Legislative Analyst's Office
Analysis of the 2001-02 Budget Bill
The administration needs to provide the Legislature an adequate amount of information on both the state's infrastructure needs and the five-year statewide plan to address these needs. We suggest the Legislature hold hearings on the administration's process for developing the plan to ensure the Legislature receives the necessary information.
Chapter 606, Statutes of 1999 (AB 1473, Hertzberg) enacted the California Infrastructure Planning Act. The act requires the Governor, beginning in the 2002-03 budget year, to annually submit to the Legislature a statewide five-year infrastructure plan and a proposal for its funding. The plan is intended to provide the Legislature with a more detailed picture of the state's long-term capital funding needs than has previously been available. As the state's population increases to an estimated 59 million in the next 40 years, the need for investment in new capital facilities to meet the demands of population growth will be great. Compounding the challenge will be the need to renovate and replace existing facilities in order that they can continue to serve their purpose.
Chapter 606 requires that the following information be included in the five-year infrastructure plan:
For all of the infrastructure identified, the plan is required to provide an estimate of its cost and a proposal for funding, subject to the following:
The Legislature needs adequate information in the plan in order for it to be a useful document. Important information that is needed but not specifically required is discussed below.
Projects Should Be Identified. The Legislature needs to have specific projects identified with a definition of scope and cost for each of the five years covered by the plan. This is needed to provide a sense for what the outcomes would be if the plan were implemented. This also would give the Legislature information that is necessary to determine if the administration's proposals are consistent with legislative priorities or if other projects should be approved. Providing a plan with project specific information should not be a problem. This is because in order to prepare a meaningful five-year plan, each department must evaluate specific needs, identify projects necessary to address these needs and set priorities over the five-year period. In fact, departments have prepared project specific five-year plans for many years. This practice should continue and be incorporated into the statewide plan.
Program Information. The Legislature needs two types of information to evaluate projects in the infrastructure plan. First, the plan should identify the programmatic need for the facilities. The Legislature needs to understand how the departments' operations relate to program needs, and how operations drive the need for facilities. If the department is experiencing program growth and that is causing a need for new facilities, this information needs to be provided. If the department has added new program functions or entire new programs, the infrastructure plan needs to show how this causes a need for new or renovated facilities. Second, if individual projects are themselves part of a statewide capital outlay program, the Legislature should have information about the scope and total cost of the larger program. For example, a department with a large number of older service facilities (such as motor vehicle offices or forest fire stations) throughout the state may have determined that replacement or renovation of many facilities is needed because of age and functional obsolescence. The Legislature needs to understand the need, scope, and cost of the entire program so that it can consider the long-term funding requirements. This will allow the Legislature to consider individual capital outlay projects with an understanding of the total capital commitment required.
Priorities and Criteria. The infrastructure plan should reflect projects in priority order and include the criteria used by the administration to set priorities. In addition, when each department prepares its five-year plan, the projects should be in priority and the department's criteria identified.
Strategic Plans Needed for All Departments. All departments are required to prepare or update strategic plans. The administration needs to submit these plans to the Legislature and the infrastructure plan should address how specific capital outlay projects relate to strategic goals and objectives. Conformance to the requirements of a department's strategic plan should be part of the criteria used for setting priorities.
As discussed above, the infrastructure plan should provide the Legislature with more information than it has had in the past. The specific information that is required to be included in the plan, however, may not be sufficient for the Legislature to assess whether or not the plan supports statewide infrastructure needs.
Also, we are concerned that the Legislature will not receive the information in a timely manner. For example, the Department of Finance (DOF) issued a budget letter dated January 12, 2001, directing departments not to share capital outlay information, including budget proposals and five-year plans, with our office. This is contrary to the practice of over 30 years, whereby the departments have sent the information to our office at the same time it is sent to DOF. This will severely limit our ability to conduct site visits of proposed projects and provide timely policy analysis and recommendations to the Legislature. This also greatly restricts the information available to the Legislature when it is asked to appropriate capital outlay proposals.
For the Legislature to use the plan effectively, it needs to know the specific projects that will provide the infrastructure needed by the state. To do this the Legislature needs information about the administration's proposed capital outlay projects and about alternatives. It needs to know how these projects will help the state achieve its programmatic goals, and it needs to know what priorities and criteria the administration used in selecting projects to propose for funding. To begin the Legislature's participation in the infrastructure planning process, we recommend the Legislature hold hearings this spring on the administration's process for developing the plan and on the way the plan can be used by both the administration and Legislature to more effectively provide for the state's future infrastructure.