Prescott, Ohanian: How the Golden State lost its luster
Last month's $167 billion dollar budget deal forged by Gov. Jerry Brown and California lawmakers is four times as large in per capita terms as it was in the early 1960s under Brown's father, Gov. Pat Brown. But despite spending less, the budgets of yesteryear contributed considerably more to economic growth.
California also made remarkable transportation and water infrastructure investments in the 1960s, but those investments are not being adequately maintained nor expanded. The Reason Foundation ranks California roads as the second worst in the country. The Road Information Program estimates that bad roads coststate drivers $44 billion per year, despite the fact that California gasoline taxes are 40 percent higher than the national average.
California's water infrastructure situation is no better. The last major water infrastructure was the 1960 California Water Project. But as state capital spending declined, the California Water Project never realized the capacity that its planners envisioned. Most of the project was completed by the early 1970s, but California's population has grown by 18 million since then.
The failure to expand water infrastructure is not because voters were unwilling to pay. Since 1970, voters approved 15 of 16 state water bonds, yet this did not deliver major new water storage or canals nor maintain existing infrastructure.
California's capital outlays have declined from about 20 percent of the state budget in the 1960s to about 3 percent today. California's political leaders once agreed that substantial infrastructure investment was a major obligation of state government.
This principle, which created so many opportunities that helped generations of Californians succeed, now sadly appears to be lost.
Edward C. Prescott, a 2004 Nobel Laureate in Economics, is a professor of economics at Arizona State University. Lee E. Ohanian is a professor of economics at UCLA and a senior fellow at the Hoover Institution. They wrote this for the Mercury News.Prescott, Ohanian: How the Golden State lost its luster - San Jose Mercury News: