The Department of Transportation (Caltrans) is responsible for planning, coordinating, and implementing the development and operation of the state's transportation system. These responsibilities are carried out in five programs. Three programs--Highway Transportation, Mass Transportation, and Aeronautics--concentrate on specific transportation modes. In addition, Transportation Planning seeks to improve the planning for all travel modes, and Administration encompasses management of the department.
The budget proposes expenditures of $6.4 billion by Caltrans in 1998-99. This is about $71 million, or 1.1 percent, more than estimated current-year expenditures.
The budget proposes $5.7 billion for the highway transportation program, less than 1 percent more than in the current year. The increase is the net result of proposed increases in capital outlay support and capital outlay project construction, offset with proposed decreases in expenditures for local assistance.
Of the total expenditures proposed in the department's budget, $5.7 billion is for the Highway Transportation program. This is an increase of $50.4 million, or 0.9 percent, over estimated current-year expenditures.
The major responsibilities of the highway program are to design, construct, maintain, and operate state highways. In addition, the highway program provides local assistance funds and technical support for local roads.
As shown in Figure 8, Caltrans expects that state funds will support $2.9 billion (51 percent) of highway program expenditures. Federal funds make up about $2 billion (34 percent) of the program budget, and the remaining $834 million (15 percent) is reimbursements, primarily from local governments.
Highway Transportation Budget Summary
(Dollars in Millions)
|Estimated 1997-98||Proposed 1998-99||Percent Change From 1997-98|
|Capital outlay support||$779.7||$857.3||$870.3||1.5%|
|Capital outlay projects||2,274.4||2,910.0||3,030.3||4.1|
|aBeginning in 1997-98, the budget shows technical services in the Administration Program.|
|bBeginning in 1997-98, the budget shows equipment expenses (other than telecommunications) distributed to the affected programs.|
Increases in Reimbursed Highway Activities.Figure 8 shows that the budget projects significantly higher reimbursements for Caltrans' highway program in 1998-99. In part, the increase reflects changes in how toll funds are accounted for and who decides how they are used. Previously, these funds were budgeted as state funds and Caltrans determined how they were used. However, Chapter 328, Statutes of 1997 (SB 226, Kopp) created the Bay Area Toll Authority and the Bay Area Toll Account and made the following changes:
The Department of Transportation (Caltrans) requests $870.3 million to support 9,521.4 personnel-year equivalents of staff effort in order to deliver projects in the 1998 State Transportation Improvement Program (STIP). We withhold recommendation on the proposed amount because many of the projects are yet to be identified for programming in the 1998 STIP, and Caltrans indicated that it will revise its proposal in April by which time those projects are better identified.
The budget proposes 9,521.4 personnel-year equivalents (PYEs) of work for the highway capital outlay support program--an increase of 266.3 PYEs (2.9 percent) from the amount estimated in the current year. Capital outlay support staff provide environmental clearance, design and engineering, right-of-way acquisition, and construction oversight on highway capital improvements.
Figure 9 shows both the source of the 9,521.4 PYEs, as well as their proposed uses. Specifically, Caltrans proposes to increase state staff, increase the amount of work to be achieved through cash overtime, and reduce work by consultants. Work to be done by consultants will be limited to continuation of contracted work on toll bridges, design and engineering work on the east span of the San Francisco-Oakland Bay Bridge, and specialty work for which the department does not have staff expertise.
Capital Outlay Support Staffing
|Estimated 1997-98||Proposed 1998-99|
|Supervision and overhead||1,622.0||1,620.2||1,833.1|
|aSTIP = State Transportation Improvement Program; SHOPP = State Highways Operation and Protection Program; TSM = traffic system management; CMAQ = congestion management and air quality; and SLTP = State Local Transportation Partnership.|
Of the total staffing request, about 6,911 PYEs will provide engineering support for individual projects. Figure 9 also shows the proposed allocation of staffing by categories of projects. For instance, the budget projects 2,137 PYEs will be allocated to work on STIP projects. The remaining 2,610 PYEs will provide staff to perform project-related, but not project-specific, functions, including conducting pre-STIP work and other technical services (such as photogrammetry), as well as departmental overhead and supervision.
As we discuss below, Caltrans' proposed capital outlay support staffing level is likely to change during the spring.
Not All Project Support Estimated Based on Specific Projects. Chapter 622, Statutes of 1997 (SB 45, Kopp), requires that the department identify, for each capital outlay project that is expected to receive state funds, the amount of support costs for environmental studies and permits, preparation of plans and specifications and construction management, survey and inspection. However, because not all projects to be programmed in the 1998 STIP were identified at the time the budget was prepared, about 2,480 PYEs of the request are not estimated based on specific projects. The department is currently working with local and regional agencies to identify projects for the 1998 STIP which will be adopted in June. The department advises that it intends to revise the capital outlay support request in April after projects for the 1998 STIP are identified.
Staffing Need for Highway Seismic Retrofit Could Be Lower. As Figure 9 also shows, the budget requests significantly fewer staff for seismic retrofit of highways in 1998-99, mainly because Phase 2 of the seismic retrofit program is winding down. Our review, however, shows that as the program progresses, capital outlay workload for that program could be lower in 1998-99 than the budget projects. As Caltrans revises its staffing request in April, it should also re-estimate the staffing need for this program.
Project Study Report Workload Needs to Be Better Defined and Coordinated. Included in the total capital outlay support request is 469 PYEs of staff to do pre-STIP work, including project scope summary reports (PSSRs) and project study reports (PSRs), and to oversee PSR work done by local agencies. Chapter 622 prohibits projects from being included in the STIP without a complete PSR or major investment study. Caltrans indicated that as operator of the highway system, it will continue to conduct PSRs for highway projects. However, at the time this analysis was prepared, the department did not have a list of PSRs to be conducted by the proposed staffing. Furthermore, because projects in the Regional Improvement program are to be determined by regional transportation planning agencies, it is not clear to what extent regional agencies will be conducting PSR work or how Caltrans' efforts will be coordinated with those of the regional agencies.
