State Spending Plan
July 9, 2018

The 2018-19 Budget

California Spending Plan

(Preliminary Version)


Transportation

The spending plan provides $23.2 billion from all fund sources for transportation programs. As shown in Figure 27, this is a net increase of $4.7 billion, or 25 percent, when compared to the revised level of spending in 2017-18. This largely reflects increased spending resulting from the recent transportation funding package contained in Chapter 5 of 2017 (SB 1, Beall). The spending plan also includes other augmentations for the California Department of Transportation (Caltrans), the California Highway Patrol (CHP), and the Department of Motor Vehicles (DMV).

Figure 27

Transportation Program Expendituresa

(Dollars in Millions)

Program/Department

2016-17

2017-18

2018-19

Change From 2017-18

Amount

Percent

Department of Transportation

$9,151

$11,416

$14,260

$2,844

25%

California Highway Patrol

2,341

2,410

2,596

185

8

Shared revenues (local streets/roads)

1,290

1,890

2,596

706

37

Department of Motor Vehicles

1,057

1,118

1,181

63

6

High-Speed Rail Authority

733

304

1,176

872

287

State transit assistance

339

726

983

257

35

Other transportation programsb

334

648

428

-220

-34

Totals

$15,245

$18,512

$23,220

$4,708

25%

aIncludes state General Fund, state special funds, state bond funds, federal funds, and reimbursements.

bIncludes California State Transportation Agency, California Transportation Commission, and Board of Pilot Commissioners.

Senate Bill 1 Funding

Senate Bill 1 increased fuel taxes and vehicle charges to support existing and new transportation programs. It also repays monies loaned in the past to the General Fund from various transportation accounts. In total, the spending plan assumes SB 1 provides $4.6 billion in 2018-19—a $1.8 billion (62 percent) increase from the revised level of spending in 2017-18. (The main reason for the year-to-year increase is that the increased taxes and charges authorized by SB 1 were in effect for only part of 2017-18.) The $4.6 billion in spending includes:

  • $1.6 billion for state highways.

  • $1.2 billion for local streets and roads.

  • $778 million for transit.

  • $758 million for programs supporting multiple types of transportation.

  • $170 million for other transportation programs (such as for active transportation).

  • $105 million for state parks and agricultural programs (from the fuel tax revenues associated with off-highway vehicles).

The budget package also amends SB 1 to allow local governments to fund projects upfront and later reimburse themselves with funds they receive in future years through SB 1.

Caltrans

The budget plan for Caltrans includes total expenditures of $14.3 billion from all fund sources, an increase of $2.8 billion (or 25 percent) from the revised 2017-18 level of expenditures. The increase from 2017-18 to 2018-19 primarily reflects new funding provided from SB 1 for highway maintenance and rehabilitation. As discussed below, the budget also augments Caltrans’ capital outlay support program, provides increases for Caltrans’ compensation costs and various other purposes, and places a limit on Caltrans’ indirect cost recovery charges for certain local governments.

Highway Maintenance and Rehabilitation. The budget increases highway maintenance spending from the Road Maintenance and Rehabilitation Account (RMRA) established by SB 1 from $421 million to $576 million—a $154 million increase. The increase consists of (1) $100 million for major maintenance contracts (specifically for bridges and culverts) and (2) $53.6 million to support 400 new positions. Of the new positions, 300 are to perform routine maintenance, while the remaining 100 are to oversee construction contracts for major maintenance. Additionally, the budget increases spending from the RMRA on highway rehabilitation projects included in the State Highway Operations and Protection Program (SHOPP) from $424 million to $994 million—a $570 million increase.

Capital Outlay Support. The budget increases spending from various funds on Caltrans’ capital outlay support program to deliver new projects through the SHOPP and other programs from $1.9 billion to $2 billion—a $168 million increase. The increase consists of (1) $137 million for 785 state staff and overtime equivalent positions, (2) $22 million for 87 external consultant equivalent positions, (3) $3.3 million for project permits, (4) $2 million (one time) for construction arbitration costs, (5) $1.2 million (one time) for a Caltrans’ facility needs study to be conducted by the Department of General Services, and (6) $1 million for training. Further, provisional language allows the Department of Finance (DOF) (after notification to the Joint Legislative Budget Committee [JLBC]) to increase or decrease spending for additional state staff or external consultants to meet project delivery needs. Under the language, DOF can increase spending by up to $36 million at any point in the fiscal year and can increase or decrease spending by up to $13.3 million on or after January 1, 2019.

Compensation Cost Adjustment. The budget provides a $58 million increase from the State Highway Account (SHA) to address what Caltrans characterizes as insufficient funding for its existing positions. The augmentation is spread across Caltrans’ programs based on their historical compensation expenditures and position history, with most of the increase going to highway maintenance ($20.5 million) and administration ($16.1 million). Caltrans indicates that this augmentation will alleviate the need for new position requests for most of its programs over the next few years.

