Legislative Analyst's Office
February 22, 1995

Transportation Overview

Major Issues

• Funding Shortfall Will Delay State's Transportation Program Beyond 2002-03. The state is short at least $5.9 billion to carry out all transportation projects programmed through 1998-99 and at the same time, fund all seismic retrofit work. Unless revenues are increased or other non-capital outlay expenditures reduced, the state will have to take all of its resources projected to be available into 2003-04 to cover this shortfall. This would mean that projects scheduled in the 1992 State Transportation Improvement Program (through 1999) will be delivered over an 11-year, rather than a seven-year, period. (See pages A-12 through A-16.)
• Caltrans Could Run Out of Federal Funds in 1995-96. There are not enough funds to construct all transportation projects scheduled to be built in 1995-96. Caltrans plans to borrow future state and federal funds in order to increase 1995-96 capital outlay expenditures. Caltrans' plan will consume all federal funds remaining available to the state under the Intermodal Surface Transportation Efficiency Act (ISTEA). In 1996-97--the last year of ISTEA--California will have no federal funds remaining available. (See pages A-15, and A-23.)
• Lack of Information Hinders Legislative Review. Caltrans failed to provide information to explain or justify its proposed budget, expenditures and program activities. This lack of information hinders the Legislature's ability to set transportation priorities and to assess the extent to which Caltrans meets state goals. (See page A-19.)
• Budget Assumes Actions to Free Up Funds for Capital Outlay. The Caltrans' budget assumes that several actions will be taken in order to free up funds for transportation capital outlay. These actions include: (1) reducing 1,226 personnel-years (pys) of staff support, (2) reducing funding for two local assistance programs, and (3) using toll bridge revenues to fund toll bridge seismic retrofit work. (See pages A-22 through A-24.)
• Caltrans Proposes Significant Staff Reduction. The budget proposes to reduce Caltrans staff by 1,226 pys including: (1) 252 pys to accommodate expenditure reductions imposed on the current year program, (2) 220 pys to match support staffing to the smaller size of the fundable transportation capital improvement program, and (3) an unallocated reduction of 716 pys that Caltrans has not explained. As part of the smaller capital outlay support workload, the budget includes a reduction of 353 personnel-year equivalent in work to be contracted out to private engineers. (See pages A-31, and A-33 through A-36.)
• Intercity Rail Service Expansion Delayed Repeatedly, Program Needs Accountability. For the third year in a row, Caltrans has not been able to expand its intercity rail service, as planned. Instead, Caltrans has redirected funds provided for the proposed expansion to other intercity rail purposes. In particular, from 1992-93 through 1994-95, $23 million was redirected to pay for higher operating costs of service. While Caltrans has the statutory authority for the redirection, the Legislature is not advised of the redirection, and therefore, is not informed of the actual level of service provided, or the costs associated with that level of service. (See page A-47 through A-50.)
• Budget Proposes Consolidation of the California Highway Patrol and the California State Police. The proposed consolidation would provide both more coordinated, as well as, a higher level of service, particularly for state facilities and employees. The proposal would result in annual savings of about $835,000 as a result of economies of scale and more efficient use of resources. However, many implementation questions remain to be addressed. (See page A-55.)

Overview

For traffic enforcement, the budget proposes a significant increase in the expenditures of the California Highway Patrol primarily due to an increase in the number of traffic officers, additional telecommunications expenditures and consolidation with the California State Police. The expenditure level of the Department of Motor Vehicles is also proposed to increase in order to implement various new legislation. The budget proposes total state expenditures of about $5.1 billion for transportation programs in 1995-96. This is an increase of $660 million, or 15 percent, over estimated expenditures in the current year.

Figure 1 shows that state-funded transportation expenditures increased by $2.2 billion since 1988- 89, representing an average annual increase of 8.7 percent. When adjusted for inflation, these expenditures increased by an average of 5.4 percent annually. In addition, Figure 1 shows that transportation expenditures have increased as a share of total state expenditures over the period. This change is largely the result of the passage of the Transportation Blueprint legislation in 1990 which provided additional state funds for highway and mass transportation programs. In 1995-96, proposed transportation expenditures will constitute about 9.2 percent of all state expenditures.

Of the 1995-96 state transportation expenditures, about $4 billion is proposed for programs administered by the state, and about $945 million is for subventions to local governments for streets and roads purposes. Another $180 million is projected to be for debt service payments on rail bonds issued under Propositions 108 and 116 of 1990.

Spending by Major Programs

Figure 2 shows spending for the major transportation programs in detail. Specifically, the budget proposes expenditures of $6.2 billion for the Department of Transportation in 1995-96 an increase of $197.4 million (3.3 percent) over estimated current-year expenditures. The higher expenditure level reflects an increase of about $800 million in state and federally-funded expenditures, offset by a decrease of $600 million in reimbursed expenditures for highway capital outlay projects.

Spending for the California Highway Patrol (CHP) is proposed to increase in 1995-96 by $70.4 million, about 10 percent. The increase is due in part to funding of 180 currently vacant traffic officer positions, and expanding the department's vehicle theft enforcement programs. In addition, the increase reflects the budget proposal to transfer the California State Police to the CHP, beginning July 1, 1995.

For the Department of Motor Vehicles (DMV), the budget proposes expenditures that are about 6.3 percent higher than in the current year. The proposed expenditure level of $539.5 million results mainly from an increased workload related to the implementation of various recently enacted legislation.

Additionally, the budget proposes an increase in the State Transportation Assistance (STA) program in 1995-96 to reflect higher projected revenues into the Transportation Planning and Development (TP&D) Account. The STA program provides funds to local transportation agencies to operate public mass transit systems. Annual funding of the program is based on a statutory formula and varies depending on anticipated revenues into the TP&D Account. Major Budget Changes

Figure 3 presents the major budget changes proposed for 1995-96 in various transportation programs.

As the figure shows, the budget proposes to reduce the funding level of the State Local Transportation Partnership Program by $100 million. The budget also proposes a reduction of $71.4 million in highway capital outlay support (design and engineering) and an unallocated reduction of $76.4 million in Caltrans support and local assistance funding. The effect of these and other actions is to reduce personnel by an equivalent of 1,226 personnel-years. At the same time, the budget proposes to provide $118 million in state and federal funds for rail capital improvements. The budget also proposes an increase in intercity rail passenger service of about $9.7 million, an additional $10 million to accommodate highway maintenance workload increase, and $28.6 million to restore prior year reductions.

For the CHP, the budget proposes $10.4 million to fund an additional 180 traffic officer positions which are currently vacant. This is the second phase of a three-year effort to increase the number of traffic officers. The budget also proposes to consolidate the California State Police with the CHP.