Caltrans' PSR efforts will affect the Regional Improvement program in two ways. First, resources expended on pre-STIP work will leave fewer dollars for projects in the STIP. Second, completion of PSRs will be critical in order for regions to program their priority projects. Consequently, it is essential that Caltrans' pre-STIP work is coordinated with regional and local transportation planning agencies such that resources are targeted to produce in a timely manner PSRs for high priority regional projects. Accordingly, as Caltrans revises its capital outlay support request in April, it should identify the PSRs it will conduct for potential regional improvement projects to ensure that the work is coordinated with regional priorities.
No Justification for Increasing Cash Overtime. The budget also proposes to increase significantly the amount of work to be done by cash overtime--by about 271 PYEs, or 86 percent over the current-year base level. Accomplishing work with staff overtime may be reasonable depending on the nature and timing of the workload. However, the department has not provided any justification for the proposed increase.
Withhold Recommendation. Because the department will be revising its capital outlay support request in April, we withhold recommendation on $870.3 million of the department's budget request for 1998-99. In its April revision, the department should identify the support needs for individual projects that are to be programmed in the 1998 STIP, provide an update of highway seismic retrofit workload, identify the PSR work it will be conducting in 1998-99 and how that workload is coordinated with regional agencies, as well as provide justification for any significant increase in the use of staff overtime.
The budget requests appropriations of $871 million in the State Highway Account and $1.2 billion in federal funds for highway capital outlay for 1998-99. We withhold recommendation on these amounts because the department indicated that it will revise the request in April when projects are identified for the 1998 State Transportation Improvement Program.
The budget requests appropriations totaling $2.1 billion
in state and federal funds for highway capital outlay in 1998-99.
Caltrans based the request on the amount of funds projected in
the 1998 Fund Estimate to be available for projects. Our review
shows that the request is overstated. This is because while
additional funds will be available for new projects to be
programmed in the 1998 STIP, a portion of the funds will be used
for project support. Additionally, it is not known at this time
what amount of new capital outlay projects will be programmed for
delivery in 1998-99.
The department indicated that it will revise its capital outlay request in April (as discussed above) when projects for the 1998 STIP are identified and projects to be delivered in 1998-99 are known. Accordingly, we withhold recommendation on the department's capital outlay request pending that revision.
Phase 1 of the highway seismic retrofit program is almost complete. About 97 percent of Phase 2 projects are either complete or under construction. The Department of Transportation anticipates completion of retrofit for all toll bridges other than the Bay Bridge in 2001, with retrofit/replacement of the Bay Bridge complete by the end of 2004.
Following the 1994 Northridge earthquake, Caltrans expanded its seismic retrofit program for state highway bridges, creating a Phase 1 program and a Phase 2 program. Phase 1 includes bridges that Caltrans identified in its first screening, following the 1989 Loma Prieta earthquake. The Phase 2 program includes bridges that Caltrans added as a result of an additional screening that followed the Northridge earthquake. The seismic retrofit program also includes retrofitting all state-owned toll bridges.
For 1998-99, the budget requests a total of 626.1 PYEs for seismic retrofit of highways and toll bridges.
Phase 1 Almost Complete. In 1994, Caltrans established a goal to complete retrofit construction of 1,039 bridges by the end of 1995. Figure 10 (see next page) shows that as of the end of 1997, retrofit of 1,022 bridges, or 98 percent, were complete. Construction is under way on another 14 bridges. The department now anticipates construction to be complete on all Phase 1 bridges by mid-1999. Total construction costs are currently estimated at about $812 million. Together with support cost, Phase 1 is estimated to cost about $1.1 billion.
Majority of Phase 2 Complete; Program Will Continue Into 2002. Caltrans had set targets for all Phase 2 bridges to be under construction by December 1996 and for construction to be complete by December 1997. As Figure 10 shows, of the 1,155 Phase 2 bridges, construction was complete for 968 (or 84 percent) by the end of December 1997, and another 153 were under construction. Because engineering design is yet to be completed on 26 bridges, Caltrans now estimates that construction of all but one of the Phase 2 bridges will be complete by the end of 2002 and the remaining one will be complete by the end of 2005. Caltrans estimates construction costs to be about $1.05 billion. Including support costs, Phase 2 is estimated to cost a total of $1.35 billion.
Scope and Progress
|As of December 31,
(Dollars in Millions)
|Number of Bridges|
|Phase 1||Phase 2|
|Retrofit construction complete||1,022||968|
|Under contract for construction||14||153|
|Design engineering complete||3||8|
|Engineering not complete||0||26|
|Construction complete target||12/95||12/97|
Retrofit of Toll Bridges to Be Complete in 2004.Of the state-owned toll bridges, seven require retrofit. Caltrans has determined that the eastern span of the Bay Bridge and the west span of the Carquinez Bridge cannot be economically retrofitted and should be replaced with new spans. Replacement of the western Carquinez span was planned and funded prior to the retrofit program, and thus is not counted as part of the retrofit program. As of the end of 1997, Caltrans estimated that the toll bridge retrofit program would cost $2.62 billion. Replacement of the Bay Bridge east span is the largest cost component, estimated at $1.28 billion. For 1998-99, Caltrans is requesting 348 PYEs of staff for the program, including contracted consultant services for the design and engineering work for the Bay Bridge east span replacement. The department's current target is to complete retrofit of all toll bridges with the exception of the Bay Bridge in 2001. As regards the Bay Bridge, Caltrans currently expects to complete retrofit of the west span by late 2003 and replacement of the east span by the end of 2004.
