The Department of Transportation (Caltrans) is responsible for planning, coordinating, and implementing the development and operation of the state's transportation systems. These responsibilities are carried out in five programs. Three programs--Highway Transportation, Mass Transportation, and Aeronautics--concentrate on specific transportation modes. Transportation Planning seeks to improve the planning for all travel modes and administration encompasses management of the department.
The budget proposes expenditures of $7.5 billion by Caltrans in 2000-01. This is about $464 million, or 7 percent, more than estimated current-year expenditures. This does not reflect the Governor's initiative related to increased programming of transportation projects in the 2000 State Transportation Improvement Plan (STIP). It does, however, include increased one-time expenditures for rail and ferries.
The budget proposes expenditures of $6.5 billion for the highway transportation program, about $367 million, or 6 percent, more than estimated current-year expenditures. Highway transportation comprises approximately 87 percent of the department's proposed budget.
Of the total expenditures in the department's budget, $6.5 billion, is for the Highway Transportation program. This is an increase of $367 million, or 6 percent, over estimated current-year expenditures. The proposed increase is primarily in capital outlay expenditures for highway construction.
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 1, Caltrans expects that state funds would support about $2.8 billion (43 percent) of highway program expenditures. Federal funds would fund about $2.9 billion (43 percent) of the program, while the remaining $866 million (13 percent) would be paid through reimbursements, primarily from local governments.
|Department of Transportation
Highway Transportation Budget Summary
|1998-99 Through 2000-01
(Dollars in Millions)
|Element Requirements||Actual 1998-99||Estimated 1999-00||Proposed 2000-01||Percent Change From 1999-00|
|Capital outlay support||$930.0||$980.1||$962.3||-1.8%|
|Capital outlay projects||2,031.4||2,840.7||3,309.2||16.5|
We withhold recommendation on $962 million and 10,898 personnel-years (PYs) of staff to deliver projects in the 2000 State Transportation Improvement Program (STIP) because the California Transportation Commission plans to adopt the 2000 STIP in July 2000 to significantly increase the number of projects programmed in the STIP, as part of the administration's proposal. Caltrans indicates that it will revise its capital outlay support request in May to accommodate the anticipated change in workload.
Withhold Recommendation on Capital Outlay Support. The budget proposes $962 million to fund capital outlay support, a 1.8 percent decrease from the current-year's estimated expenditures. The decrease is due largely to a reduction in capital outlay work for storm water cleanup. The department's overall expenditures related to storm water are proposed to increase substantially in the budget year. However, these expenditures will be primarily in the maintenance, legal, and administration programs, rather than capital outlay support.
Caltrans determines its capital outlay support staff request on the basis of workload in the STIP. In view of the Governor's proposal to accelerate $3.6 billion in programming capacity to the 2000 STIP, Caltrans is currently working, in coordination with regional transportation planning agencies (RTPAs), to identify new projects for programming. At the time this analysis was prepared, Caltrans was unable to estimate the total number and value of projects that would be programmed in July 2000. Under the new schedule, Caltrans and RTPAs will submit their revised STIP programming proposals by June for adoption in July. In conjunction with this effort, the administration will make a revised budget request for capital outlay support in the May revision of the budget. Pending the receipt of that revised workload request, we withhold recommendation on the department's capital outlay support budget.
Phase 1 of the highway bridge seismic retrofit program is 99 percent complete, with work on the remaining two bridges under construction. Phase 2 is 96 percent complete; of the remaining projects, one-half are in the construction phase, and the other half under design. The department currently estimates that Phase 1 will be completed by March 2000, while most of Phase 2 will be completed by the end of 2005. Seismic retrofit of the state-owned toll bridges has been delayed on three of the seven bridges and is now scheduled to be completed in 2006.
Caltrans inspects all state and local bridges at least once every two years. Since 1971, when the Sylmar earthquake struck the Los Angeles area, Caltrans has been engaged in an ongoing bridge retrofit program. The retrofit program involves a variety of different improvements, depending on the needs of the particular structure. The improvements include strengthening the columns of existing bridges by encircling certain columns with a steel casing, adding pilings to better anchor the footings to the ground, and enlarging the size of the hinges that connect sections of bridge decks to prevent them from separating during seismic activity.
Following the 1994 Northridge earthquake, Caltrans expanded its seismic retrofit program for state highway bridges, creating a Phase 1 and a Phase 2 program. Phase 1 includes 1,039 bridges identified for strengthening after the 1989 Loma Prieta quake at a cost of $815 million, as shown in Figure 2. As of January 2000, 1,037 of those projects were completed and Caltrans anticipates completing retrofit of the last two bridges in March 2000. Phase 2 consists of an additional 1,155 bridges that were identified for strengthening following the 1994 Northridge earthquake. To date, Caltrans has completed the work on 1,120 of the Phase 2 bridges and estimates total Phase 2 costs to be $1.05 billion. Caltrans estimates that with the exception of one or two bridges (with very complex design work), all Phase 2 projects will be completed by the end of 2005.
