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Legislative Analyst's OfficeAnalysis of the 2002-03 Budget Bill |
The Department of Parks and Recreation (DPR) acquires, develops, and manages the natural, cultural, and recreational resources in the state park system and the off-highway vehicle trail system. In addition, the department administers state and federal grants to local entities that help provide parks and open-space areas throughout the state.
The state park system consists of 266 units, including 39 units administered by local and regional agencies. The system contains approximately 1.4 million acres, which includes 3,000 miles of trails, 285 miles of coastline, 822 miles of lake and river frontage, and nearly 18,000 camp sites. Over 80 million visitors travel to state parks each year.
The budget proposes $374.5 million in total expenditures for the department in 2002-03. This is an overall decrease of about $1.1 billion (74 percent) below estimated current-year expenditures. Most of this reflects a decrease in Proposition 12 expenditures of $907 million from the current year as well as the elimination of one-time expenditures, including $64 million for deferred maintenance.
The budget proposes about $268.2 million in departmental support, about $48.2 million in local assistance and $58.2 million in capital outlay expenditures. (Please also see the "Capital Outlay" chapter of this Analysis.) Of the total proposed expenditures in 2002-03, about $112 million (30 percent) will come from the General Fund; $79 million (21 percent) from Proposition 12; $72 million (19 percent) from the State Parks and Recreation Fund; $44.2 million (12 percent) from the Off-Highway Vehicle Trust Account; and the remainder $67.5 million (18 percent) from various other state funds, federal funds, and reimbursements.
The budget proposes General Fund reductions of $19.8 million for operating expenses and equipment at state parks, of which $15 million is to be offset by an additional transfer of $15 million from the Motor Vehicle Fuel Account to the State Park Recreation Fund. The department proposes to implement the net General Fund reduction ($4.8 million) by limiting hours and days of operation at state parks.
The department significantly increased its land acquisitions in 2000-01 and 2001-02. In addition to the funding required to acquire the land, acquisitions can result in future development costs and ongoing operations costs. We find that the department has acquired land without addressing the future development and operating costs associated with these acquisitions. We provide options for funding the development and operation of recent acquisitions, and make recommendations to reduce the likelihood that future acquisitions will result in unfunded obligations.
As shown in Figure 1, DPR significantly increased its land acquisitions in 2000-01 and 2001-02. Specifically, DPR projects to increase its land holdings by more than 75,000 acres and projects to expend about $328 million on land acquisition during this period. This increase is largely due to the significant funding available from Proposition 12, the Safe Neighborhood Parks, Clean Air, and Coastal Protection Bond Act of 2000. This bond measure provides $502 million for DPR to acquire lands and improve state park facilities.
All of DPR's land acquisitions have been for the purpose of expanding existing state parks or acquiring new state parks. The DPR's recent land acquisitions have included a wide range of parcels that will be added to the state park system, from remote redwoods to urban parcels. The acquisitions have been for a variety of purposes associated with DPR's mission, including habitat protection and cultural and historical preservation.
The DPR acquires land when it is identified by the department or the Legislature as high priority. If it is identified by the department as such, then a budget proposal is submitted for that acquisition outlining its significance. Once land is acquired for a new state park or to significantly expand an existing state park, the department begins the planning process for that acquisition, called the park general plan process. During this process a plan is developed that serves as a guide for the future development, management, and operation of the park. The plan defines the proposed land uses, facilities, concessions, and operation of the park. However, the general plan does not include related cost information.
Land acquisitions create future development and operating obligations for the department. We find that funding for most of these obligations has not been addressed as part of the acquisition process.
Development Costs Mostly Unfunded. In our review of DPR's recent acquisitions, we found that many acquisitions will require additional development in order to (1) provide reasonable access to the acquisition and/or (2) develop the acquisition to achieve its intended purpose for use. For example, new park units or acquisitions that are not immediately adjacent to existing parks typically require development to provide access to them. The types of improvements needed to provide such access vary from parcel to parcel, but in general can include parking, roads, and signage.
