The US Census Bureau reported that California’s population began to grow again last year after an unprecedented three years of decline. But don’t fool a modest rebound of 0.6%. California is in a new era of slow population growth at best. The growth of Go-Go, which the nation has long accustomed to, will not return soon.
If you hear the stories of many Californians who struggled with the state’s continued growth and opposed further development, you’d think this reversal would solve all of our problems. But the truth is, even the slow-growing communities in the state are effectively taking themselves to the idea that growth pays for everything. If California communities will thrive in the future without more people, we need to understand how to free ourselves from that idea. It’s not easy.
Ever since state voters restricted property tax rates by passing Prop. 13 almost half a century ago, California has embraced the idea that growth has to pay for itself. But it’s often piqued that “growth has to pay for itself.” This means that “growth and we have to pay.” So when the population growth stops, everyone has to pay more.
The general expectation is that as the community grows, current residents should be at no cost. As a result, the “immunity fees” that most state areas charge developers through the roof, reaching over $100,000 in some jurisdictions and at least $1 billion a year across the state.
Additionally, developers and new residents often pay more than a fair share due to California’s unique “development agreement” law. In the state, cities and counties allow developers to build new homes and retail in exchange for payment agreements for infrastructure such as roads, sewerage and water supply. In other words, developers who respond to population growth, and the new residents they sell, are helping to draft infrastructure bills that cities need but have failed to consistently raise, build and maintain funding.
So, what happens because California isn’t adding so many people to its community?
Our population is not growing much, but there is still real estate development. We are unable to compensate for 30 years of inadequate housing production due to our existing population, promoting disproportionate housing prices and homelessness. However, recent history does not give us much confidence in doing so. California’s housing production remained stubbornly low despite a series of legislative efforts to promote development.
Additionally, stagnant populations do not eliminate the need for improved or improved facilities for infrastructure and community facilities. Roads, schools and parks are worn out and need to be repaired, replaced and updated. Public needs and desires change. (Think about a pickleball court and a dog park.)
But we can no longer rely on new home buyers to pay for either of them. California is already bleeding due to high home prices and rent. It is not clear whether new developments can even pay for themselves, let alone pay for improvement and maintenance needs of existing communities and residents. Sacramento lawmakers are under great pressure to cut impact fees that help reduce housing costs.
So how can California communities fund infrastructure and public works in a slow or unrelated era of population growth?
The problem arises primarily from the proposed structure 13. 13. While there is no chance of abolishing the general scale or major reforms, steps that are lacking in major revisions will help California break its dependence on growth.
Proposal 13 prevents the community from raising property taxes to pay for necessary infrastructure repairs and replacements unless two-thirds of voters are approved. In contrast, property taxes for similar school projects require only 55% approval. This is behind in a world where school enrollment is rapidly declining and the need for an aging population is growing rapidly. Communities should be able to raise property taxes to pay a 55% majority infrastructure.
That was the intent of the failure of Proposition 5 last fall. However, that measure would have reduced the voting requirements for affordable housing and infrastructure bonds. Affordable housing is certainly a keen need in California, but the outcome can be different if two objectives are presented to voters with separate measures.
The state could also significantly increase local infrastructure funding. This can be achieved by putting a huge local infrastructure bond proposal (probably over $100 billion) into a statewide vote. Alternatively, states could create dedicated funds to boost local infrastructure over the years of high income tax revenue.
Neither of these ideas will have a simple time in Sacramento. Compared to teachers, civil servants, labor unions and other political heavyweights, cities and counties have less influence on the capital.
Still, lawmakers have to do something. Most of their members live in communities struggling to pay for the basic infrastructure that enables daily life. And aside from changes that have proven even more difficult for California, growth won’t pay for it anymore.
William Fulton is the editor and publisher of California Planning and Development Report. He previously served as mayor of Ventura and planning director for San Diego.
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