Presented to: Assembly Budget Subcommittee No. 3 on Resources and Transportation Hon. Richard Bloom, Chair

Presented to Senate Transportation and Housing Committee, Hon. Mark DeSaulnier, Chair and Senate Budget and Fiscal Review Subcommittee No. 2 On Resources, Environmental Protection, Energy and Transportation, Hon. Jim Beall, Chair

The Governor’s budget provides a total of $21.1 billion from various fund sources—the General Fund, special funds, bond funds, federal funds, and reimbursements for various transportation departments and programs under the new Transportation Agency in 2013-14. This is an increase of $558 million, or 2.7 percent, above estimated expenditures for the current year. In this report, we review the Governor’s 2013-14 budget proposals for various transportation departments and programs, including the California Department of Transportation (Caltrans), the California High-Speed Rail Authority (HSRA), and the California Highway Patrol. We identify concerns with several of the proposals and make recommendations for legislative consideration. In some cases, we identify proposals that we think should be rejected or modified. We also identify issues that we think would benefit from additional legislative oversight. These include (1) the ability of Caltrans to manage its budget and workload for completing project initiation documents and (2) the HSRA's oversight of the design and construction of the state's high-speed rail project.

In recent years, the state has entered into public-private partnerships (P3) to finance, design, construct, operate, and maintain two state infrastructure projects in order to achieve benefits that they might not have obtained under a more traditional procurement approach. In this report, we find that the P3 practices of these recent projects are not necessarily aligned with the P3 best practices identified in research. Based on our findings, we identify several opportunities for the state to further maximize its benefits when deciding to procure a state infrastructure project as a P3. Specifically, we recommend that the Legislature (1) specify P3 project selection criteria in statute, (2) require a comparative analysis of a range of procurement options in order to better determine which procurement option would most effectively benefit the state, (3) require the existing Public Infrastructure Advisory Commission (PIAC) to approve state P3 projects, and (4) modify the structure and responsibilities of PIAC to better provide state expertise on P3s.

Real Estate Fraud Prosecution Trust Fund Program Chapter 942, Statutes of 1995 (SB 537, Hughes)

Presented to: Assembly Insurance Committee Hon. Henry T. Perea, Chair and Senate Insurance Committee Hon. Ron Calderon, Chair

In April 2012, the California High-Speed Rail Authority (HSRA) released its most recent business plan, estimating the cost of constructing the first phase of the high-speed train project at $68 billion. However, the HSRA has secured only about $9 billion in voter approved bond funds and $3.5 billion in federal funds. The revised business plan also makes significant changes from prior plans, such as proposing to integrate high-speed rail with other passenger rail systems, constructing the southern portion of the system first, assuming lower construction costs, and using “cap-and-trade” auction revenues if additional federal funds fail to materialize. Consistent with the HSRA's revised business plan, the Governor’s budget plan for 2012-13 requests $5.9 billion to continue the high-speed rail project--$2.6 billion in state bond funds matched with $3.3 billion in federal funds to begin construction in the Central Valley. In addition, about $800 million is requested to make improvements to existing passenger rail services and about $250 million to complete preliminary design work and environmental reviews for various sections of the project. In this brief report, we find that HSRA has not provided sufficient detail and justification to the Legislature regarding its plan to build a high-speed train system. Specifically, funding for the project remains highly speculative and important details have not been sorted out. We recommend the Legislature not approve the Governor’s various budget proposals to provide additional funding for the project. However, we do recommend that some minimal funding be provided to continue planning efforts that are currently underway.

The DMV, which provides service to over 20 million customers per year and operates 313 facilities, has made efforts in the past decade to improve its efficiency and provide better customer service in field offices and elsewhere. The 2012-13 Governor’s budget includes several proposals to build on these efforts, including incentivizing DMV customers to complete transactions without visiting a field office, combining information technology systems, expanding electronic driver's license testing, and undertaking infrastructure projects to adjust to demands at DMV field offices due to shifting populations. We find that the Governor’s budget proposals have merit and could improve DMV’s efficiency. We have identified, however, a number of shortcomings and recommend that the Legislature modify some of the Governor’s proposals, as well as take additional actions to further expand some of the department’s current efforts to increase efficiency and outreach.

Assembly Budget Subcommittee No. 6 On Budget Process, Oversight and Program Evaluation. Hon. Bob Blumenfield, Chair.

Presented to: Assembly Transportation Committee

Strategy for Reviewing the Draft 2012 High-Speed Rail Authority Business Plan

Real Estate Fraud Prosecution Trust Fund Program

Legislative Analyst Mac Taylor, report author Eric Thronson, and section director Farra Bracht speak to reporters about the LAO report "High-Speed Rail Is at a Critical Juncture."

In November 2008, voters approved Proposition 1A, which allows the state to sell $9 billion in general obligation bonds to partially fund the development and construction of the high-speed rail system. In addition, the state has received roughly $3 billion from the federal government for its construction. We describe a number of problems that pose threats to the high-speed rail project’s successful development as envisioned by Proposition 1A and make several recommendations. We recommend that the Legislature direct the High Speed Rail Authority (HSRA) to renegotiate the terms of the federal funding awarded to the state by the Federal Rail Administration. We also recommend that the Legislature pass legislation this session that shifts the responsibility for the day-to-day and strategic development of the project from HSRA to the California Department of Transportation (Caltrans).

In this 5-minute video, analyst Eric Thronson discusses the LAO report "High-Speed Rail Is at a Critical Juncture."