California Uses the Government Corporation

As one of the most significant of recent developments in public administration, the government corporation has been the subject of much study and discussion. Apparently without exception, interest has centered around the corporate agencies of the federal government and their operations. The time is perhaps overdue to point out that an increasing number of our state governments are depending upon corporations of their own for financing, constructing, and operating a wide variety of enterprises, including tollbridges, sewage disposal plants, water resources and hydro-electric projects, housing programs, construction of university buildings, planetariums, public markets, and health resorts. The creation of the large majority of these state and local “authorities,” as they are ordinarily termed, is the direct outgrowth of the New Deal's public works and housing programs. In December, 1934, President Roosevelt wrote the 48 governors suggesting legislation which through “revision of the procedure relative to municipal financing” would enable the states to take “full advantage” of any public works program that Congress might continue. The legal division of P.W.A. was placed at the disposal of the states, and much of the stimulation as well as the form of “authority legislation” must be credited to its staff. In some states, only through separate corporations and the device of revenue bonds could state constitutional limitations upon borrowing be circumvented and state participation in the public works program made possible. Administrative advantages of the public corporation were also considered of importance, however, and in states where constitutional obstacles were not met, these seem to have been the determining factor in the creation of corporate agencies.