In addition, we found that several acquisitions could require potentially significant amounts of development expenditures in order for the acquisition to achieve its purpose. For example, many of the acquisitions in urban areas involve unimproved lots with no existing park features such as trails, natural landscaping, or facilities. These parcels will likely require significant development costs.
In most instances where future development will be required for a recent acquisition, the department has not identified the cost or extent of this development. Furthermore, funding for these costs have not been provided nor have future funding sources been identified. In many instances, without the additional development, public access to these acquisitions will be severely restricted or not possible and the purpose of the acquisition will not be achieved.
Operating Costs of Expanded and New Parks Not Provided For or Identified. As a result of the land acquisitions, DPR will also incur ongoing operating costs to preserve habitat, cultural resources, and to provide recreational opportunities associated with the land acquisitions. These operating costs include trail maintenance, habitat restoration, brush management, and increased ranger patrol areas. These costs will be incurred for both new and expanded parks.
In general, the extent and magnitude of these operating costs are not known because they are not consistently identified for each acquisition as part of the budget process. Complicating matters is the fact that DPR has acquired several new parcels intended to be developed for urban park use. Since these acquisitions differ significantly from the department's traditional acquisitions in the past, the operating costs for these acquisitions are even less certain. In total, the department has only provided estimates of operating costs for less than one-third of the acquisitions made since 2000-01. These estimates total more than $2 million in annual operating costs.
We found that only in limited cases have the funds necessary for operating costs been provided or sources of future funding identified. Failure to provide for the ongoing operating needs for these acquisitions could lead to the deterioration of the park assets, limited public access, public safety risks, and a continuation of the accumulated deferred maintenance problems that DPR has experienced in the past.
Existing Planning Process Does Not Provide For Sufficient Fiscal Oversight of Future Costs. As discussed, for some acquisitions, the extent of future costs will depend on what is planned for the development of the park in the general plan process. While the general plan does not include cost estimates, the plan is very relevant to the future development and operating costs of the park because it defines how the park will be developed. For example, if the general plan proposes a large complex of facilities at a park, then it is likely that the future development and operating costs of a park will be significant.
The general plan is approved by the Parks Commission and is not required to be approved by the Department of Finance (DOF) or the Legislature. Instead, fiscal oversight occurs later when funding is requested in the budget process for individual stages of development projects. As a result, the process in which the scope of facilities and services is typically defined--the park general plan process--includes minimal fiscal oversight.
We recommend adoption of supplemental report language requiring the department to provide an assessment of development and operating costs associated with its recent land acquisitions, and to identify and recommend funding sources. We also identify several potential funding sources for these obligations.
In the previous section we noted that there is limited information on the extent of the future cost obligations created by DPR's recent land acquisitions. Specifically, there is limited information on the costs to develop these land acquisitions to their intended uses and on ongoing operating costs. Although our review focused solely on DPR's acquisitions since 2000-01, it is possible that our findings could apply to prior-year acquisitions as well. In this section we offer recommendations for assessing these obligations and provide options for funding them.
Require Funding Plan for Recent Acquisitions. In order that the Legislature can assess the extent of obligations created by recent acquisitions, we recommend the adoption of the following supplemental report language, requiring that the department prepare a funding plan for its recent land acquisitions.
The Department of Parks and Recreation shall submit a report to the Legislature by March 1, 2003 that includes the following:
1. An assessment of the potential costs to develop each land acquisition acquired in 2000-01 and 2001-02 to its intended use and an estimate of the ongoing operations and maintenance costs of each acquisition.
2. An identification of potential funding sources to pay for the development and operating costs, and the department's plan for which funding sources it will seek.
Once the Legislature has reviewed the funding plan, it may wish to give funding priority to future capital outlay appropriations that would be used to develop timely public access to existing acquisitions which were acquired for recreational purposes, instead of acquiring new properties. Providing such access would be an important component of the public's return on existing state investments.