Caltrans delivered 93 percent of State Transportation Improvement Program, State Highways Operation and Protection Program, and traffic system management projects proposed for delivery in 1996-97. In addition, the department delivered a number of projects planned for later years as well as 257 seismic retrofit and emergency projects. The total value of projects delivered was $1.4 billion, about 5 percent higher than the amount in 1995-96.
Because of concerns over project delays, the Legislature has enacted various requirements to monitor Caltrans' delivery of state highway projects. Our office is required to report on the department's progress in delivering projects as they are scheduled for construction.
Cumulative Delivery Higher. In 1996-97, the department delivered (defined as ready for award for construction) 500 projects, with a total construction value of $1.4 billion, as shown in Figure 11. The STIP projects delivered included 49 (out of 54) planned for delivery in 1996-97, and seven projects that were advanced from future years. The department delivered 163 State Highways Operation and Protection Programs (SHOPP) projects, including 145 planned for 1996-97 and advanced 18 projects from future years. For traffic system management (TSM) projects, the department delivered 24 projects, all planned for 1996-97. In total, the department delivered about 93 percent of STIP, SHOPP, and TSM projects planned for delivery in 1996-97. Figure 11 shows that the department also delivered seismic retrofit projects and other emergency projects. Compared to 1995-96, total delivery is higher by about 5 percent.
Highway Project Delivery
(Dollars in Millions)
We recommend the adoption of Budget Bill language authorizing the department to use up to $2.1 million for additional state staff to evaluate bridge scour for local bridges, unless local agencies request in writing to conduct their own evaluations.
The state receives federal funds to inspect bridges and evaluate the effect of scouring (water erosion) on bridges that are over water, an activity that is federally required. In the current year, $4.5 million is available for local assistance to evaluate local bridges.
Budget-Year Proposal. Evaluations in the current year were initially to be done by Caltrans through contracting out. However, due to a recent court decision regarding contracting out, the work will not be done in the current year. Instead, the department is proposing to subvene the funds to local agencies in 1998-99 so that they can contract with the private sector for the work directly. Local governments may in turn request Caltrans to perform the work with state staff.
Our review shows that of the alternatives considered, the department's proposal to accomplish local bridge evaluation is the more costly alternative. By Caltrans' own estimation, it would cost the department $2,119,000 to use state staff to do scour evaluation--significantly less than the $5.4 million the department now estimates would be needed if it subvenes the funds to local agencies. For local agencies to contract out the work directly, Caltrans estimates consultant costs to be $4.3 million. Additionally, Caltrans maintains that it will need $1.1 million to add 12.6 personnel-years of staff to administer local agencies' contracting efforts. Performing the work as proposed by Caltrans will therefore cost more than twice as much as doing the work by state staff in part because of the additional administrative overhead and oversight the department claims to be necessary.
To the extent the state can economize on federal dollars for bridge scour evaluations, the freed-up federal dollars can be used for other local bridge repairs and rehabilitation activities.
Proposed Budget Language Should Be Amended.The Budget Bill includes language to allow Caltrans to carry out its proposal. Instead, we recommend that the department conduct the inspections and evaluations unless local agencies request in writing to conduct the work on their own. Consistent with this recommendation, the proposed language should be amended to allow Caltrans to transfer only up to $2.1 million for bridge inspection and evaluation. This would free up at least $3.3 million for local assistance of bridge repairs and other improvements. The amended language under Item 2660-101-0042 would be as follows:
The department shall employ state staff to undertake bridge inspections and bridge "scour" evaluations, and may reduce up to $2,119,000 in Items 2660-101-0042 and 2660-101-0890 combined, and transfer these amounts to Items 2660-001-0042 and 2660-001-0890 respectively for this purpose. The department shall conduct bridge inspection and scour evaluation for local bridges unless local agencies, upon written notification to the department, request to conduct the work on their own.
We recommend adoption of Budget Bill language authorizing the expenditure of funds for the Rural Intelligent Transportation Systems Showcase project only if federal funds are provided in the new federal transportation act.
The department is requesting $2.4 million (including $1.4 million in SHA and $1 million in federal funds) in 1998-99 to participate in the Rural Intelligent Transportation Systems Showcase. The showcase will demonstrate and evaluate the appropriateness of using, in rural areas of the state, intelligent transportation systems (ITS) which apply advanced communication, information, and electronics technologies to solve transportation operations problems.
According to the department, the project, when funded, will be for three years, totaling $11.2 million, including $6.2 million in state funds and $5 million in federal funds. First year costs are estimated at $2.4 million. The department also indicated that the federal funds are pending reauthorization of the federal transportation act.
We believe the project has merit. However, because of the uncertainty of the federal funds, we recommend that Budget Bill language be adopted to authorize the expenditure of state funds only if the federal funds for the project are forthcoming.
Item 2660-001-0042--Of the funds appropriated in this item,
$1.4 million are available for the Rural Intelligent
Transportation System Showcase only if federal funds are approved
by the Federal Highway Administration.
We recommend deletion of $4.5 million requested for increased nighttime maintenance in urban areas because highway sweeping will not need additional material, and the department has adequate equipment to deploy for nighttime maintenance. (Reduce Item 2660-001-0042 by $4.5 million.)
Due to heavy usage of the highway system particularly in urban areas, it is becoming more difficult for the department to close parts of the system during daylight hours to perform routine maintenance work. The budget proposes as a pilot program to increase the amount of nighttime highway maintenance work in two districts--Los Angeles and the Bay Area--and is requesting $8.8 million for the pilot program.
