a piecemeal approach that appears mostly targeted to satisfying stakeholders instead of solving the state’s most pressing problems.

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