While developing a funding plan may result in additional workload for the department, we note that the department has received several augmentations in recent years, totaling about $2 million and additional staff, which can be used to complete the funding plan described above.
Potential Funding Sources. Based on our review, we have identified several potential funding sources to cover the development and operations costs of the land acquisitions. These include:
We recommend that the Legislature take a number of actions to ensure that the development and ongoing operating costs associated with state park acquisitions are accounted for before funding for an acquisition is approved in the budget process.
As discussed earlier, acquisitions can result in a number of obligations to DPR beyond the actual cost of the parcel. These obligations and appropriate funding sources with which to fund them are often not identified as part of the budget process when approval of funding for a land acquisition is being considered. To the extent that these obligations are unaccounted for in the funding decision, the full benefits to the public associated with the acquisition are not achieved nor are the stewardship needs of the acquisitions met.
In this section we identify a number of statutory actions the Legislature could take in order to improve budgeting for the obligations associated with future land acquisitions. These recommendations are intended to (1) provide the Legislature with more complete information on the obligations associated with a particular acquisition, (2) identify the fiscal resources available for future obligations, (3) provide more fiscal oversight in the planning process, (4) facilitate public access to the acquisitions in a timely manner, and (5) limit future obligations from land acquisitions.
Require DPR to Submit Funding Plan for Future Costs With Budget Proposal. In order to provide the Legislature with information on future obligations associated with land acquisitions, we recommend that DPR be required to submit a funding plan for future development and operating costs with a budget proposal for new land acquisition. The funding plan should include information on the development and operating costs for the budget and future years. The funding plan should also identify the funding sources to meet these obligations. We further recommend, to the extent development costs are identified, that these costs be included in the Governor's five-year infrastructure plan required by Chapter 606, Statutes of 1999 (AB 1473, Hertzberg). (Please see the discussion on the five-year infrastructure plan in the "Crosscutting Issues" section of the "Capital Outlay" chapter.)
Require DPR to Set Aside Bond Funds for Future Development of Bond-Funded Acquisitions. In cases where bond funds are used to acquire land, we recommend that some portion of the bond funds be set aside for future development costs. While exact future development obligations may not be known until the park general plan process is carried out, an estimated amount for these obligations should be set aside. A similar process is currently used with higher education facilities funded from general obligation bonds, in which funding is appropriated for the initial stages of the work and funding needed for future stages is set aside. This appears to work effectively to ensure that funding is available to complete projects the Legislature has approved.
Require DPR to Submit Funding Plan for Discretionary Acquisitions. For those budget act appropriations where a specific parcel or state park to be acquired is not identified, it would be difficult to estimate the exact obligations created by the acquisition. For example, recent appropriations from Proposition 12 have included funds for "opportunity purchases" for which specific acquisitions were not identified. In order to provide the Legislature with the appropriate cost information once a specific parcel is acquired, we recommend that DPR in the first budget year following the initial budget appropriation be required to submit a funding plan for the parcel.
Require General Plans for Parks to Be Approved by DOF. As discussed earlier, the park general plan process can have a significant fiscal impact on the development costs of state parks. We therefore recommend that the general plans for new acquisitions, or those that propose significant revisions to existing parks, be reviewed and approved by DOF before funding is requested of the Legislature. This would give the administration the opportunity to review the development plan for a park in its entirety rather than on a project-by-project basis when funding is requested for individual stages of a parks project.
Set Limits in Future Bond Measures on New Acquisitions. In order to ensure an adequate share of funding in any future bond measure is allocated to the development and restoration of existing acquisitions, the Legislature should specify the proportion of funds that can be used to acquire new lands as opposed to the development and restoration of existing facilities. This is similar to the existing provision in Proposition 40 (The California Clean Water, Clean Air, Safe Neighborhood Parks and Coastal Protection Act of 2002) which directs DPR to spend no more than 50 percent of its acquisition and development allocation on new state park acquisitions.