While we think the pilot program is warranted, we recommend that the funding request be reduced by $4,514,000 for the following reasons:
Nighttime Sweeping Should Not Require Additional Material. The budget requests $944,000 for additional material in order to do nighttime sweeping of the highways. We see no reason, and the department can provide no justification, why sweeping at night would necessitate additional material. Accordingly, this amount should be deleted.
Equipment Used in the Day Can Be Used at Night.The department is requesting $4.7 million for additional equipment for the pilot program. Additional equipment includes more of the same types of equipment currently used during daytime maintenance and special equipment, such as lights and light trailers, that are needed only for night work. Our review shows that of the request, $1.2 million will be used for light trailers. The remaining equipment requested is the same types of equipment as those used for daytime maintenance. Because the department proposes to only shift a part of the districts' maintenance to nighttime work, there is adequate existing equipment (used for daytime work) that can be used more intensively, for nightwork as well. Accordingly, we recommend that $3,570,000 be deleted.
We recommend reduction of $800,000 requested to
reimburse the California Highway Patrol for traffic control
because experience shows that the department has not used the
amounts provided in the past. (Reduce Item 2660-001-0042 by
When the department does highway maintenance, it often uses California Highway Patrol (CHP) officers to provide traffic control services to ensure work site safety. In the current year, the budget includes $1.4 million to reimburse CHP for these services.
For 1998-99, the budget requests an increase of $720,000 for CHP to provide similar services for the nighttime maintenance pilot program. (See earlier discussion.) While we think that the request for CHP services is justified, our review shows that Caltrans' current expenditures for the use of CHP services are substantially lower than authorized. In fact, based on reimbursements made to CHP, Caltrans only expended about $566,000 in 1996-97 and $297,000 for the first six months of 1997-98 for CHP services at highway maintenance work sites. The CHP projects total current-year services at about $500,000. Based on this experience, we do not think that the department will use $2.1 million of CHP services in the budget year and, therefore, the base amount should be reduced. Accordingly, we recommend a reduction of $800,000 to provide ongoing funding of about $600,000 and a one-time increase of $720,000 for the nighttime maintenance pilot project.
The Department of Transportation is under court order to control pollutants in stormwater runoff from highways and other facilities in Los Angeles and San Diego. The compliance cost in 1998-99 will be about $31 million. Future costs could be even higher. We recommend the adoption of supplemental report language directing the department to report on future costs of cleanup and actions that can be taken to address the problem.
In late 1994, a federal court ruled that Caltrans had failed to comply with the provisions of the federal Clean Water Act with respect to pollution levels in stormwater runoff from highways and other Caltrans facilities in the Los Angeles area. The court required Caltrans to reduce pollution in stormwater runoff, including cleaning annually all drain inlets in the Los Angeles basin and to undertake studies to retrofit storm drains. Since 1996-97, the department has been provided about $18 million annually for stormwater cleanup in the Los Angeles area.
Caltrans Sued for Violation in San Diego Area.In September 1996, Caltrans was sued for violation of the Clean Water Act because it was operating without a discharge permit in the San Diego area. (The department was subsequently issued a permit in April 1997.) Caltrans has proposed a settlement regarding the court case (a consent decree) which is consistent with requirements of the regional discharge permit relating to facility planning, construction, maintenance and operation. The consent decree will be implemented over a four-year period, beginning in 1997-98. Activities to be carried out pursuant to the consent decree include cleaning drain inlets, continued inspection of drains and runoff, pilot studies for treatment of runoff, and erosion control projects. The department anticipates that the consent decree will be approved by the court in February.
Multimillion Dollar Costs for Consent Decree.Caltrans estimates the cost of complying with the terms of the consent decree to be about $34 million over four years. The department will be submitting a deficiency appropriation request to cover the cost for the current year. For 1998-99, the budget requests $12.9 million to carry out the requirements of the consent decree.
Compliance Cost Could Continue to Increase. In total, complying with court orders regarding stormwater cleanup in Los Angeles and San Diego areas will cost about $31 million in 1998-99. Costs will probably continue at that level in 1999-00. Beyond that, compliance costs are unknown and could continue to increase. This is because, in the case of Los Angeles, it is not clear what the court will order the state to do after the required studies are completed. If the state is required to retrofit storm drains, the potential cost could be major--potentially in the hundreds of millions of dollars. Additionally, it is not clear whether the issue of stormwater cleanup will apply to the rest of the state and to what extent Caltrans will be required to take mitigating and remedial actions. For instance, Caltrans indicates that a suit was filed in 1996 relating to the San Francisco Bay.
Caltrans Should Advise Legislature.Because of the potential cost impact to state transportation funds, we think that the department ought to inform the Legislature on actions the department can and plans to take statewide, such as modifying construction specifications, to ameliorate the problem of stormwater runoff, and the potential cost impact of these actions. We recommend that the following supplemental report language be adopted:
By December 1, 1998, the Department of Transportation shall
report to the Legislature on the projected costs of stormwater
cleanup for 1999-00 through 2003-04. The report shall also
identify actions that the department plans to take statewide to
address the problem of stormwater runoff and the potential impact
on state transportation funds.
We recommend a reduction of $244,000 from Item 2660-001-0042 because the budget overestimates the department's cost to operate the new San Bernardino Office Building in 1998-99.
In 1995, Caltrans entered into a lease purchase agreement for office and parking facilities in order to consolidate its offices in the Riverside-San Bernardino region.
Caltrans has taken possession of the new facilities which will be jointly managed by Caltrans and the Department of General Services. Costs of the facilities will be covered by lease payments made by Caltrans and other state tenants. The budget projects the 1998-99 cost to be $7,686,000. To fund its part of the cost, Caltrans is requesting an increase of $1,293,000. Our review, however, shows that based on Department of General Services information, total costs in 1998-99 will be $7,442,000, or $244,000 lower than Caltrans' estimate. Accordingly, we recommend the overbudgeted amount of $244,000 be deleted.