|Highway Seismic Retrofit Program
Scope and Progress
|As of January 2000
(Dollars in Millions)
|Number of Bridges|
|Phase 1||Phase 2|
|Retrofit construction complete||1,037||1,120|
|Under contract for construction||2||11|
|Design not complete||--||24|
|Estimated construction cost||$815||$1,050|
|Construction complete target||2000||2005|
Caltrans is also currently retrofitting seven of the state's toll bridges for seismic safety at an estimated cost of $2.6 billion, as shown in Figure 3. Replacement of the east span of the Bay Bridge is the largest cost component, estimated at $1.3 billion. Caltrans currently estimates this to be completed in summer 2005, delayed from an original schedule of fall 2004. Caltrans reports the delay to be partly due to the United States Navy's refusal to grant an encroachment permit to drill on Yerba Buena Island. With respect to the west span of the Bay Bridge, the department estimates that construction will be completed in summer 2006, also one year later than planned, due to environmental litigation and traffic conditions requiring a longer construction time. Additionally, Caltrans reports one year delays (from last year's schedule) in completing the Richmond-San Rafael and Vincent Thomas bridges.
|Toll Bridge Seismic Retrofit Program|
|(Dollars in Millions)|
|Bridge||Target Completion Date||Cost|
|San Francisco-Oakland Bay Bridge|
|New east span||2005||$1,285|
|San Diego Coronado||2002||93|
A new statewide National Pollutant Discharge Elimination System (NPDES) permit for storm water discharges requires Caltrans to conduct various activities, including the development of an inventory of approximately 150,000 storm water discharge locations. A plan to implement the permit has not yet been approved by the State Water Resources Control Board (SWRCB). We recommend budget bill language to provide $41 million for compliance with the NPDES permit contingent upon approval of the plan by SWRCB.
The federal Clean Water Act requires that the discharge of pollutants into waters of the United States from any point source comply with a NPDES permit. Pollutant discharges from Caltrans facilities include various metals, petroleum products, pesticides, and general litter. In July 1999, Caltrans received a statewide NPDES permit from the SWRCB for storm water discharges from the state highway system and any other Caltrans facility. Prior to the statewide permit, Caltrans had nine regional permits that governed activities in its 12 districts. In order to comply with the statewide permit, Caltrans is required to submit a statewide plan for implementation. This plan has been submitted to SWRCB, but has not yet been approved.
Requirements of Statewide Permit Extensive. The permit requires Caltrans to undertake a number of new activities including the following:
The permit also reflects the U.S. Environmental Protection Agency's new requirement that discharges from storm drain systems must not violate water quality standards. According to Caltrans, discharges from its facilities (and those owned and operated by local municipalities) regularly contribute to violations of these standards. Furthermore, constructing and operating treatment facilities to purify this water would cost billions of dollars. As the first major agency in the state faced with this new requirement (it also applies to all municipalities with populations greater than 10,000), the permit also requires Caltrans to conduct extensive research into how to comply with the new requirement.
Budget Proposal Is Premature. The budget proposes $41 million and 150 PYs to fund compliance with the NPDES permit. This is over five times what the department is spending on compliance in the current year under the various regional permits. While we concur with the department's appraisal that the new permit will likely require a higher level of funding, we find the proposal to be premature. This is because Caltrans has not yet received approval for the storm water management plan which details how the department will implement the permit. The SWRCB indicated that the plan Caltrans submitted in November 1999 is unsatisfactory and will require substantial revision. As a result, the Legislature is unable to evaluate whether the proposed $41 million is necessary (or adequate) to implement the plan and comply with the permit. Under these circumstances, we recommend budget bill language to make the proposed $41 million available only upon the plan's approval. Specifically, we recommend the following budget bill language be adopted:
The department shall not expend any of the $41 million appropriated in this item for compliance with the statewide National Pollutant Discharge Elimination System permit until a management and implementation plan has been approved by the State Water Resources Control Board. Any funds not encumbered to comply with the management and implementation plan shall revert to the State Highway Account on June 30, 2001.
Depending on the complexity of a transportation project, it is not uncommon to take ten years or more to prepare the project for construction. As congestion on the state's highways and roads grows worse each year, Caltrans and local agencies have been under increased pressure to speed up project delivery. Timely delivery of transportation projects is important for two reasons. First, delay inconveniences the traveling public as congestion grows worse over time. Second, delay in project delivery is an inefficient use of tax revenues as it results in higher costs due to the extra time spent on projects, as well as inflationary pressure on construction material, right of way acquisition, and labor costs.
Transportation projects typically involve the following phases of work: identify project need, scope, and schedule; program the project in the STIP or State Highway Operation and Protection Program (SHOPP) (for projects using state funds); and complete environmental review, design, and right of way acquisition. A project is considered "delivered" when it is advertised for construction (in other words, bids are sought for its construction). According to Caltrans, project development takes between two to six years on a typical SHOPP project, such as rehabilitation of an existing roadway, and between four to eight years on a typical STIP project, such as adding a high occupancy vehicle (HOV) lane to an existing freeway. Project advertisement and construction typically add between one to three years to this process, resulting in a total delivery time (from initial planning to ribbon cutting) of between 3 to 11 years.
In the current year, Caltrans has 10,992 PYs to conduct project development work and construction oversight.
