Speaker's Commission
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The two Californias, dumb growth and ad-hoc policies

By Peter Schrag
(Published May 17, 2000)

True to form, Gov. Gray Davis' minions spent much of the past week news-managing the daily announcements of his little bundles of largess from California's $12.3 billion budget surplus -- more money for schools one day, a $150 tax rebate on another day, a tax exemption for teachers another day. Some of it, the teacher tax exemption, for example, might fall somewhere between the silly and the cynical, but if you can get the front page of the New York Times with it, what the hell.

Against all those goodies, however welcome some of them may be, the state's more fundamental concerns -- the growing gap between our haves and have-nots, the gaps between communities and schools, and between the state's economic boom and the decay of its public services and infrastructure, the inefficiency and inequities generated by stupid tax and development policies -- didn't have a chance.

Not that they're being neglected. Earlier this month, California Treasurer Phil Angelides, who's the nearest thing to a policy visionary in statewide office, again called for community reinvestment policies, public and private, to control sprawl, reduce stress on transportation networks and resources, and to encourage job formation and the construction of affordable housing in inner cities and other at-risk communities.

Angelides, who sits on the boards controlling some $400 billion in state pension and bond funds, has been trying to push more of those funds into needy communities and to programs that "pry open the doors of economic opportunity" for those who live there. The state has put some of those funds into high-risk emerging markets overseas. Why, he asks, shouldn't similar risks be taken in California's emerging markets? If civic and business leaders "do not fully commit themselves to confronting the dangerous trend toward 'two Californias'," he said earlier this month, California's own long-term economic and social strength will be in jeopardy.

The reality of those two Californias has been dramatically reinforced by a number of recent reports, among them those of the widely respected urbanologist Myron Orfield, a Minnesota legislator who was instrumental in creating (in the twin cities of Minneapolis and St. Paul) what's probably the nation's most sweeping regional government.

Orfield, who has developed maps of nearly all of California showing the geography of unplanned growth, self-defeating tax laws and the growing gap between rich and poor communities, was here twice this month, once at a San Francisco conference sponsored by Angelides on Smart Investing in California Communities, once at a Sacramento conference last week on the Central Valley sponsored by the Great Valley Center of Modesto.

The story of the geographic coincidence of poor people, poor housing, poor schools and poor prospects is hardly new, but Orfield's space-view maps dramatize it in entirely new ways. "While some jurisdictions thrive on a large share of the region's sales and property tax revenues" says the introduction to Central Valley Metropolitics, his preliminary report on the fast-growing Valley, "others can barely generate enough revenues to provide minimal levels of basic services. And while some cities and counties provide upscale housing and new investment, others must deal with business closures and poverty-stricken neighborhoods." Poverty in schools, Orfield said in San Francisco, "is a powerful indicator of the future of a community."

California, where cities and counties battle one another for big-box retailers and auto malls and the sales tax revenues they throw off, is a particularly egregious example of that process. In California, it's not just the poor who get poorer; poor communities, urban and suburban, get poorer as well.

Orfield's solution is a combination of tax reform and regionalism, where local communities share at least a portion of sales and property tax revenues and thus have greater incentives to plan for the prosperity of the larger community rather than pursuing zero-sum, beggar-thy-neighbor policies.

In offering Minneapolis-St. Paul as a positive example of that process, Orfield may be underestimating the huge political, cultural and social differences between California and the Midwest. California's size and diversity -- not to mention the festering issue of immigration, which helps depress the wages of California's low-income workers but which is rarely, if ever, mentioned at smart-growth conferences these days -- makes the politics of any reform effort that much more difficult.

Yet surely one central missing element in this picture is leadership. A number of legislative and private-sector commissions have generated proposals for reforms in taxation and in local-state fiscal relations that would at least reduce the barriers to better local planning. But despite the opportunities provided by the state's economic boom and its huge budget surplus -- the opportunity for planning to generate investment and development strategies; to reinvigorate California's poorest communities, many of which are in this Valley; to end the isolation of black and Hispanic students in the worst schools -- the administration remains stuck in its ad-hoc policy-setting process.

Last week's goofy proposal to exempt teachers from state income taxes, apparently dreamed up in the governor's office over the previous weekend, and set in no larger planning context, was another example. But it got headlines. Meanwhile, the problems fester, and the opportunity to address them goes down the drain.

PETER SCHRAG's column appears in The Bee on Wednesday.

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