The Mass Transportation program provides operating and capital support for the implementation of urban, rural, and interregional public transportation services, primarily bus and rail transportation. The program has two main elements--state and federal mass transit which primarily provides federal funds to local agencies for bus and rail services, and rail transit capital which provides funds for intercity rail services and transit capital improvement grants to local agencies.
For 1998-99, the budget proposes $376.9 million for mass transportation, which is $3.5 million, or 0.9 percent, less than estimated current-year expenditures. As shown in Figure 12 (see next page), the budget proposes a significant increase in the state and federal mass transit element, mainly due to projected increases in federal funds for local assistance for mass transit purposes. In contrast, rail transit capital expenditures are projected to decrease. This reflects the net result of a proposed increase in support for intercity rail service and a reduction in proposed expenditures for transit capital improvement grants to local agencies.
No Public Transportation Account Funds for 1998-99 Transit Capital Improvement Projects. The Public Transportation Account (PTA) has been the primary source of funds for transit capital improvements. However, as we discuss in the Crosscutting Issues section of this chapter, the PTA will face a deficit in 1998-99 without a transfer of $30.5 million in SHA funds. The budget proposes no PTA funding in 1998-99 for new transit capital improvement projects. Additionally, it projects PTA expenditures of only $17.8 million to pay for about $82.8 million in prior project commitments.
Mass Transportation Expenditures
(Dollars in Millions)
|State and federal mass transit||$29.7||$40.4||$53.8||33.2%|
|Rail transit capital||233.4||339.9||323.0||-5.0|
The outcome of negotiations over the transfer of the Capitol service will affect Caltrans' budget request for that service. We recommend that Caltrans, along with the Secretary for Business, Transportation and Housing, report to the Legislature at budget hearings on the status of the transfer negotiations.
Due to the lack of progress in negotiating an agreement for the transfer of the San Diegan and the San Joaquin services, Caltrans will most likely continue to administer and operate these services in the budget year.
The intercity rail program was established to provide motorists with a safe, efficient, and cost-effective transportation alternative that reduces congestion and improves air quality. The state currently supports and funds intercity rail passenger services on three corridors--the San Diegan in Southern California, the San Joaquin in the Central Valley, and the Capitol in Northern California. All train routes are supplemented and integrated by a dedicated feeder bus service.
Currently, Caltrans contracts with Amtrak for the operation and maintenance of the intercity rail services. Caltrans staff, along with advisory committees, plan route schedules and project ridership and revenues.
Chapter 263, Statutes of 1996 (SB 457, Kelley), authorized the transfer of the administration of intercity rail service from Caltrans to regional joint powers boards and authorities (comprised of the jurisdictions through which each of the three corridors operate). In order for the transfer to take place, regional boards must submit a business plan to the Secretary for Business, Transportation and Housing (BT&H) that reflects cost reductions in providing these services. The state and joint powers boards must sign an interagency transfer agreement with specified provisions in order to effectuate a transfer of the service. The expectation is that with regional boards administering the intercity rail service, administrative costs will decrease, and service will improve through better coordination of local commuter and intercity rail services.
Capitol Corridor Transfer Status. As of December 1997, only the Capitol Corridor Joint Powers Authority (CCJPA) has been established and is negotiating an interagency transfer agreement with Caltrans and the Secretary for BT&H.
Two main issues are still under negotiation. First, the CCJPA must demonstrate operating or administrative cost-savings. Second, the authority has yet to negotiate with Amtrak on the costs of the service and on legal liability issues. Until these issues are resolved, it is unlikely that a transfer will occur.
At the time this analysis was prepared, Caltrans did not have an estimated timetable for the transfer. Consequently, the budget assumes that Caltrans will continue to administer the service for all of 1998-99. Depending on when the transfer occurs, total support costs to provide the Capitol service will likely be lower and the amount provided for service support should be adjusted accordingly. In order that the Legislature may make the necessary budgetary adjustment, we recommend that Caltrans, along with the Secretary, report to the Legislature during budget hearings on the status of the transfer.
San Diegan and San Joaquin Transfer Status.In
the San Diegan corridor, members of the Southern California
Regional Rail Authority (SCRRA), and other corridor
jurisdictions, have established an interim board to examine the
feasibility of the transfer. The SCRRA will release the results
of its study by late spring 1998. In the San Joaquin corridor, no
joint powers board has been established. Consequently, Caltrans
will in all likelihood continue to administer these two services
in the budget year.
We withhold recommendation on $64.5 million requested for existing intercity rail services in 1998-99 because the amount needed will likely be lower. Specifically, more current cost estimates will be forthcoming from Amtrak by April 1998. We recommend that the department provide the updated cost estimates at budget hearings. Based on that information, the Legislature should adjust accordingly the amount of support for intercity rail services.
The budget requests $64.5 million to support continuation of the current level of intercity rail services in 1998-99. This amount includes estimated Amtrak costs of $53.7 million to provide the services and $10.8 million for Caltrans' support and marketing of the program. Our review shows that the amount needed will likely be lower.
Caltrans Costs May Be Less. As we discussed above, the budget assumes that Caltrans will continue to administer all three services in 1998-99. However, administration and marketing costs may be lower for the department if the Capitol service is transferred during the budget year.
Amtrak Costs for Current Service Will Be Adjusted.The budget request of $53.7 million for Amtrak to continue existing services is based on cost estimates provided by Amtrak in July 1997. Discussions with Amtrak indicate that final cost estimates will be available by April, and costs may in fact be lower.
