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CCRL California Center for Regional Leadership
Connecting California's Regions to the State and Each Other
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CalRegions Email Newsletters Archive

Volume II, Issue 7 - October 2001

REGIONS: HOMELAND SECURITY, ECONOMIC RECOVERY AND SUSTAINABLE DEVELOPMENT

[Dear readers,
We had anticipated focusing the October issue of CalRegions on the Report of the Governor's Commission on Building for the 21st Century. The release of that report is now anticipated in November, and our November issue will focus on the Report, and the Governor's response to it, from the perspective of California's regions.

In the meantime, some of our regional and national partners have begun in earnest to prepare a regional response to the post-9/11 "New Realities," and we want to share that information with our readers.....NB]

CONTENTS:

I. Regions: Homeland Security, Economic Recovery, and Sustainable Development
II. The Regional Response
III. Other Regional News & Information

I. Regions: Homeland Security, Economic Recovery, and Sustainable Development

What is different and what is not

1) The fact of terrorism on U.S. soil, that could strike in any number of ways, and ways that are as yet not fully understood or anticipated, is different. How we anticipate, plan for, organize, and finance our homeland defense and security is a new question. The answers are experimental, and unfolding before our eyes, but clearly it is a condition that is now with us forever. Like it or not, it is yet another thing for which we've got to roll up our sleeves, the public, private, and civic sectors, and figure it out. There will be a significant role for regional leadership to play, around emergency preparedness and long-term security planning (see below).

2) That the recession may go deeper and longer than anticipated, and have "spiking" effects in particular industries (airlines, tourism) is different. But, as our economist colleague Steve Levy, Director of the Center for the Continuing Study of the California Economy, points out, this recession is likely to be milder and shorter than the deep recession of the early 90's:

''...from what we know now, there is broad agreement that the upcoming period of economic weakness will be mild relative to earlier recessions - both in the duration of the downturn and in its severity. Some examples will put the downturn in perspective. The annual output of goods and services in the nation (the GDP) is approximately $10 trillion. If GDP fell temporarily by 2% (at the top end of current estimates), GDP would then be $9.8 trillion - still 18% higher in real terms than five years ago.

There are currently approximately 16 million jobs in California - actually about 200,000 more jobs than at this time last year. A loss of 300,000 jobs (well beyond any current estimates) would raise unemployment rates temporarily to around 6.5%. While this is far higher than the 4.5% all-time low reached in early 2001, it is far lower than the 9.7% unemployment rate reached in the early 90s recession when 550,000 jobs were lost.

So, the downturn which can be expected from the early 2001 weakness compounded by the aftermath of September 11th will be a sharp change from the strong economic growth of the past five years, but not severe in terms of historical periods of recession."

For Steve's full analysis, go to: http://www.ccsce.com/issues_091101.htm

3) We hope that the role of the federal government in responding to the recession will not be different, that is, that it will produce a timely, positive, modest, highly targeted counter-cyclical program to relieve short-term suffering and help stimulate consumer spending and business investment. But the length of the recent boom, during which elected leaders didn't have to think about counter-cyclical roles, and the temptation to mix old agendas into the new needs (including pork-barrel projects that unfortunately look like but are not important infrastructure projects-see below), is likely to make the federal role more complicated. As we have reviewed the analyses from many thoughtful analysts, it would appear that the objects of federal action should be:

a. Workers who have been laid off, who may need extended unemployment insurance and nimble and targeted retraining programs that put them onto promising career paths.

b. Businesses particularly hurt by the attacks, which use the help to rebuild the business and re-employ workers.

c. State and local governments, perhaps through temporary general revenue sharing, whose enormous deficits and spending cuts or tax increases otherwise might undermine federal counter-cyclical actions.

d. Temporary tax policies that would result in quick and certain consumer and business spending and investment.

e. Accelerated public works projects, that meet long-term infrastructure investment needs, not just "pork barrel" projects. Of particular importance would be those projects that also increase homeland security and resilience and reduce vulnerability.

4) The California state government is not much of a counter-cyclical player (with some modest exceptions-see below), and it was already facing a multi-billion dollar deficit, complicated by uncertain financing strategies for its prior and future energy expenditures. This is different. Local governments are facing their own shortfalls, but since Proposition 13 took away home rule, and put allocation of property taxes in the hands of state government, cities and counties have very limited options for protecting revenues and delivering essential services. Unfortunately, this is not different at all, and we are likely to see a reprise of the early 90's state incursion on local property taxes, making the situation even worse for local government.

5) In California, what is not different is that we have a very deep and broad infrastructure crisis, consisting of three parts:

a. An infrastructure deficit: old and deteriorating systems and facilities suffering from little maintenance or modernization, and quite across the board, from schools to transportation systems;

b. A looming growth crisis, with the population increasing by 12 million over the next 20 years, and a need for more and better infrastructure systems to support that population; and

c. No idea where we are going to find enough funds, even with improved planning and return-on-investment approaches, to close the infrastructure deficit and meet new needs.

6) But California also has an emerging consensus around the principles of sustainable development. These include comprehensive, integrated, regional development and conservation; land, materials and energy efficiency strategies; public-private-civic collaboration; innovative public and market-incentive financing techniques; and reuse of existing communities and infrastructure, with positive social equity outcomes. This is different, and could make all the difference, if we use the principles of sustainable development to help guide our long-term planning and implementation for homeland security, to guide job-creation spending for economic recovery and to address our infrastructure crisis.

