The new federal transportation act--the Transportation Equity Act for the 21st Century (TEA-21)--increases federal funding for California highways significantly. The California Transportation Commission plans to amend the 1998 State Transportation Improvement Program (STIP) in March 1999 to enable Caltrans to begin designing additional projects in order to speed up their delivery (see page A-12).
Caltrans and local transportation agencies will have to deliver projects on a timely basis if California is to receive any federal funds left unobligated by other states and avoid a loss of its own federal funds. We recommend enactment of legislation to encourage local agencies to deliver projects in a timely manner (see page A-12).
The cash balance in the State Highway Account for 1998-99 is estimated to be $1.5 billion. Our review indicates that in 1999-00 the account's balance will exceed the $1.1 billion projected in the Governor's budget (see page A-19).
Mass Transportation Continues to Face Funding Shortfall
The Public Transportation Account (PTA), which provides funds for mass transportation, is projected to have a shortfall of $38 million over the period 1998-99 through 2002-03. The shortfall is due to declining diesel sales tax revenues, lower-than-projected growth in gasoline consumption, and increasing expenditures (see page A-21).
Given the projected funding shortfall in the PTA, no new transit capital improvement projects will be funded over the next six years (see page A-22).
In order to partially address the transit funding shortfall, we recommend enactment of a constitutional amendment to permit expenditure of gas tax revenues fro transit rolling stock (see page A-24).
Huge Increase in Highway Program
Caltrans proposes $7.2 billion for the Highway Transportation program, about $1.6 billion, or 28 percent, more than in the current year. This increase is largely due to a $1.2 billion increase in projected capital outlay expenditures (see page A-25).
Caltrans plans to revise its capital outlay support request to accommodate any change in workload related to the STIP amendment. Accordingly, we withhold recommendation on the department's capital outlay support request (see page A-29).
Caltrans' staffing for project scope and summary reports is excessive. We recommend a reduction of $8.9 million and 136 PYEs for this purpose (see page A-32).
Court Settlement on Contracting Out Seismic Retrofit Program
A recent court settlement regarding contracting out of the seismic retrofit program requires Caltrans to transfer construction inspection and some design work to state staff (see page A-35).
Caltrans Lags in Bridge Scour Evaluation
The Federal Highway Administration requires Caltrans to evaluate state and locally owned bridges for the effects of water erosion, referred to as "bridge scour." Although evaluation of most bridges is scheduled to be complete by 2002, approximately 3,000 locally owned bridges have unknown foundations and are not yet scheduled for evaluation (see pages A-30 and A-40).
No End in Sight for DMV's Database Project
The DMV's second attempt to replace its aging database systems is falling further behind schedule. We make recommendations for increasing the department's accountability and for reducing risks of project failure and cost overruns (see page A-51).
Total expenditures from state funds for transportation programs are proposed to be significantly higher in 1999-00 than estimated current-year expenditures. The increase is due mainly to proposed higher expenditures for highway improvements, including seismic retrofit of state-owned toll bridges.
For traffic enforcement, the budget proposes a modest increase in the California Highway Patrol and a slight decrease in the expenditure level of the Department of Motor Vehicles.
The budget proposes total state expenditures of about $6.2 billion for transportation programs in 1999-00. This is an increase of $867.7 million, or 16 percent, over estimated expenditures in the current year.
Figure 1 (see next page) shows that state-funded transportation expenditures increased by $2.1 billion since 1992-93, representing an average annual increase of 6.1 percent. When adjusted for inflation (constant dollars), these expenditures increased by an average of 3.7 percent annually. The increase is largely the result of the full implementation of the Transportation Blueprint legislation enacted in 1990. The legislation increased over several years the tax on motor vehicle fuel (gasoline and diesel) and truck weight fees as well as authorized bond measures in order to provide additional state funds for highway and mass transportation programs. In addition, in March 1996, voters passed Proposition 192 which authorized $2 billion in bonds for seismic retrofit of highways and bridges. In August 1997, the Legislature further enacted legislation to fully fund seismic retrofit of state-owned toll bridges.
Figure 1 also shows that transportation expenditures have increased slightly as a share of total state expenditures over the period. In 1999-00, proposed transportation expenditures will constitute about 8 percent of all state expenditures.
Of the 1999-00 state transportation expenditures, about $4.9 billion is proposed for programs administered by the state and about $1 billion is for subventions to local governments for streets and roads. Another $300 million will be for debt-service payments on rail bonds issued under Proposition 108 and Proposition 116 of 1990 and seismic retrofit bonds issued under Proposition 192 of 1996.