Withhold Recommendation. Because costs to provide the current level of intercity rail service will likely change by April, we withhold recommendation on $64.5 million requested by the department. We further recommend that the department provide a cost estimate update at budget hearings and that the Legislature adjust the amount based on the updated information.
We recommend that the Legislature delete $4.3 million for the proposed Stockton-Sacramento service extension on the San Joaquin because the proposal is premature. (Reduce Item 2660-001-0046 by $4.3 million).
The budget proposes $4.3 million to extend intercity rail service between Sacramento and Stockton on the San Joaquin corridor. Currently, a bus service connects the two cities. We believe that the request is premature. Based upon conversations with the private railroad company representative, an operating agreement needs to first be negotiated between the railroad and Caltrans/Amtrak for use of the tracks. This agreement, in turn, depends on Caltrans and the railroad agreeing on the specific track improvements that need to be made and on the share of costs each will pay. Once there is an agreement, construction of track improvements will take at least 12 months to 15 months, thus it is unlikely that the tracks will accommodate passenger trains in the budget year.
Without the track improvements, we believe that the proposal is premature. Accordingly, we recommend a reduction of $4.3 million for the proposed expansion.
We withhold recommendation on the proposed $5.1 million to add service on the Capitol corridor because Amtrak may revise the cost estimates for the service. We further recommend that Caltrans report on these cost estimates during budget hearings in order that the Legislature may adjust the amount accordingly.
The budget also proposes $5.1 million for additional trips on the Capitol corridor. As we pointed out above, Amtrak will be providing more updated cost estimates by April, and the cost for the service expansion may be revised to reflect more current estimates. Accordingly, we recommend that Caltrans provide an update on Amtrak's contract costs for the additional service on the Capitol corridor. In addition, we recommend that the Legislature adjust the proposed amount based upon Caltrans' updated information.
The California Highway Patrol (CHP) is responsible for ensuring the safe, lawful, and efficient transportation of persons and goods on the state's highway system and to provide protective services and security for state employees and property. To carry out its responsibilities, the department administers four programs: (1) Traffic Management, (2) Regulation and Inspection, (3) Vehicle Ownership Security, and (4) Protective Services. The first three programs are funded primarily with Motor Vehicle Account funds. Protective Services are funded by fees charged to state agencies receiving CHP services.
The budget proposes $872.4 million to support CHP in 1998-99. This is approximately $2.3 million or 0.3 percent above estimated current-year expenditures. The increase is primarily the result of (1) an increase of $4.9 million to continue to provide laptop computers in patrol cars, (2) an increase of $454,000 in reimbursed services, and (3) a reduction of $3.4 million in protective services due to the completion of one-time security improvements in state facilities.
The budget proposes $54.8 million from the State Highway Account (SHA) to fully fund the California Highway Patrol's Commercial Vehicle Inspection program for 1998-99. We recommend the enactment of legislation to specify the appropriate funding mix of Motor Vehicle Account and SHA funds for this program.
The CHP operates and staffs 15 truck inspection stations throughout the state through the Commercial Vehicle Inspection program. Through this program, trucks are weighed and inspected to promote truck safety, to ensure that registration and weight fees are collected, and to protect the highways from excessive truck weights. Approximately 300,000 trucks are inspected on an annual basis and 600,000 safety violation citations are issued.
State Highway Account Provided Partial Funding in the Past. The SHA funds the construction of truck inspection stations. Up until 1991, MVA revenues were used to fully fund CHP's operation of the truck inspection program. Beginning in 1992 and through 1996-97, ongoing support for the program had been funded with a mix of MVA and SHA funds. Typically, SHA contributed between 20 and 40 percent of the program's total costs.
Current Year Program Funded Solely by SHA.As part of the solution to avert a deficit in MVA for the current year, the Legislature funded the Commercial Vehicle Inspection program fully with SHA in 1997-98. The Legislature also adopted Budget Bill language expressing its intent that in future years, 60 percent of the program be funded with MVA and 40 percent with SHA. (This language was subsequently stricken from the Budget Act by the Governor.)
Full Funding From SHA to Continue.For 1998-99, the budget proposes to fully fund the Commercial Vehicle Inspection program with $54.8 million in SHA funds. The main purpose of the proposal is to maintain the solvency of MVA. (Please see related write-up in the Crosscutting Issues section.)
Legislature Should Determine Funding Mix.In the past, SHA funds have been used mainly for highway construction, operations and maintenance, while MVA funds have been used for vehicle and driver regulation activities. Because truck weight fees are deposited into SHA, using SHA to pay for part of the cost of the truck inspection program is reasonable. However, what the appropriate funding mix of MVA and SHA ought to be is a decision that the Legislature should make. Without that determination, as the MVA condition worsens, it is very likely that SHA funds will be used to fund not only CHP's truck inspection program, but potentially other traffic enforcement functions, such as the operation of traffic management centers.
Accordingly, we recommend enactment of legislation to specify
on an ongoing basis, the statutory funding mix of MVA and SHA for
CHP's truck inspection program. Specifying a funding mix will
also facilitate the Department of Transportation's (Caltrans')
projection of available resources for transportation projects.
We recommend that CHP's reimbursement authority be increased by $720,000 to reflect an increase in reimbursed work related to highway maintenance .
The CHP provides traffic control and enforcement services around highway maintenance work sites. In 1996-97, Caltrans reimbursed CHP $586,000 for such services . For 1998-99, Caltrans is proposing to significantly increase the amount of highway maintenance work conducted at night in major urban areas.In order to provide for adequate CHP service for the proposed amount of nighttime maintenance work, Caltrans is requesting an increase of $720,000 for CHP services. This amount, however, is not reflected as a reimbursement in CHP's budget. Accordingly, we recommend reimbursement authority to CHP be increased by $720,000
The Department of Motor Vehicles (DMV) is responsible for protecting the public interest in vehicle ownership by registering vehicles and for promoting public safety on California's roads and highways by issuing driver licenses. Additionally, the department licenses and regulates vehicle-related businesses such as automobile dealers and driver training schools, and also provides revenue collection services for state and local agencies.