Caltrans and Local Agencies Share Responsibility for Project Delivery. The responsibility for the delivery of transportation projects in California is shared between Caltrans and local transportation agencies. In general, Caltrans is responsible for developing capital outlay improvement projects on the state highway system, while local agencies deliver projects that are off the state highway system, such as local street and road rehabilitation or transit improvement projects. There are several exceptions to this general rule, however. For instance, Caltrans occasionally delivers projects off the state highway system for local agencies on a reimbursement basis. Additionally, 16 counties with special sales taxes for transportation purposes, known collectively as the "self-help counties," deliver projects on the state highway system using local sales tax revenues to fund the projects.
Project Delivery Has Been Concern of Legislature. The Legislature has taken a number of steps to improve project delivery in recent years. In addition to making statutory changes, discussed below, the Legislature requires that the Legislative Analyst include annually in the Analysis an assessment of the department's progress in delivering projects as scheduled in the STIP.
In this Analysis, we go beyond our annual review of how well Caltrans delivered its planned projects, and examine the bottlenecks and inefficiencies in the current project delivery process. We find that some of these bottlenecks are a result of state or federal law and would therefore require statutory changes, while others are simply a result of Caltrans' way of doing business and could be alleviated relatively easily.
In this section, we discuss:
We provide a summary of our recommendations related to project delivery in Figure 4. Our detailed discussion of each of these recommendations follows the figure.
Environmental review also has an important impact on project delivery. Our review of environmental streamlining opportunities is discussed separately following this section.
LAO Findings and Recommendations
|Local Agencies Underspend Their Share of Federal Funds|
|Caltrans Unable to Fill Project Delivery Positions|
|Caltrans Needs More Flexibility in Managing State and Federal Funds|
Caltrans delivered over 90 percent of projects planned for delivery in 1998-99. Additionally, the department delivered many projects that were planned for delivery in future years. As a result, the department spent a record $2.1 billion on transportation projects in fiscal year 1998-99.
Caltrans Delivered Vast Majority of Planned Projects. Caltrans measures its project delivery performance by comparing actual delivery with planned delivery. The department showed a strong project delivery performance in 1998-99, delivering 91 percent of STIP and SHOPP projects that were planned for delivery, compared to about 89 percent in 1997-98.
The performance record improves considerably when projects that were advanced from future years are included. Specifically, Caltrans delivered 120 percent of its planned delivery, compared to 103 percent of its planned level in 1997-98. As shown in Figure 5, the department delivered 60 STIP projects, comprised mostly of projects that were planned for delivery as well as some that were advanced from future years. The department delivered 240 SHOPP projects, including 172 projects that were planned for delivery in 1998-99 and 68 that were advanced from future years.
|Caltrans Project Delivery|
|Program||Planned for Delivery||Projects Delivered||Delivery as Percentage of Planned|
|Planned Projects||Advanced Projects||Total|
|a State Transportation Improvement Project.|
|b State Highway Operation and Protection Program.|
Caltrans Spent Over $2 Billion on Transportation Projects. In terms of expenditures, Caltrans delivered a total of $2.1 billion worth of projects. Of this amount, approximately $1.3 billion was spent on STIP and SHOPP projects, while the remaining $813 million was spent on seismic retrofit projects, emergency work and minor projects (SHOPP-type projects with a total cost under $750,000). As Figure 6 shows, the department's STIP and SHOPP expenditures were 117 percent of planned expenditures for 1998-99. This was due primarily to the department's decision to advance 68 SHOPP projects from future years. Overall, the department's performance exceeded the California Transportation Commission's (CTC) project delivery goal.
|Caltrans Project Delivery by Expenditure
|(Dollars in Millions)|
|Program||Actual Costs of Projects Delivered||Planned Cost of Projects to Be Delivered||Actual Cost as a Percentage of Planned Cost|
|a State Transportation Improvement Project.|
|b State Highway Operation and Protection Program.|
Local Delivery of Federally Funded Projects
For a variety of reasons, local agencies have underspent their share of federal funds in recent years. Although they improved in 1998-99, Caltrans still had to spend about $350 million of the local share of federal funds to prevent the state's permanent loss of these funds. This causes the cash balance in the State Highway Account to grow and may delay projects due to increased requirements attached to federal funds.
Local Delivery of Federally Funded Projects Lags. Under the federal Transportation Equity Act for the 21st Century (TEA-21), which covers the period from 1998 to 2003, local agencies receive approximately 60 percent more in federal funds than under the prior federal transportation act. As discussed in our 1999-00 Analysis (please see page A-14), spending this increased amount is a challenge to local agencies, particularly those that are less accustomed to the myriad requirements attached to federal funds. For example, federal funds require audits prior to contracting out projects and compliance with various other requirements that local agencies would not otherwise confront. As currently implemented, these additional requirements can add several years to the length of a project. As a result, local agencies have tended to postpone the use of federal funds, preferring to spend state funds or local funds first. By October 1999, local agencies had a significant backlog of unspent federal funds. This backlog has accumulated over several years, as local agencies have typically spent about 50 percent of their annual federal funds.
