America's Urban Agenda: A View From California

A generation ago, pundits, professors, politicians, and policymakers debated what to do about the "urban crisis." Today the discussion is about the metropolitan predicament. The terms have evolved because our urban areas have been transformed. At the dawn of the 21st century, most Americans live in suburbs. But they have not exactly left the cities behind.

Cities and suburbs alike face daunting challenges. Our suburbs—from wealthy gated communities, to gritty blue-collar bungalow and industrial communities, to new housing tract developments on the urban fringe—are inexorably linked to the fate of nearby cities. In fact, many of the places we call suburbs are really small cities. They, too, confront serious problems: fiscal challenges, poverty, environmental concerns, crime, housing shortages, traffic congestion, ethnic tensions, and struggling public schools. The question is whether cities and suburbs can recognize and build on their common ground, working together instead of competing in the struggle for public resources and governmental attention.

Since the 1960s, helping cities has been perceived as a matter of political ideology. How much help they get has largely depended on which political party was in power in Washington and whether it thought its friends were in the cities or in the suburbs. It's time to accept the fact that cities, like suburbs, are too important to be political footballs.

As the federal government has reduced its role in urban policy, states are becoming more important sources of creative thinking on how to address metropolitan concerns. Over the past 20 years, Congress—in what some academics have described as "fend-for-yourself federalism"—has given states responsibility for addressing many issues that most vex cities and suburbs. Although we cannot let Washington off the hook when it comes to strengthening metropolitan areas, including central cities, the reality is that states will be wielding significant new power. The question is how they will use it.

More than any other state, California reflects the nation's changing demographic, economic, and political realities. If metropolitan-wide approaches are the wave of the future, then nowhere is that strategy more appropriate than in California. California practically invented the "metroplex" concept. In the San Francisco Bay Area and in Los Angeles—Orange County—Inland Empire, it is hard to know where the cities end and the suburbs begin. The state is home to 4 of the nation's 25 largest metropolitan areas—the San Francisco Bay Area, the metro Los Angeles—Orange County—Inland Empire, greater San Diego, and the Sacramento—Yolo County area. California has 56 cities with populations over 100,000, including 4 of the nation's 25 largest cities: Los Angeles, San Diego, San Jose, and San Francisco. Many California cities were small towns, even rural communities, only a decade or so ago.

States can play at least three important roles in improving metropolitan areas. First, they can help cities and suburbs address their fiscal dilemmas. Second, they can help make communities more livable by dealing with infrastructure, traffic congestion, pollution, and parks. Finally, states can help support working families, especially those on the bottom rungs of the economic ladder, many of whom live in distressed neighborhoods in cities and older suburbs.

Helping Cities Pay Their Bills

Many localities are in a fiscal bind. Improving management can help, but in most cases cities' fiscal problems are structural. Increasingly, municipal governments' needs are greater than their resources. States can and should help local governments stabilize and improve their financial condition. California's landmark Proposition 13, passed in 1978, shifted control over property tax revenues from the local government to the state. It left local jurisdictions dependent on sales tax revenues, along with state subventions, to pay their bills. As a result, local governments tend to favor retail land uses over housing and industry, often triggering controversies over shopping malls and "big box" stores (such as WalMart).

Proposition 13 also has led to self-defeating competition between jurisdictions for taxable investment. In The Reluctant Metropolis, Bill Fulton described the bidding wars among three adjacent Southern California cities (Oxnard, Ventura, and Camarillo) to entice shopping centers and auto malls with public subsidies and tax breaks. After several years of this competition, an Oxnard council member declared in frustration, "This is not about creating new business. This is about spending $30 million to move two stores three miles." State government should help municipalities avoid bidding wars that undermine the fiscal health of all. Cities need the resources to shape their own destinies and provide basic services that people expect from local government. Changing the rules on revenue distribution can relieve some of the pressure that forces California cities to fight over sales taxes.