The budget proposes total expenditures of $584.1 million for support of the DMV in 1998-99. This is an increase of $ 10.8 million, or 1.9 percent, above estimated current-year expenditures. About $310.1 million (53 percent) of total support will come from the Motor Vehicle Account (MVA) and $224.1 million (38 percent) from the Motor Vehicle License Fee Account (MVLFA). The remaining support will be funded primarily from the State Highway Account (SHA) and reimbursements.
Use of motor vehicle license fee revenues and State Highway Account revenues for the Department of Motor Vehicles support has increased significantly. In 1998-99, vehicle license fees will pay for 38 percent of departmental support.
The department is supported primarily by MVA and MVFLA. It is also funded from weight fees on trucks which are deposited into the SHA. Current law directs the department to allocate its costs of registering vehicles, collecting weight fees and vehicle license fees to the various accounts in proportion to the amount of revenues each account receives.
Vehicle license fees are an in-lieu property tax which, after deducting for DMV and Franchise Tax Board costs, are subvened to local governments.
Vehicle License Fee Support for DMV Increasing.Vehicle license fees are by far the bulk of revenues collected by DMV. As a consequence, the department allocates the bulk of its vehicle registration and compliance program costs to vehicle license fees. For 1998-99, the budget projects $3.8 billion in vehicle license fee revenues of which $2.9 billion will be deposited in MVLFA and $937 million in the Local Revenue Fund. The MVLFA revenues are apportioned to local governments for general fund purposes. Revenues in the Local Revenue Fund are spent for specified purposes, primarily health and social services which were transferred, as part of the 1991 realignment of state/county programs, to local governments . (Please see discussion in the 1998-99 Budget: Perspectives and issues, Part IV.)
Figure 13 shows the proportion of total DMV support from MVLFA from 1994-95 through 1998-99. As the figure shows, vehicle license fees have paid for a greater proportion of DMV expenditures in the current year compared to previous years. The budget proposes an even greater use of vehicle license fees for the department's support.
Support From MVA and MVLFA
(Dollars in Millions)
|Percent of Total||MVLFA||Percent of Total|
|aIncludes weight fee revenues.|
Increase in MVLFA Revenues to DMV Means Reduction to Local Governments. Our review shows that not only has the amount of vehicle license fee revenues been supporting more and more of DMV costs, the proportion of vehicle license fees used for that purpose has also increased. For instance, in 1994-95, about 5.7 percent of MVLFA revenues were used to support DMV (with most of the remainder going to local governments), as compared to 7.2 percent for the current year, and 7.6 percent proposed for the budget year. Correspondingly, the proportion of fee revenues available to local governments is reduced.
State Highway Account Support of Department Will Also Increase.For 1998-99, the budget proposes $36.8 million in SHA support for the department, a 7.6 percent increase over the current-year amount and almost 22 percent more than the amount provided in 1996-97.
Cost Allocation Methodology Will Result in Continued Shift to MVLFA and SHA. Our review shows that vehicle license fee revenues have grown at rates that far exceed the growth rates in vehicle registration fee and weight fee revenues. Specifically, vehicle license fee revenues grew at an average annual rate of 5.5 percent since 1994-95, compared to an average annual rate of 3 percent for weight fees and 1.2 percent for vehicle registration fees. As vehicle license fees and weight fees grow faster relative to vehicle registration fees, an increasing proportion of DMV's vehicle registration and collection costs will be allocated to MVLFA and SHA based on the current cost allocation methodology.
It will cost the Department of Motor Vehicles about $15.9 million in 1998-99 to continue to implement the financial responsibility legislation which will sunset January 2000. Initial data show a drop in the rate of vehicle registration renewal.
We recommend the adoption of supplemental report language directing the DMV to report by April 1999 on a pilot project to test electronic transfer of insurance data in order to assist the Legislature in determining how the department can most cost-effectively implement the financial responsibility requirement if it is extended.
Chapter 1126, Statutes of 1996 (AB 650, Speier) requires that beginning in 1997, vehicle owners provide proof of financial responsibility (liability insurance) as a condition for renewing a vehicle registration. The requirement sunsets on January 1, 2000.
To implement Chapter 1126, the DMV requires that vehicle owners submit insurance information with their vehicle registration renewal application. The department rejects applications that lack complete insurance information; however, it does not verify the authenticity of the information in most cases. Instead, in order to prevent fraudulent reporting, it verifies information on a sampling basis. For the current year, the department estimates costs to implement the requirement at about $17.8 million. It is requesting $15.9 million for the program in the budget year.
Vehicle Registration Renewal Rate Has Dropped.Data collected by the department show that compared to 1996, the rate of registration renewal (the number of registered vehicles that renew their registration) has declined since the implementation of Chapter 1126. Figure 14 shows that renewal rates in the first half of 1997 declined by about 6 percent. Similarly, it was about 4 percent lower in the third quarter of 1997 compared to the same period in 1996.
Vehicle Registration Renewal Rates
|1997 Versus 1996|
|aData not yet available.|
Because vehicle registration fee revenues make up about 75 percent of MVA revenues, a drop in vehicle registration renewal would negatively impact the account's condition. In fact, departmental data show that despite an increase in first-time registration, total registration revenues (including first-time and renewal registration) dropped by $25 million, or about 4 percent, in the first 11 months of 1997 compared to the same period in 1996.