Caltrans Does Not Expect Loss of Federal Funds in 2000. In order to expend federal funds, the state is provided federal spending authority (known as obligation authority or OA) annually by the Federal Highway Administration (FHWA). This authority expires at the end of each year and is split between Caltrans and local agencies. To prevent the state's loss of federal spending authority, whenever local agencies expect to spend less than their share, Caltrans has used the remaining local share of spending authority on STIP or SHOPP projects that are eligible to use federal dollars. Subsequently, Caltrans would repay local agencies when they have projects ready to deliver. Local agencies improved their overall expenditure of federal funds from 40 percent in 1997-98 to 57 percent in 1998-99. Nevertheless, Caltrans had to use about $350 million of the unexpended local share of federal spending authority. Under Chapter 783, Statutes of 1999 (AB 1012, Torlakson), discussed below, Caltrans may continue this practice, but is only required to repay the local agencies' share if they have projects ready to deliver within a specified time limit.
California has never lost its federal funds spending authority and, according to Caltrans, is unlikely to do so this year. This is because Caltrans has projects available to use up about $300 million in local agency spending authority. Nevertheless, it is critical that local agencies continue to improve their expenditure of federal funds to reduce this risk in the future.
Local Delivery Shortfall Drives Up State Highway Account (SHA) Cash Balance and May Delay STIP and SHOPP Projects. Some of the projects Caltrans uses to absorb the local share of federal funds were originally to be paid for with state funds exclusively. When Caltrans uses the local share of federal funds in lieu of state funds, this has the effect of freeing up state funds and ultimately increasing the cash balance in the SHA (discussed in greater detail in the Crosscutting Issues section of this chapter). Approximately $500 million in the current SHA cash balance (of $1.8 billion) can be attributed to this practice. In addition, using federal instead of state funds on these projects may cause project delays due to the additional requirements attached to federal funds. This problem may be addressed in part by increasing the flexibility by which state and federal funds are managed, discussed in greater detail below.
The Legislature took steps in 1999 to improve project delivery and experiment with different ways of designing and constructing projects. We recommend that the department report at hearings on the status of a user-friendly local assistance manual.
In 1999-00, a number of statutory and budgetary actions were taken to speed up project delivery by Caltrans as well as by local agencies. In particular, two laws were enacted with the objective of accelerating the delivery of transportation projects in California.
Design-Sequencing Legislation Should Provide Lessons to Increase Project Delivery. Chapter 378, Statutes of 1999 (AB 405, Knox) authorizes Caltrans to designate six design-sequence projects to determine if this method of developing projects offers potential for faster delivery and cost savings. Under design-sequencing, construction can begin on a particular phase of a project once design for that phase is complete. Under Caltrans' standard practices, construction cannot begin until design has been completed for the entire project. Chapter 378 also requires that the department report to the Legislature annually on the progress of the projects and submit a final report evaluating the pilot project. Caltrans staff has selected 12 projects as candidates and will make a final recommendation to the Director by March 2000.
Assembly Bill 1012 Addresses Cash Balance and Local Agency Delivery. Chapter 783 contains many provisions designed to expedite project delivery. Figure 7 summarizes the law's key provisions. In particular, Chapter 783 authorizes the use of SHA cash balances for short-term loans to local transportation agencies to fund transportation projects. Although the loan program will make these funds available for immediate use on local transportation projects, we think that the SHA cash balance will likely remain high in the short term. This is because many local agencies are not spending their current share of state or federal funds, and thus would be unlikely to seek interest-bearing loans for their projects.
|Expediting Project Delivery|
Chapter 783, Statutes of 1999 (AB 1012, Torlakson)
Chapter 783 also imposes timely use of funds provisions on the two major categories of federal funds that local agencies have had difficulty spending--Regional Surface Transportation Program (RSTP) and Congestion Mitigation and Air Quality (CMAQ) (the same federal funds targeted in the Governor's Transportation 2000 initiative). Specifically, the law makes these federal funds available to local agencies for three years; if a region has not obligated the funds within that period, Caltrans is authorized to redirect them to other state and local projects that are ready for construction. This use-it-or-lose-it provision is designed to increase local agencies' annual expenditure of federal funds in order to ensure that the state uses all of its federal spending authority each year.
The Governor's budget proposes more stringent use-it-or-lose-it provisions in order to put even greater pressure on local agencies to spend these funds. We find that this proposal is unwarranted given the improvement in expenditure of these funds in 1998-99 by local agencies, as well as the substantial increase in Caltrans staff to provide assistance to local agencies on federally-funded projects. (Please see the Crosscutting Issues section of this chapter for further discussion of the Governor's proposal.)
Urgent Need for User-Friendly Local Assistance Manual. One factor that contributes to local agencies' slow expenditure of federal funds is the complexity of the guidelines associated with their use. Although Caltrans has a manual to help guide local agencies through the federal funding process, the current manual is perceived by many to be far too cumbersome to provide meaningful assistance. We understand that the department is working on the development of a more concise, user-friendly manual. In order to ensure that this task remains a top priority, we recommend that the department report at budget hearings on the status of this effort, the extent to which Caltrans has coordinated its efforts with local agencies, and the target date for completion.
We recommend that the department report at budget hearings on capital outlay support and local assistance vacancies and the department's strategies to fill them.