Figure 2 shows spending for the major transportation programs in detail. Specifically, the budget proposes expenditures of $7.9 billion (from all fund sources including federal and bond funds) for the Department of Transportation in 1999-00--an increase of $1.6 billion (25 percent) above estimated current-year expenditures. The higher expenditure level reflects mainly increases of $1.3 billion for highway construction, including seismic retrofit of highways and state-owned toll bridges. The increase includes about $710 million in state and federal funds and about $536 million in reimbursements.
Spending for the California Highway Patrol (CHP) is proposed at $885.2 million--$51.7 million, or 6.2 percent, higher than the current-year level. About 90 percent of the expenditures would be funded from the Motor Vehicle Account. For the Department of Motor Vehicles (DMV), the budget proposes expenditures of $596.3 million, about $21 million (3.4 percent) less than in the current year. These expenditures would be funded mainly from the Motor Vehicle Account and the vehicle license fees.
|Transportation Budget Summary
Selected Funding Sourcesa
|1997-98 Through 1999-00
(Dollars in Millions)
|Estimated 1998-99||Proposed 1999-00||Change From
|Department of Transportation|
|California Highway Patrol|
|Motor Vehicle Account||$740.6||$739.7||$794.8||$55.1||7.4%|
|Department of Motor Vehicles|
|Motor Vehicle Account||$306.6||$312.3||$311.7||-$0.6||-0.2%|
|Motor Vehicle License
|State Transportation Assistance|
|a Includes bond funds.|
Additionally, the budget proposes to fund the State Transportation Assistance (STA) program in 1999-00 at the current-year level of $100.2 million. Annual funding of the program is determined based on a statutory formula, and the level varies depending on anticipated revenues into the Public Transportation Account (PTA). For 1999-00, the budget projects a drop in PTA revenues and STA funding should be correspondingly less. The budget, however, proposes to keep STA funding at the current-year level, about $14 million (16 percent) more than called for by statute.
Figure 3 highlights the major changes proposed for 1999-00 in various transportation programs.
As the figure shows, the budget proposes to increase highway construction by $1.3 billion, and local assistance for road improvement by $297 million. The budget also includes an increase of $69 million to accommodate additional highway maintenance and traffic operations systems workload and $4.4 million to continue bridge inspections and painting.
In addition, $7.9 million is proposed in order to increase systems planning activities and for more project studies work to generate and define the scope of future capital outlay projects. The budget also proposes $6.8 million to match private and other funds for seismic research.
For CHP, the budget proposes $4.9 million to replace two helicopters and $3.2 million to improve the department's telecommunications system. The budget also proposes $3.7 million to continue the multiyear effort to automate the patrol vehicle environment for traffic officers, primarily via the installation of laptop computers. About $6.1 million is also requested to fund the full-year costs of salary increases and additional health benefits for managerial and supervisory staff.
For DMV, the budget proposes a reduction of about $21 million in departmental support in 1999-00. The reduction is the net result of the elimination of one-time expenditures that have been authorized through the current year, offset by various increases in the budget year. Specifically, the budget proposes $4.9 million to begin replacement of the department's accounting system, $1.8 million to continue DMV's multiyear effort to redesign its major databases and $3.8 million for facilities improvement and repairs. It also includes (1) $4.6 million to upgrade the phone system and to provide a toll-free line in order to improve customer service, and (2) an increase of $1.9 million to accommodate workload increases in order to maintain the department's level of service.
Proposed Major Changes for 1999-00
|+$1.3 billion in highway construction|
|+$297 million in local assistance for road improvement|
|+$69 million for increased highway operations and maintenance|
|+$7.9 million for system planning and project studies|
|+$6.8 million for seismic research|
|+$4.4 million for bridge inspection and painting|
|California Highway Patrol||Requested:||$885.2 million|
|+$6.1 million for managerial staff salary increase and employee benefits|
|+$4.9 million to replace two helicopters|
|+$3.7 million to automate the patrol vehicle environment|
|+$3.2 million to improve the telecommunications system|
|+$4.9 million to replace existing accounting system|
|+$4.6 million to upgrade phone service and provide toll free line|
|+$3.8 million for facilities repair and maintenance|
|+$1.9 million to maintain service levels|
|+$1.8 million to continue database redesign|
|-$40 million to adjust for one-time expenditures.|