By Dave Sorem, P.E. ECA Government Affairs Chairman

email: [email protected]

Lost in all the coverage about the Presidential election is the fact that California officially returned to one party control of state government as the Democrats regained the two-thirds Supermajority control of the state legislature.

This means that the Democratic Party now owns every statewide office—Governor, Lt. Governor, Treasurer, Controller, Attorney General and State Superintendent of Schools—and a legislature that can pass anything it wants, including tax increases, without consultation or consent of members who be- long to the Republican Party.

The Democrats won legislative control the old-fashioned way—they outspent their Republican opponents in the election, to the tune of $34 million in Senate and Assembly races in a handful of districts to gain complete control.


An Awesome Responsibility/Opportunity

In some ways, it might be good for construction activity—the very first bill introduced in the new legislative session—AB 1 is another attempt to deal with the shortfall on funding for transportation in the state.

Another big issue is the underfunded state pension programs—CalPERS, the state employee plan, in particular—a $300 billion fund with a $140 billion shortfall in meeting its current obligations. CalPERS has, since 1984, been able to invest money in places other than government bonds and they have been spreading money around looking for better returns than the 1.34 percent yielded by a 10-year Treasury bill or the rollercoaster ride that characterizes the stock market.

One of the places they have been exploring is what CalPERS money managers call “Infrastructure,” which delivered an 8.98 percent return as of June, 2016. Infrastructure in this case means investing in power, energy, transportation, water, communications and other related projects. It is a very small part of the portfolio—around five billion—and the water investments so far have been even smaller part of that subset—just $97 million as of 2015.

More tellingly, only five percent (5%) of the infrastructure investments were made in California. This needs to change and is something for the Democratic Supermajority legislature to sink its teeth into.

CalPERS, in April of last year, reported that roughly half the money set aside for infrastructure investments had not been committed to any of the segments. We suggest to the legisla- ture that they make clear to CalPERS money managers that the $2.2 billion in uncommitted funds in the infrastructure area be dedicated to water and sewer projects, in California.

These projects are necessary for the actual public health of California citizen sand the health of our industry.