In the current year, Caltrans is authorized 10,992 PYs for project delivery and construction oversight. This staffing level is estimated by Caltrans as necessary to deliver projects currently programmed in the STIP and SHOPP. Accordingly, the inability to hire and maintain this level of staff could have an adverse impact on Caltrans' project delivery. Furthermore, due to a constitutional restriction on contracting out, the department cannot seek assistance from the private sector to deliver transportation projects on time to meet project schedules.
Vacancies in Capital Outlay Support. According to Caltrans, the department has had difficulty hiring capital outlay support staff due to a lack of qualified applicants and higher salaries offered by the private sector. As of January 12 , 2000, the department reported a 9 percent vacancy rate in capital outlay support positions. In particular, the department reported difficulty in hiring electrical and traffic engineers due to a combination of lack of qualified applicants and an inability to compete with private sector salaries.
Vacancies in Local Assistance. Additionally, Caltrans reported an overall 30 percent vacancy rate in the local assistance program. Local assistance staff play a key role in local agency project delivery. For instance, they are responsible for processing requests for federal funds and reviewing local agencies' documents to certify that projects are designed in accordance with federal guidelines. The 1999-00 budget contained an increase of 67 PYs due to the increased workload that resulted from increased federal funds. In addition, in response to local agencies' slow expenditure of federal funds, the 1999-00 budget contained 117 new positions to provide extra assistance and training to local agencies on the various requirements associated with federal funds. As of December 13, 1999, Caltrans had filled less than half of these positions. To the extent that these positions, as well as the other vacancies in local assistance, are necessary to meet existing local assistance project schedules, local assistance projects will be delayed.
Recommendation. In order to hold Caltrans accountable for filling its capital outlay support and local assistance positions, we recommend that the department report at budget hearings on: (1) the vacancy level in capital outlay support and local assistance, (2) reasons why these positions are difficult to fill, and (3) the steps the department is taking to address the vacancies.
Caltrans' use of project management is hampered by project managers being assigned too many projects and given too little authority over key aspects of the project.
Project management, a style of managing projects in which one individual is held accountable for the project from start to finish, is widely recognized both in the private and public sectors as the preferred way of delivering transportation projects. The key ingredient in project management is accountability; typically, a single manager is held accountable for the cost and schedule of a project. However, in order for project management to work successfully, this level of responsibility must also be accompanied by substantial decision-making authority. At Caltrans, project managers are held responsible for keeping projects on schedule and within budget, but they are seriously limited in several ways:
Additionally, because of the constitutional restriction against contracting out, Caltrans project managers have less flexibility to meet project deadlines than project managers in self-help counties. For example, a project manager in a self-help county might decide to contract out the environmental review of a project due to its specialized nature; Caltrans project managers typically do not have this option.
For all of these reasons, the effectiveness of project management at Caltrans is limited in comparison with local self-help counties. We believe it is important for the Legislature to keep these limitations in mind when considering measures that would shift responsibility for project delivery from local agencies to Caltrans.
We find that project delivery could be improved by increasing the flexibility by which state and federal funds are managed. Specifically, we recommend the enactment of legislation to allow Caltrans and local agencies to "swap and pool" federal funds. Additionally, we recommend relaxing the eligibility criteria for "county share advances" to ensure full programming of state transportation funds. Finally, we recommend that Caltrans (1) report to the Legislature on whether the state satisfies a federal requirement that would allow right-of-way acquisitions to be reimbursed prior to approval of the final environmental document and (2) develop criteria for projects that would be suitable for this purpose.
Caltrans and Local Agencies Should Be Authorized to Exchange State Funds for Federal Funds. Additional flexibility in state law is needed in order to enable Caltrans and local agencies to move federal funds from one project to another to ensure full expenditure of federal funds and minimize the delay and inconvenience associated with their use. Under the rural exchange program, local agencies in areas with populations below 200,000 can swap their share of federal funds for state funds. However, current state law does not allow more urbanized areas to participate in similar exchanges. Nor does current state law allow Caltrans to pool federal funds from different counties so that the burden associated with federal funds is consolidated on several large projects rather than on many smaller ones. Given that the use of federal funds entails substantial additional requirements that add to the project delivery time line, Caltrans should have the flexibility to target federal funds on the largest projects.
Pooling Federal Funds Could Free Up Valuable State Funds for State's High-Priority Projects. Allowing Caltrans to pool and swap federal funds would ensure that the extra work and time associated with the use of federal funds is limited to fewer projects. Additionally, it would give Caltrans greater ability to target state resources on those projects which would benefit the most from them.
One significant advantage of funding projects exclusively with state (and local) funds, as opposed to using federal funds, is the ability to conduct design or purchase right of way before final environmental documents are approved. Typically this cannot be done when federal funds are used in a project. This is because FHWA requirements make it difficult to be reimbursed for final design or right-of-way acquisition done prior to approval of the final environmental document.
Based on conversations with Caltrans and local agencies, we find that the use of federal funds can add several years to a project. Figure 8 (see next page) illustrates, for instance, the substantial time savings achievable when no federal funds are involved. While this figure is based on one particular project and the time savings are likely to vary depending on the project, it illustrates the many phases of a project that can be done concurrently when not using federal funds. Recognizing the substantial time savings that could be realized, Caltrans is funding the seismic retrofit of the San Francisco-Oakland Bay Bridge and the Carquinez Bridge exclusively with state funds. According to Caltrans, this strategy has likely expedited the delivery of these projects by at least one year.