Proposition 40, if approved by the voters at the March 2002 election, will provide $225 million for state parks. Our recommendations in the previous section can be applied by the Legislature in its review of May Revision proposals for state park acquisitions, including those proposed to be funded from Proposition 40.
New Bond Funds for State Parks. Proposition 40, if approved by the voters at the March 2002 election, would provide $225 million for state park improvements and acquisitions, of which no more than 50 percent can be used by DPR for land acquisitions. If Proposition 40 is approved, the Governor could propose expenditure of these funds during the May Revision process.
Issues for the Legislature to Consider in Evaluating Proposition 40. If Proposition 40 expenditures are proposed as part of the May Revision, we recommend, consistent with our recommendations in the previous section, that the Legislature:
The budget includes three concession renewal proposals. We recommend that the Legislature withhold authorizing the department to solicit proposals for a new concession contract for Millerton Lake State Recreation Area and Pfeiffer Big Sur State Park until the department provides information on the terms of the proposals.
Two of Three Proposals Lack Sufficient Detail. Under current law, the Legislature is required to review and approve any proposed or amended concession contract that involves a total investment or annual gross sales over $500,000. In past years, the Legislature has provided the required approval in the supplemental report of the budget act.
The department has included three concessions proposals in its budget that require legislative approval. Of the three proposals, our review found that only one--for Old Sacramento State Historic Park, Jewelry Shop--is warranted. The two other proposals lack sufficient detail on the appropriate rent to be charged and the amount of capital outlay investment that will be required. Without this information, the Legislature is not able to determine whether these proposals are in the state's best interest. Accordingly, we recommend the Legislature withhold approval of the proposals for (1) Millerton Lake State Recreation Area and (2) Pfeiffer Big Sur State Park until the department, based on its economic analysis, provides the Legislature the specific terms of these two concession proposals. Below, we provide information on each of the three concession proposals.
Millerton Lake State Recreation Area. Millerton Marina is an existing concession located on Millerton Lake State Recreation Area (Fresno County). Facilities currently include a marina with 550 boat berths, fuel and retail sales dock, parking, and a restroom building. Services offered include boat berthing, boat repair, boat rentals, and retail sales. The existing concessionaire is presently operating under a contract that expires December 31, 2002.
Our review of the request to solicit proposals found that the department has not finalized major provisions for the terms of the proposal. For example, the type and scope of facilities to be provided, the amount of capital outlay required, and the minimum rent to be paid to the state have not been established. The DPR reports these details will be formulated based upon information provided in an economic feasibility analysis anticipated to be completed in spring 2002. Due to lack of detail, we recommend the Legislature withhold approval of the proposal.
Pfeiffer Big Sur State Park.The department requests approval to solicit bids to improve, operate, and maintain the Big Sur Lodge project consisting of 61 motel-like cottages, up to 70 alternate overnight accommodations, employee housing, camp store, restaurant, gift shop, laundry facilities, and baseball field. The existing concession contract expired on June 30, 2001 and has continued on a month-to-month basis.
Our review of the request to solicit proposals found that the department has not finalized major provisions for the terms of the proposal. For example, the type and scope of facilities to be provided, the amount of capital outlay required, and the minimum rent to be paid to the state have not been established. The DPR reports these details will be formulated based upon information provided in an economic feasibility analysis anticipated to be completed in spring 2002. Due to lack of detail, we recommend the Legislature withhold approval of the proposal.
Old Sacramento State Historic Park, Jewelry Shop. The department requests approval to solicit bids to operate and maintain a jewelry shop in Old Sacramento State Historic Park. The existing concession contract expired on November 30, 2001 and has continued on a month-to-month basis. Proposed conditions for the new contract include: a ten-year term; minimum monthly rent of $2,000 or 3 percent of monthly gross sales up to $25,000, plus 4 percent of all gross sales in excess of $25,000. Our review found this concession proposal to be warranted.