If we can help localities become fiscally independent, some 80 percent of our cities would be at least a little better off overnight and a lot better off in the long run. During my term as speaker, my office sponsored a statewide, bipartisan blue-ribbon task force on fiscal reform, which delivered its findings to the legislature earlier this year. Among its recommendations are returning to local jurisdictions a portion of property tax revenues in exchange for a portion of sales tax revenues, whose fluctuations the state is better equipped to accommodate, and returning to cities and counties some of the revenues diverted in the early 1990s to keep the state budget in balance during the recession.

While some communities, in California and elsewhere, agitate for increased local control, another movement, spurred in part by the rise of "smart growth," argues for regional cooperation in planning and fiscal matters. If, as some claim, only regionalism can secure the services, infrastructure, and quality of life that residents demand, these factions must call a cease-fire. Here is another role for the state. Its preemptive statutory role in land use planning, environmental protection, and transportation, and in certain kinds of infrastructure planning and finance, gives it the authority to force warring local factions to the table. Whether the state has the moral authority (or gumption) to exercise its legal authority remains to be seen.

More Livable Communities

The land use, infrastructure, and transportation planning powers described above are often viewed as the boring minutiae of government, but they are critical to any state effort to build livable communities. There are those who view suburban sprawl and traffic gridlock as the inevitable consequence of our desire for a single-family house, a yard, and a picket fence. Challenging the tendency toward sprawl first requires removing incentives that encourage it and making urban communities more appealing for families with choices.

States have a key role in addressing the growing public concern for more livable communities. For example, they can invest in infrastructure that helps rebuild cities and nearby older suburbs. For several decades, California allowed its physical foundation to deteriorate, primarily because of anti-tax, anti-"big government" politics, but also because of earthquakes and other natural disasters. It is time to repair the damage, a task that will be easier if the state is not forced to spend limited resources building new facilities to service sprawl communities.

Fortunately, California is beginning to look at infrastructure planning from a "big picture" strategic, anti-sprawl angle. A task force appointed by Governor Gray Davis is working on a plan that is likely to focus future infrastructure in existing communities. State budget analysts predict that California must spend nearly $100?150 billion to meet its current and future infrastructure needs, but this spending, which will generate many jobs, will also be a substantial investment in the state's future.

Federal and state policies have long favored private autos over public transit. More people will use public transit if it is convenient and affordable, but mass transit systems have long been underfunded, discouraging people from getting out of their cars. California now appears ready—building on tentative, sometimes controversial steps taken in the 1990s—to step up funding for urban mass transit projects. The governor and legislature recently announced a three-year $5 billion transportation spending plan, half of which is devoted to mass transit. An ambitious proposal for statewide high-speed rail, which could reduce traffic gridlock in urban areas, is in the works as well.

In the mid-1990s, the Los Angeles County Metropolitan Transportation Authority bit off more than it could chew in its plan envisioning a spiderweb of subways and light rail throughout the county. A chastened agency now struggles to improve bus service and provide more modest corridor rapid transit in parts of the urban area, while the San Francisco Bay Area takes similar steps. The bottom line is that both the state and its major metroplexes acknowledge that without comprehensive improvement to the mass transit system, California risks choking on its own traffic, air pollution, and the economic dislocation that can result from both.

In the past few years California has also become more active in environmental protection that relates to cities. Voters recently approved an unprecedented $2.1 billion park bond and its companion, a $1.9 billion water bond, nearly half of which will go to enhance recreation and open space in urban areas. To address the last remaining unregulated mobile source of vehicular pollution, we launched a program to subsidize the replacement of dirty diesel truck and bus engines with cleaner technologies. After more than a decade and a half of disinvestment in commercially and environmentally valuable natural resources, California is turning the corner.

Helping Working Families

A state's responsibility to deal with wide disparities between the haves and have-nots has broad implications for cities. According to Pulling Apart, a recent Center on Budget and Policy Priorities report, in 46 states the income gap between the richest and poorest one-fifth of the population is wider today than it was two decades ago. More than one-fifth of America's children, increasingly concentrated in urban ghettos, live in poverty, with inadequate health care and housing. Millions more live on poverty's edge.