Recommend Restrictions on County Share Advances Be Removed. One option to help expedite the use of the SHA funds is to broaden the eligibility criteria for STIP advances. Under current law, the regional share of the STIP is divided into county shares based on population and lane miles. Most counties do not program the full amount of their share for a variety of reasons, including concern about cost overruns or a desire to set aside funds for a costly project in the future. As of December 1999, 50 counties had left about $615 million of STIP funds unprogrammed. By contrast, only eight counties had fully expended their share of funding. The CTC is authorized to advance the shares of county funds that are on reserve and loan them to counties that have exhausted their share and identified projects in need of funding. Thus, advances can increase the funds available to a county without the interest costs of a loan and put SHA funds to more timely use. The CTC anticipates programming about $300 million of these reserves over the next several months, leaving a balance of about $315 million unprogrammed.
Current law limits the use of advances in several important respects:
Limiting advances to a single project is problematic for rural counties which often have many small projects that could make use of advances, rather than one large project. Limiting advances to counties with populations below one million excludes 18 counties with about 80 percent of the state's population--the counties where traffic congestion is worst. The restriction was originally intended to prevent urban counties from requesting advances for costly projects that would crowd out projects of smaller, rural counties. While this is a potential risk, we believe that criteria could be developed to address this potential inequity.
In its 1999 annual report, the CTC proposes lifting or modifying these restrictions to permit greater use of advances in order to allow for fuller programming of state transportation funds. We think such changes have merit. Accordingly, we recommend that the Legislature enact legislation to remove these restrictions on county share advances in order to promote the efficient use of transportation funding.
Recommend That Caltrans Report to Legislature on Beginning Right-of-Way Activities Prior to Final Environmental Document. Given that most projects will require the use of federal funds, it is worth noting that recent changes in federal regulations provide an opportunity for Caltrans to begin more right-of-way acquisition prior to final approval of the environmental document. Specifically, FHWA recently revised its policy to allow acquisition to begin prior to the final environmental document as long as the purchase of property does not bias the alternatives under consideration. The new policy allows Caltrans to be reimbursed for the cost of the property acquisition, but not all the associated support costs except under certain conditions. Specifically, if the state can certify that it has a mandatory land use, environmental and transportation planning process, and the Governor certifies that the acquisition is consistent with state plans, then it can qualify for full reimbursement. We recommend that Caltrans report at budget hearings as to whether California satisfies this planning requirement. We also recommend that Caltrans develop, in coordination with the CTC, criteria for projects that would be good candidates for beginning right-of-way acquisition prior to final approval of the environmental document.
Most project delay occurs during the environmental phase, particularly on large projects. As such, efforts to expedite project delivery should focus on streamlining the environmental review process. In this section, we discuss the major causes of delay in the environmental review process. We make a number of recommendations for administrative and statutory changes that would streamline the process without compromising the integrity or level of the environmental review. Our recommendations are summarized in Figure 9, and discussed in detail below.
LAO Findings and Recommendations
|Resource Agencies Delay in Responding to Environmental
Documents and Issuing Permits.
|Caltrans Does Not Take Full Advantage of Environmental Streamlining Opportunities.|
Before a project may be constructed, the FHWA, Caltrans or local agencies are responsible for ensuring that the project complies with state and federal environmental laws. The two major laws governing transportation projects in California are the California Environmental Quality Act (CEQA) and the National Environmental Protection Act (NEPA). Most large transportation projects must comply with both of these laws. Specifically, all projects built in California must comply with CEQA and any project receiving federal funds or requiring approval of a federal agency must comply with NEPA.
In addition to CEQA and NEPA, there are also laws at the state and federal level that deal with specific environmental issues, ranging from the protection of archeological sites and endangered species to the protection of water and air quality. Compliance with all of these laws may require involvement from as many as 30 federal, state, and local transportation, environmental and planning agencies, as well as public comment and review. While the goals of these laws have merit, some of the procedures that Caltrans and/or local agencies follow (either by law or practice) to comply with them add substantial time to the project development process without necessarily adding a higher level of environmental protection.
Both CEQA and NEPA provide for three different levels of review, as shown in Figure 10. For projects that are categorically excluded or exempt, Caltrans or FHWA need only certify that the project meets the criteria for exclusion from a detailed environmental review to be in compliance. For example, a minor rehabilitation project to an existing freeway would be categorically excluded from detailed environmental study. By contrast, both negative declarations (no impact) and environmental impact reports (EIRs) require detailed scientific study, with a much higher level of review required for an EIR or an environmental impact statement (EIS) than a negative declaration or a finding of no significant impact (FONSI).
|Three Levels of Environmental Review
For Transportation Projects
|Level of Review||NEPAa||CEQAb|
|Exempt from detailed review due to type of project||Categorical exclusion||Categorical exemption|
|No impact: Studies find project to have no significant impact on environment. May require mitigation under CEQA.||FONSI
(Finding of No Significant Impact)
|Full environmental review required with environmental studies, public hearings, and extensive agency involvement. Project benefits must outweigh costs.||Environmental Impact Statement (EIS)||Environmental Impact Report (EIR)|
|a National Environmental Protection Act.|
|b California Environmental Quality Act.|
In 1998-99, Caltrans completed only 10 of 36 environmental review documents that were scheduled for completion. We find that delay in environmental review is often caused by lengthy federal review time and late involvement of state and federal resource agencies.
