Legislative Analyst's Office Analysis of the 2001-02 Budget Bill

Overview

Total expenditures from state funds for transportation programs are proposed to be substantially higher in 2001-02 than estimated current-year expenditures. The increase is due primarily to significantly higher expenditures for state highway and local road improvements, as scheduled in the State Transportation Improvement Program and for seismic retrofit of state-owned toll bridges. A relatively small portion of the increase in expenditures is projected for the delivery of projects included in the 2000 Transportation Congestion Relief Program.

For traffic enforcement, the budget proposes minor increases in the expenditure levels of the California Highway Patrol and the Department of Motor Vehicles.

The budget proposes total state expenditures of about $7.7 billion for all transportation programs and departments under the Business, Transportation and Housing Agency in 2001-02. This is an increase of $742 million, or 11 percent, over estimated expenditures in the current year.

Figure 1 shows that state-funded transportation expenditures increased by about $3.5 billion since 1994-95, representing an average annual increase of 9 percent. When adjusted for inflation, these expenditures increased by an average of 6.5 percent annually. The increase is mainly the result of the significant increase in expenditures under the Transportation Congestion Relief Program (TCRP) enacted in 2000-01. The TCRP provided $1.5 billion from the General Fund in the current year for a number of specified projects to be constructed over multiyears. In addition, in March 1996, the 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 as a share of total state expenditures have remained relatively stable since 1994-95. In 2001-02, proposed transportation expenditures will constitute about 7.6 percent of all state expenditures.

Of the 2001-02 state transportation expenditures, about $6.4 billion is proposed for programs administered by the state, and $1.1 billion is for subventions to local governments for streets and roads. Another $285 million will be for debt-service payments on rail bonds issued under Propositions 108 and 116 of 1990, and seismic retrofit bonds issued under Proposition 192 of 1996.

Spending by Major Program

Figure 2 shows spending for the major transportation programs in detail. Specifically, the budget proposes expenditures of $9.5 billion (from all fund sources including federal and bond funds) for the Department of Transportation (Caltrans) in 2001-02—an increase of $1.3 billion (15 percent) above estimated current-year expenditures. The higher expenditure level reflects mainly increases of about $1.1 billion in state and federal funds for highway construction and local road improvements.

Spending for the California Highway Patrol (CHP) is proposed at $997.1 million—$19.4 million, or 2 percent, higher than the current-year level. Ninety percent of the expenditures would be funded from the Motor Vehicle Account. For the Department of Motor Vehicles (DMV), the budget proposes expenditures of $690.7 million, $9.7 million (1.4 percent) more than in the current year. These expenditures would be funded mainly from the Motor Vehicle Account and vehicle license fees.

Additionally, the budget proposes to fund the State Transportation Assistance program in 2001-02 at $189.2 million, which is $77.4 million (or almost 70 percent) more than the current-year level. The significantly higher funding level reflects the infusion of gasoline sales tax into the Public Transportation Account (PTA) as the result of the TCRP legislation. Annual funding of the program is determined based on a statutory formula, and the level varies depending on anticipated revenues into PTA.

As the figure shows, the budget proposes to increase highway construction by Caltrans by $922 million, 30 percent more than in the current year. Similarly, local assistance for highway and road improvement is projected to increase significantly, by $278 million, or 29 percent, over the current-year level. The bulk of the increase is related to the delivery of the State Transportation Improvement Program, seismic retrofit of state-owned toll bridges, and increased reimbursed highway construction for local governments. A relatively small portion of the projected increase is for the delivery of TCRP projects.

The budget does not propose any increase in highway engineering and design support. However, it indicates that the level may be changed in May 2001 when the 2001-02 workload for the State Transportation Improvement Program and TCRP are better identified.

In addition, the budget includes an increase of $98 million for track capacity and signal improvements for intercity rail services. The budget also proposes $18 million for a new program to provide grants to rural transit systems for capital improvements.

For CHP, the budget proposes $8.8 million for 76 additional motorcycle officers to support congestion relief efforts on state highways. The budget also includes $7 million from the General Fund to continue to provide grants in 2001-02 for local collection of racial profiling data. Another $1.7 million is proposed to increase staff to inspect and certify farm labor vehicles for safety compliance.

For DMV, the budget proposes an increase of $9.7 million in total expenditures in 2001-02 over the current-year level. This amount includes a total increase of $18.5 million for departmental support and a decrease of $8.8 million in capital outlay expenditures. Significant increases include $13.3 million to deter and investigate driver license fraud, and $6 million to implement the vehicle license fee rebate program. The budget also requests $8.1 million to continue the redesign of the department's financial and accounting system.