How might this work?
[Note: we are indebted to Neal Peirce of the Citistates Group, Judy Corbett of the Local Government Commission, Doug Henton of Collaborative Economics, Steve Levy and others for encouraging this kind of thinking]

First, understand that the principles of sustainable development, emphasizing regional self-sufficiency, shared responsibility and better use of resources, are crucial elements of long-term homeland security.

Second, wherever possible link long-term sustainable development needs to short-term economic recovery strategies. If we are going to put people back to work, why not put them back to work building schools and libraries and transit facilities and parks and repairing roads and connecting communities to the internet, and all the other infrastructure projects so essential to our long-term economic strength and our quality of life. To be optimally counter-cyclical, the money and jobs and income will have to get out quickly; but even if the recession clock ticks too fast for a timely counter-cyclical effect, infrastructure is still the top priority, and should be a focus of our job-creation efforts.

Third, plan and execute with the most sophisticated resource efficiencies available, whether in the use of energy or materials, or land itself. What is new, however, is that we must now couple this with security considerations, meaning keeping the infrastructure as close to home as possible, and also regionally distributed for reduced vulnerability and increased resilience (this may be especially true for energy and water systems).

Fourth, emergency preparedness requires that planning incorporates a better communications interface across systems and incorporates "redundancy" into transportation, communications, and other cultural sectors. These strategies will provide both a better ability to respond rapidly and effectively to emergencies, and have the ability to withstand system shock because there are alternatives.


II. The Regional Response

a. The Economic Action Summit, November 1. The Los Angeles Economic Development Corporation, at the request of County Supervisor Mike Antonovich and L.A. Mayor James Hahn, and with the mayors from the county's other 87 cities, is convening several hundred days government and business leaders to develop a strike force plan to be put into place within 90 days. David Abel, a prominent L.A. civic and business leader and director of a Collaborative Regional Initiative, the Metropolitan Forum Project, will chair the event. For more information contact cbickham@laedc.org.

b. In the Bay Area, the Bay Area Partnership, Northern California Council for the Community, United Way of the Bay Area and a number of other business, labor, and economic development organizations are planning an event to assure cross-agency coordination in responding to rising unemployment and other adverse impacts. The convening is in its early planning stages, so contact us at CCRL adminasst@ccrl.org, and we will connect you with the proper contact person.

c. The Governor's Economic Recovery Summit will take place in Burbank on November 2. Nick Bollman from CCRL will attend and will encourage a state-regional partnership in both short- and long-term economic strategies. We welcome any ideas or suggestions you might have. Contact nbollman@ccrl.org.

d. The Alliance for Regional Stewardship is working with the White House to explore regional strategies for economic recovery and homeland security. For further information, contact www.regionalstewardship.org.

e. If and as other regions develop programs and activities around homeland security, economic recovery, and sustainable development, we'll include that information in future CCRL newsletters.


III. Other Regional News & Information

* The Speaker's Commission on Regionalism (SCOR) will hold its next meeting on October 31, 2001 in Sacramento. For the agenda and digest of the Commission's September meeting, or to view the minutes of all previous meetings, and papers prepared for Commission consideration, visit the SCOR website at www.regionalism.org. The Commission will adopt its final recommendations on November 16, 2001 and release a published report and implementation strategy in January 2002 at the Civic Entrepreneur Summit.

* The Bay Area Alliance for Sustainable Development hosted an October 25, 2001 quarterly meeting that included a panel of distinguished guests discussing statewide legislative and other activities that address local government finance and "smart growth." Panelists included: Senator Tom Torlakson; Assemblymember Pat Wiggins; Chris McKenzie, Executive Director, League of California Cities; and Steve Szalay, Executive Director, California State Association of Counties. Christopher Carlisle, Executive Director of the Speaker's Commission on Regionalism, moderated the panel. For more information, visit the Bay Area Alliance website at www.bayareaalliance.org/newscalendar.html, or email to InfoBAA@BayAreaAlliance.org.

* Joint Venture Silicon Valley, in partnership with the Salamanca Speakers Spotlight, Cultural Initiatives Silicon Valley, Council member Cindy Chavez - City of San Jose, KLIV, Silicon Valley Business Ink, and Commonwealth Club of Silicon Valley, is hosting two public dialogues with national and international speakers on the critical issues facing the Silicon Valley. For more information visit www.jointventure.org/newsletter/online/sept01.html#future.

* The Orange County Business Council and Cal State Fullerton's College of Business and Economics are hosting their sixth annual joint conference on Thursday, November 1, 2001, at the Hyatt Regency in Irvine, California. The "2002: Economic Forecast Conference," is designed to inform the business community on economic issues and concerns for future growth and development, identifying industry trends and focusing on key industry clusters. For more information, visit OCBC's calendar page at http://www.ocbc.org/calendarf.htm.

* The Economic Alliance of the San Fernando Valley, in partnership with the Port of Los Angeles, Los Angeles World Airports, and the Valley International Trade Association, is sponsoring this year's fourth annual Southern California International Trade Conference on November 8, 2001, at the Hilton Universal Towers in Universal City, California. To learn more about this event and register online, visit the Economic Alliance on the web at www.economicalliance.org.