According to the CTC's 1999 annual report, the schedule used by Caltrans' for programming environmental documents in the STIP is often unrealistic. Delay in completing environmental documents often causes delay in project design and engineering which, in turn, delays construction. This causes funds programmed for these projects to sit idle. Our review found that Caltrans' record of completing environmental documents in 1998-99 fell far below its target. Specifically, Caltrans completed only 10 of 36 environmental documents (including negative declarations and EIRs) that were scheduled for completion. The department also projects delays in environmental documents scheduled to be completed in 1999-00 and 2000-01. The delay of these documents will almost certainly delay the overall construction schedule of these projects.
Duplication Between CEQA and NEPA Not Major Problem; Delay Caused Primarily by Federal Review Time. One common perception of the cause of delay in transportation projects is the duplication of work required under CEQA and NEPA. However, our review found that duplication is not a major problem. For transportation projects requiring both CEQA and NEPA review, Caltrans conducts all of its studies, consultations, analyses, and public reviews of draft documents concurrently, and uses the same documents to satisfy both laws. Local agencies sometimes conduct reviews sequentially when projects that are originally funded with state and/or local funds are subsequently selected for federal funding. While this adds substantial time to the process, it is a result of the decision to use federal funds at a later date, rather than a requirement to conduct sequential review.
From a practical standpoint, however, NEPA does add substantial time to the environmental review of a project. Our review found that this is primarily due to the length of time federal agencies, including FHWA, take to review and approve the documents. This problem also occurs at state agencies responsible for commenting on CEQA documents.
Delay Also Caused By Late Involvement of State and Federal Agencies. Delay in completing environmental documents is often caused by concerns that are raised late in the review process by state or federal resource agencies regarding the alternatives and/or environmental impacts of a project. In recognition of this problem, Caltrans has entered into memoranda of understanding (MOUs) with a number of state and federal agencies to facilitate their earlier involvement in the review process. However, according to Caltrans, these MOUs have not been accompanied by an increase in staff at the various agencies that would enable earlier involvement in the process. Consequently, early involvement by federal and state resources agencies in the scoping and planning of transportation improvements has been practically nonexistent.
We find that Caltrans has not yet completed negotiations to fund any of the resource agency positions approved for the current year to expedite project delivery. We recommend that the Resources Secretary and the Secretary for Business, Transportation and Housing report at budget hearings on actions they are taking to ensure that the agreements are promptly negotiated. Additionally, we recommend that Caltrans report at budget hearings on whether additional funds are needed to fully fund the 25 positions in resource agencies that were originally approved in the 1999-00 budget to review environmental documents.
The 1999-00 budget took a first step toward addressing the problem of under-staffing at state and federal resource agencies by funding 25 new positions in various state and federal agencies using transportation funds. However, due to higher than anticipated costs for the positions, Caltrans now estimates that it will only be able to fund 19 positions, as shown in Figure 11. As a result, Caltrans no longer intends to fund any positions in a Regional Water Quality Control Board or the Department of Toxic Substances Control, despite its original request for a total of six positions in these departments.
For Transportation Projects
Funded by Caltrans
|California Department of Fish and Game||6|
|California Office of Historic Preservation||3|
|California Coastal Commission||2|
|U.S. Army Corps of Engineers||1|
|U.S. National Marine Fisheries Service||1|
|U.S. Fish and Wildlife Service||4|
|U.S. Environmental Protection Agency||2|
Caltrans is currently negotiating interagency agreements to transfer the funds necessary to fill the 19 positions. At the time this analysis was prepared, however, none of the agreements had been finalized and thus none of the positions had been filled, more than seven months after they had been authorized by the Legislature.
Given the administration's desire to expedite environmental reviews in order to speed up project delivery as indicated by the Governor's environmental streamlining initiative, it is unclear why it has taken so long for the state agencies to negotiate interagency agreements. To the extent departmental staff cannot expeditiously negotiate these agreements, we recommend that the Resources Secretary and the Secretary for Business, Transportation and Housing report at budget hearings on the actions they are taking to ensure that the agreements are promptly negotiated. Additionally, we recommend that the department report at budget hearings on whether more funds are needed to fully fund the 25 positions originally approved in the 1999-00 budget.
We recommend the enactment of legislation to require all state permitting agencies to participate earlier in the California Environmental Quality Act process.
Under current law, state resource agencies are not required to respond to the original "notice of preparation" which occurs at the beginning of the draft of an environmental document. As a result, permitting agencies can choose not to participate in an environmental review until they receive a permit request which may occur after CEQA approval. This can add unnecessary delay to project development. For example, after Caltrans has spent years negotiating an acceptable environmental mitigation plan for a large, complex project, a permitting agency (such as the San Francisco Bay Conservation and Development Commission or the California Coastal Commission) could raise new objections or alternatives after the final EIR has been approved, despite having been notified of the project at the initial stages of the EIR. In order to obtain the permit, Caltrans would then be required to do substantial additional work, revisiting issues that had already been resolved as part of the final approval of the environmental document.
