California’s Growing State Government

Capitol_Area_ExteriorOn the heels of last month’s “tea party” protests against higher government spending and the threat of higher taxes, Rasmussen recently released a new poll which shows 60% of Americans believe the government has too much power and too much money.

The oft repeated claim of conservatives is that at every level, government is too big, too inefficient, wasteful, and all too often interferes with private citizens and enterprises who want to get things done.  Despite the claim, it is rare that the citizenry is presented with a state sponsored study that outlines the projected growth and development of government – in terms of square feet.

Square Footage of California’s Government
Over the last five decades, state office space occupied in the Sacramento region has grown steadily.  From 2.3 million net square feet (NSF) of primarily owned space in 1960, the state office inventory in Sacramento has grown to more than 17 million NSF of occupied space in 2007.  Of that 17 million, 58 percent is state-owned and 42 percent is leased.

Currently, state office space sprawls over 500 locations in the Sacramento region.  Several state agencies have more than 20 different office locations in the region (e.g. Consumer Affairs, Corrections and Rehabilitation, Transportation, and Fish and Game).  While the California Department of General Services notes that steps have been taken to consolidate all or portions of agencies, a great deal of fragmentation still remains.  Over 60% of state office space is in the central city area.  Almost 13 million NSF (or about 76%) is within five miles of the Capitol with the remainder highly dispersed throughout the region.

Sacramento Region State Office Planning Study
Since 1960 the Capitol Area Plan, the master plan for development on state-owned land surrounding the Capitol, has guided the State of California’s office presence in the Sacramento region.  To guide the physical growth of government over the next 40 years, the state’s real estate manager, the Department of General Services, recently released its “Sacramento Region State Office Planning Study” [http://www.dgs.ca.gov/PlanningStudy.htm]. The first of its kind in four decades, this study will contribute to shaping the future landscape of the Sacramento area based on the state’s development projects.

The study estimates a need for another 13.7 million square feet in the capital region, far more than currently controlled by state government in the downtown core.

In other words, California will need to nearly double its office space over the next 40 years and will look to fill remaining vacant spots in Sacramento’s central core, including the rail-yards, but will also consider other areas such as suburban office campuses and the West Sacramento riverfront.

While the findings of the study could mean opportunities for landlords and developers – the massive government growth laid out in the report is not good news for California taxpayers.  Already burdened with some of the highest combined state and local taxes in the nation, every new government building and program adds more weight to the burden now borne by the taxpayer. 

Furthermore, the report details that several of its long-term development opportunities can be accomplished working with major redevelopment projects throughout the region.  With redevelopment comes the threat of eminent domain and a greater consumption of property tax dollars.  According to a 2005 LAO report, redevelopment consumes approximately 10 percent of all property taxes statewide.  In 2006-2007 redevelopment agencies diverted almost $4.6 billion in property tax increment revenues from counties, cities, special districts, and school districts.  The state’s General Fund must backfill the schools’ losses, at the cost of about $2 billion a year.

In Conclusion
It was 1967 when Ronald Reagan said that “the time has come for us to decide whether collectively we can afford everything and anything we think of simply because we think of it. The time has come to run a check to see if all the services government provides were in answer to demands or were just goodies dreamed up for our supposed betterment. The time has come to match outgo to income, instead of always doing it the other way around.”

Before California’s government undertakes massive new spending to gobble up precious public resources and squeezes out opportunity for private industry, we should closely examine whether or not expanding the physical size of government by an additional 13.7 million square feet is truly justified.  With a great deal of fragmentation still existing among current state properties, there is significant opportunity for state agencies to become more efficient and effective with their current allotted space.

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