California reflects these national trends. It ranks fifth in terms of the disparity between rich and poor. A recent United Way report described the L.A. region as a "tale of two cities." It is "the nation's poverty capital" but also houses a larger share of high-income households than either the state or the nation. It has, in particular, many working poor families—those who work hard but struggle to make ends meet with low-wage jobs. These economic gaps are reflected in many ways: the continuing crisis of our public schools; lack of access to decent health care for a growing number of people, including many working poor families; and the deepening shortage of affordable housing for the middle class as well as the poor.

After a 20-plus year drift from near the top to the bottom of state rankings in per-pupil education spending, California has begun the long climb back toward respectable investment in schools. Two years ago I sponsored a $9.2 billion school bond measure, the largest in U.S. history and the first in California history to guarantee substantial investment in urban school districts.

This measure is only a down payment on the state's $40 billion school facility repair needs, but it reverses decades of state school finance policy that favored suburban school districts (thus underwriting sprawl). By earmarking a major portion of the funds for use by urban school districts, the initiative helps ease difficulties cities face in getting access to funds because of costly land acquisition and environmental requirements not typically confronted by wealthier suburban districts.

California has the nation's highest proportion of people without health insurance, most of whom live in cities. This drains municipal coffers when public hospital emergency rooms become these families' primary care providers. In response, the legislature created the Healthy Families Program in 1997 and expanded it last year. It combines federal and state dollars to extend health insurance coverage to the children of California's working poor who don't quality for Medi-Cal (the state's Medicaid program) and can't afford their own insurance. Although California still needs to push harder to enroll all eligible children in this program, the legislation made a good start.

Too often state and local governments provide grants to businesses without adequately considering the kind of jobs these public investments create. In recent years, at least two dozen cities and counties around the country, including several in California, have enacted "living wage" laws to guarantee that firms receiving government subsidies, contracts, or tax breaks pay their employees enough to raise a family and provide health insurance. State and local governments could broaden this principle to link all forms of public investment?tax breaks, grants, and loans, among them?to living wages, particularly in jobs in growing industries that offer a career ladder.

Many California business leaders recognize that the housing shortage—the most severe in the nationhurts the overall business climate and neighborhood commercial areas. Skyrocketing housing prices make it difficult for corporations, hospitals, and universities to attract and retain employees. When families spend more than one-third or one-half of their incomes just to keep a roof over their heads, they have little discretionary income to pay for other essentials. This undermines family life (for the middle class and the poor) and hurts local economies. After years of neglect, California is now back in the housing business. State Assembly leaders recently proposed a $1 billion housing program to expand homeownership and provide affordable rental housing for the work force. I expect that business, labor, civic, and religious leaders will rally behind this initiative. Meanwhile, the state could do still more to help cities cope with homelessness and slum housing.

Good Business

Revitalizing our urban areas is good business. Not only will our private sector thrive by doing much of the work, it will reap the benefits of communities where employees enjoy a better quality of life and can be more productive on the job. One of the best kept secrets in state politics has been that, to the extent California has lost employers and jobs to other states, it has been over quality-of-life issues, such as congestion, housing costs, poor schools, and poor air quality, as much as over tax and regulatory concerns.

For much of the past two decades, Washington turned its back on the nation's metropolitan areas. Despite recent improvements, cities are still the orphans in our federal family. We need a new partnership between the federal government and our metropolitan areas—to set ground rules to promote metropolitan-wide cooperation (the federal Clean Air Act is a good example), to level the economic playing field (by renewing some kind of targeted revenue-sharing to localities with structural fiscal problems), and to provide funding for mass transit, health care, and housing.

But metropolitan reform is not just about money or policy agendas. It is also about attitude. State government officials must use their bully pulpit to help people think about cities and their place in society. If we're all in the same boat, it matters little whether the boat starts to leak at the urban end or the suburban end. Eventually, all of us will be treading water. To avoid that scenario, we need strong leaders, realistic resources, and a commitment to work together.