Other Budget Augmentations. The budget also includes a total of $40.8 million in other funding increases from various funds. Of this amount, $21.8 million is ongoing funding and $19 million is one-time or limited-term funding. The augmentations include (1) $10.4 million for information technology (IT) security and $2 million for IT equipment, (2) $7 million for tort payments and $4.9 million for vehicle liability insurance cost increases, (3) $6.5 million to continue staffing support for Proposition 1B projects, (4) $4.7 million to perform various federally required activities, (5) $3.2 million for a road usage charge “pay-at-the-pump” pilot program, and (6) $2.1 million for facility cost increases. In addition, the budget includes provisional language allowing DOF (after 30-day notification to the JLBC) to increase spending on tort payments by up to $20 million and IT equipment replacements by up to $12 million.

Indirect Cost Recovery Rate Limit for Self-Help Counties. When Caltrans performs work for a local government, it charges the local government for associated indirect costs, such as for accounting. The budget package includes trailer bill language to limit Caltrans to charging no more than 10 percent for administrative indirect cost recovery to self-help counties (counties with sales tax measures dedicated to transportation improvements) until July 1, 2021. The budget provides Caltrans with $10 million (SHA) to fully make up for the resulting decrease in its indirect cost recovery revenues.

California Highway Patrol

The budget provides $2.6 billion to fund CHP operations. This is an increase of $185 million, or 7.8 percent—mainly due to increases in funding for capital outlay projects—compared to the revised level of spending in 2017-18. Nearly all of this funding is from the Motor Vehicle Account (MVA), which derives the majority of its revenue from vehicle registration fees and driver license fees.

Field Office Replacement Projects. The budget includes a total of $169 million from the MVA to fund replacement CHP offices. This total includes (1) $3.7 million for the performance criteria phase in Santa Fe Springs and Baldwin Park; and (2) $165 million for the design-build phase in Quincy ($37 million), El Centro ($40 million), Hayward, ($48 million), and San Bernardino ($40 million). This funding is part of the administration’s ongoing plan to replace deficient CHP area offices.

Radio Console Replacement Project. The budget provides $3.9 million from the MVA in 2018-19 to begin the replacement of the remaining antiquated dispatch consoles in all communication centers statewide over the next four years. The CHP estimates future expenditures from the MVA of $4.5 million in 2019-20, $4.9 million in 2020-21, and $509,000 in 2021-22 in order to complete the replacement project.

Vehicle Fleet Replacement. The budget includes an ongoing augmentation of $4.5 million from the MVA for the replacement of CHP vehicles that exceed the Department of General Services’ recommended vehicle replacement mileage threshold of 100,000 miles. The CHP expects to replace a total of 1,105 vehicles in 2018-19.

Department of Motor Vehicles

The budget provides $1.2 billion for DMV operations, an increase of $63 million (or 6 percent) from the revised level of 2017-18 expenditures. Nearly all of this funding is from the MVA.

Front-End Sustainability (FES) Project. In 2013, the DMV initiated the FES project to complete the upgrade of its vehicle registration and fee collection system, which currently depend on 45-year old technology. The budget package provides an increase of $15 million in 2018-19 to support the implementation of the FES project. The budget package also includes trailer legislation to increase by $1 per-transaction fee (from $3 to $4) charged to private entities (such as car dealerships) that utilize the system to collect vehicle registration fees on the department’s behalf, in order to help offset the project’s implementation costs. The FES project is expected to be completed in 2022-23 at a total cost of $89 million, with the above fee increase expiring in 2023.

Field Office Replacement and Renovation Projects. The budget includes $7.9 million in 2018-19 to continue the replacement and renovation of the Oxnard and Reedley DMV field offices, as well as to construct perimeter fencing at 13 existing field offices. The budget also includes $200,000 to begin advanced planning for two future renovation projects proposed for 2021-22.

Other Budget Augmentations. The budget also includes a total of $6 million in other funding increases in 2018-19. The major augmentations include (1) $3.1 million for the replacement of IT equipment that has reached the end of its useful life and (2) $1.4 million to extend the state’s clean air vehicle decal program as authorized by Chapter 630 of 2017 (AB 544, Bloom). This program permits certain low- and zero-emission vehicles to operate in the state’s carpool lanes regardless of the vehicle’s occupancy level.

Other Transportation Programs

As we discuss elsewhere in this report, the budget package continuously appropriates a portion of future Proposition 2 infrastructure funding to support a new Rail Modernization Improvement Program to be administered by the California State Transportation Agency. As part of the budget package, the Legislature also adopted supplemental report language requiring our office to conduct an evaluation of the state’s Active Transportation Program. The evaluation is to focus on the types of projects funded through the program, the benefits of such projects, and any implementation challenges faced by project sponsors.