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February 10, 2014 - In this report, we review California’s Five-Year Infrastructure Plan, the first statewide infrastructure plan released by the administration since 2008. We commend the administration’s renewed focus on infrastructure. We also find that the plan raises some important policy issues related to the financing and maintenance of state infrastructure and serves as a valuable starting point for legislative discussions. However, we note that the plan does not include some key information and suggest some changes that could make the plan more helpful to the Legislature. In addition, given the size of the state’s infrastructure investments and their long-term nature, we recommend that the Legislature take a more active role in considering infrastructure in a comprehensive way. In order to assist the Legislature, we suggest some broad questions it may find helpful in guiding future discussions. We further suggest that the Legislature consider how, as an institution, it addresses infrastructure issues—for example, by creating a joint infrastructure committee.
January 7, 2014 - This report presents a summary of reports received by the LAO from California counties on construction projects that they completed with the design-build project delivery method. We find that it is difficult to draw conclusions about the effectiveness of design-build compared to other project delivery methods (such as design-bid-build) based on the reports we received. Nonetheless, when the Legislature next considers extending design-build authority for counties or other local agencies, we recommend that it consider some changes such as creating a uniform design-build statute for agencies that have design-build authority, eliminating cost limitations, and requiring project cost to be a larger factor in awarding design-build contracts.
February 26, 2013 - Presented to Senate Committee on Governance and Finance and Senate Committee on Natural Resources and Water
August 25, 2011 - California’s infrastructure includes a diverse array of capital facilities across many program areas. Additionally, the state provides funding for local public infrastructure such as K-12 schools and local streets and roads. Over the last decade, infrastructure costs have taken up a larger share of the state’s budget, yet the state’s infrastructure demands continue to grow. In this report, we summarize the state’s infrastructure spending and provide ideas for planning and funding future infrastructure. Specifically, we recommend that the Legislature establish a more coordinated process for financing infrastructure. Throughout the report, we also highlight ways the state could manage infrastructure to reduce state costs such as prioritizing the state’s infrastructure investments to the most critical and appropriate programs, adopting strategies to reduce infrastructure demand, and identifying additional revenue to support infrastructure.
November 9, 2010 - In a previous analysis, we pointed out that the sale-leaseback of state buildings authorized in 2009 legislation was poor fiscal policy and represented one imperfect option among many for balancing the state’s budget. Mainly due to changes in the interpretation of property tax assessments, our forecast of the cost of the sale-leaseback is approximately $800 million greater than our previous analysis. The Legislature may wish to consider whether this increase in costs merits changing course.
April 27, 2010 - In this short video, analyst Mark Whitaker discusses the LAO report "Evaluating the Sale-Leaseback Proposal: Should the State Sell its Office Buildings?"
April 27, 2010 -
Recent legislation authorized the Department of General Services (DGS) to sell and then lease back 11 state-owned office properties. The sale-leaseback is designed to free up the state’s equity in the buildings to provide one-time revenue for addressing the state’s current budgetary shortfall. We estimate that the sale of buildings would result in one-time revenue to the state of between $600 million and $1.4 billion, but that annual leasing costs would eventually exceed ownership costs by approximately $200 million.
Over the lives of these buildings, we estimate the transaction would cost the state between $600 million and $1.5 billion. The Legislature will need to weigh how these costs compare to other alternatives for addressing the state’s budget shortfall. In our view, taking on long-term obligations—like the lease payments on these buildings—in exchange for one-time revenue to pay for current services is bad budgeting practice as it simply shifts costs to future years. Therefore, we encourage the Legislature to strongly consider other budget alternatives.
(Short video introducing this report)
January 12, 2010 - This report presents a summary of reports received by the LAO from California counties on construction projects that they completed with the design-build delivery method. Although it was difficult to draw conclusions from the reports received about the effectiveness of design-build compared to other project delivery methods, we do not think that the reports provide any evidence that would discourage the Legislature from granting design-build authority to local agencies on an ongoing basis. In doing so, however, we recommend the Legislature consider some changes such as creating uniform design-build statute, eliminating cost limitations, and requiring project cost to be a larger factor in awarding the design-build contract.
October 30, 2009 - Sent to: Members, Senate Natural Resources and Water Committee and Assembly Water, Parks, and Wildlife Committee
May 14, 2009 - We examine the steps that the California Department of Corrections and Rehabilitation (CDCR) has taken to implement Chapter 7, Statutes of 2007 (AB 900, Solorio) which authorized a total of approximately $7.7 billion for a broad package of prison construction and rehabilitation initiatives in order to relieve the significant overcrowding problems facing state prisons. Based on our review, we identify several issues that merit legislative consideration. For example, we note that the department’s construction cost estimates for the infill bed projects reflect an almost quadrupling of costs since the last state prison was built about seven years ago. Moreover, we find that the cost to operate the infill bed and reentry facilities and pay the annual debt service for the lease-revenue bonds to construct these facilities will be significant. Based on the department’s estimates, when fully implemented, the infill bed and reentry facilities could increase General Fund costs by $1.3 billion annually.
June 13, 2008 - Item 5225-301-0001 of the 2008 Budget Conference Committee (page 330).
February 20, 2008 - The Governor’s budget proposes to ask for voter approval of $48 billion in general obligation bonds. In this piece, we provide an update on the implementation of the bond package approved in 2006, describe the Governor’s new bond-related proposals, and analyze how the proposed additional bonds would affect the state’s debt-service payments for infrastructure.review infrastructure
February 21, 2007 - Analysis of the 2007-08 Budget Bill, Capital Outlay Chapter
February 5, 2007 - Our office recently issued Implementing the 2006 Bond Package, aimed at helping the Legislature in overseeing the spending of the $43 billion in bond funds just approved by the voters. This report is intended to complement the report on the 2006 bond package. It answers basic questions about the state’s use of bonds to finance its infrastructure.review infrastructure