Current Method of Showing Proof of Financial Responsibility Is Inefficient and Ineffective. As we pointed out in last year's Analysis (page A-62), DMV's current method of requiring proof of financial responsibility is inefficient. Specifically, relying on paper evidence of insurance (a copy of an insurance policy or coverage card) provided through the mail results in delays in processing vehicle registration and fee remittance. For instance, the department has experienced a significant drop in the rate that fee remittances are deposited on the same day they are received. Because of the longer processing time, the department also has to increase staff to handle the same volume of registrations.
The method is also not effective because the department has no means of verifying all documents sent in by vehicle owners. Currently, it verifies documents only on a limited sample basis. Additionally, the department has no way of ascertaining that insurance coverage on vehicles remains in effect and is not terminated after a vehicle is reregistered.
Department Plans to Pilot Test Electronic Data Transfer. Electronic data transfer of insurance information would greatly enhance DMV's efficiency and effectiveness in implementing Chapter 1126 as it would virtually eliminate fraudulent insurance information. The department indicates that several insurance companies have volunteered to pilot test electronic transfer of insurance information. The department anticipates the pilot to last six to eight months, beginning in July 1998.
Chapter 1126 Will Sunset in 2000.Whether Chapter 1126 ought to be extended would in part depend on its effectiveness in reducing the number of uninsured motorists. That in turn depends on how effectively DMV can implement the financial responsibility requirement. Results of the pilot project will be useful to the Legislature in determining how the program should be improved if Chapter 1126 is to be extended. To assist the Legislature in doing so, we recommend that supplemental report language be adopted that requires the department to provide the pilot results in a timely manner.
By April 1, 1999, the Department of Motor Vehicles shall report on the impacts of the implementation of Chapter 1126, Statutes of 1996 (AB 650, Speier). The report shall include, among other things, an assessment of the impact of the program on vehicle registration renewal and revenues to the Motor Vehicle Account. In addition, the report shall provide an evaluation of the electronic data transfer pilot project in order to determine the department's cost and effectiveness in implementing the legislation.
Five years after a database redevelopment project failed, the department is still no further along in improving or redesigning its information technology system. The department now intends to pursue a new strategy to improve the system. We recommend that the department and the Department of Information Technology (DOIT) provide an update to the Legislature at budget hearings on the overall plan, time schedule, cost, and technological soundness of the new project.
We further recommend that any funding provided for information technology system improvement in 1998-99 be made contingent upon DOIT providing a full evaluation of the department's project proposal to the Legislature, including an assessment of the Department of Motor Vehicles' staff capability to manage the project.
In 1994, DMV abandoned an ambitious but flawed project to redesign its computer database. The purpose of the project was to redesign an obsolete information technology system in order that it could be easily updated and maintained to meet the department's expanding workload. Since then, the department has been pursuing a new project to improve its information technology system. The process began in 1994-95 with an independent consultant evaluation and in 1996-97 the Legislature provided $5.8 million for three projects to begin to implement the consultant's recommendations.
For the current year, the department's budget includes $5.1 million to continue these three projects for a second year.
Two of Three Projects Will Not Proceed.One of the three projects--business process reengineering, an effort to streamline departmental functions for higher efficiency, is ongoing and is estimated to cost about $2 million in the current year. The department, however, has suspended the other two projects--rewriting outdated computer programs and replacing custom database software with industry standard software--due to unanticipated high costs to complete the projects.
Department Intends New Project. Instead, the department is pursuing a new project to improve its information technology system. Specifically, it plans to develop a new database using, where feasible, "off-the-shelf" software systems that can be procured commercially. According to DMV, a project report had been submitted for review by DOIT at the time this analysis was prepared.
The budget requests no funds for the new database redevelopment project. Depending on DOIT and the Department of Finance's Technology Investment Review Unit's (TIRU) review of the project proposal, the department may submit a budget amendment for 1998-99.
Five Years After Project Failure, Department No
Closer to Solution.Because DMV's existing
information technology system is outdated, it is costly and
difficult to maintain. Consequently, the system must be improved
in order that the department can effectively carry out its
statutory responsibilities. However, the department has shown no
progress in improving the system in the last five years. Before
more funds are expended and time spent on any improvement
efforts, we think that the Legislature should have some assurance
that further efforts or projects (including the new project) are
technologically sound, the cost estimate and time schedule for
the projects are realistic, and the department has the necessary
staff expertise to manage the projects to completion.
Accordingly, we recommend that the department, together with the DOIT, report at budget hearings on DMV's project proposal, DOIT's assessment of the project's technological soundness, and potential alternatives to improve the current system. We further recommend that any funding provided in 1998-99 for the improvement of DMV's information technology system be made contingent upon DOIT providing a full assessment of the feasibility of any proposed project no later than September 1, 1998. The assessment should comment on the department's ability to manage the project to completion.
The Department of Motor Vehicles will take until late 1998 to modify its computer systems to meet "year 2000" requirements. As a result, the department will not be able to collect an annual smog abatement fee on certain vehicles until 1999.
Chapter 802, Statutes of 1997 (AB 208, Migden) requires certain newer model vehicles that are exempt from the biennial smog check requirement to pay a $4 annual smog abatement fee. Fees are to be collected by DMV and deposited in the Vehicle Inspection and Repair Fund for specified uses. Chapter 802 is effective January 1, 1998.
Year 2000 Compliance Will Delay Fee Collection. Because the department is in the process of modifying its computer system to meet "year 2000" requirements, it indicates that it will not be able to collect the smog abatement fee until 1999. As a consequence, an estimated $12 million in abatement fee revenues will not be collected in 1998. (Please see our discussion under the Department of Consumer Affairs [Item 1110] in the General Government chapter.)
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