We think that earlier involvement of permitting agencies in the CEQA review has the potential to reduce the length of the environmental review process. Accordingly, we recommend that legislation be enacted to require that all state permitting agencies participate earlier in the CEQA process. Specifically, if a permitting agency fails to participate and inform Caltrans of its concerns after being formally notified of the project, it forfeits the right to raise issues that have already been addressed in the CEQA review process. Such a modification of existing law might require additional staff at the permitting agencies in order to facilitate earlier involvement in the EIR process. However, it is likely that this additional cost would be more than offset by the time savings that would result from earlier involvement. Overall, this change has the potential of streamlining project delivery while maintaining the rigor of the environmental review process.
We recommend that California seek delegation of federal authority to review and approve environmental documents. Additionally, we recommend that California seek federal legislation to require that all federal permitting agencies participate earlier in the National Environmental Protection Act review process.
Under NEPA, FHWA is the lead agency for transportation projects using federal funds. As such, it is responsible for signing off on all environmental documents and federal resource agency permits required for such projects. In 1998-99, FHWA had only two staff members to perform this function in California. In 1999-00, FHWA took steps to improve its timely response and ability to process environmental documents by increasing to six its environmental staff in California. While one way to reduce delay is for Caltrans to fund additional staff at FHWA, another option is for the California Congressional delegation to seek delegation of authority from FHWA for Caltrans to review and approve environmental documents and negotiate with federal resource agencies.
The FHWA has already delegated to Caltrans the authority to review and approve design work and right-of-way certifications in recent years. We believe significant time savings could result if FHWA were to delegate to Caltrans authority to review and approve environmental documents for highway projects. For example, under current practices, FHWA takes at least six months to conduct a final review of the EIS. Additionally, FHWA currently acts as an intermediary in all official communication between Caltrans and federal resource agencies, adding unnecessary delay in the review process. Consistent with recommendations made by CTC, Caltrans and a recent consultant study, we recommend that the Legislature work with the California Congressional delegation to enact legislation that would delegate to Caltrans certain FHWA authority pursuant to NEPA.
Additionally, we recommend that the Legislature seek federal legislation to require that federal permitting agencies participate earlier in the NEPA process. As discussed above, with respect to CEQA, permitting agencies often raise new issues after the final environmental document has been approved. This legislation could ensure that they participate earlier in deliberations thereby enabling Caltrans to address their concerns at an earlier date.
We find that several states have had significant success in environmental review streamlining efforts. Accordingly, we recommend the enactment of legislation to require Caltrans, in coordination with the California Transportation Commission, to select six State Transportation Improvement Program projects as pilots in a state and federal environmental streamlining process.
Federal law, under TEA-21, contains a provision that calls for streamlining environmental review in order to reduce unnecessary delays in delivering transportation projects. To meet this commitment, various federal agencies have signed a memorandum of understanding in which they agree to reduce project delays.
To date several states, including Pennsylvania and Kentucky, have had significant success with environmental streamlining efforts. For instance, the Pennsylvania Department of Transportation, in coordination with the United States Environmental Protection Agency, has developed an innovative approach to the environmental review process. Rather than using the environmental review document as the main vehicle for communication among agencies, the department brings all the stakeholder agencies (local, state, and federal) together at the outset of a project to obtain consensus on the purpose and need of the project, and the alternatives to be studied. By achieving consensus on these issues early, the department avoids delays in the future that arise as a result of challenges to a project's scope or the alternatives under consideration.
In Kentucky, the state Department of Transportation recently completed a full EIS for a highway project on a new alignment in nine months by involving over 40 stakeholders and by approaching the project as an opportunity to provide environmental and transportation improvements. This approach avoids the traditionally adversarial relationship between transportation and resource agencies and thereby accelerated environmental review considerably. The typical review for a new alignment would be at least four years.
Recommend Environmental Streamlining Pilot Project. Given the successes of these approaches elsewhere and the approval of such projects at the federal level, we recommend that the department take advantage of the opportunity in the 2000 STIP to experiment with new approaches to environmental review. Accordingly, we recommend the enactment of legislation to require Caltrans, in coordination with the CTC, to select six STIP projects as pilots in a state and federal environmental streamlining process. These pilots should include the following key features: (1) achieving consensus early in the process on the purpose and need for the project and (2) defining projects as having a joint environmental and transportation purpose and need.
We recommend that Caltrans make greater use of an existing agreement with the Federal Highway Administration designed to expedite environmental review for certain projects. We also recommend that the department renegotiate the current agreement to make it applicable to more projects. Finally, we recommend the adoption of supplemental report language to require Caltrans to report to the Legislature on the use of this agreement.
Majority of Projects Are Excluded From Detailed Environmental Review. Because the majority of transportation projects today are modifications or repairs to the existing infrastructure and right of way, many projects are categorically excluded from detailed environmental review. According to data from Caltrans, about 67 percent of STIP and SHOPP projects are likely to be categorically excluded from detailed environmental review. Specifically, about 31 percent of projects contained in the 1998 STIP are likely to be categorically excluded, 36 percent are likely to result in negative declarations, and the remaining 33 percent are likely to require full EIRs. By contrast, about 82 percent of SHOPP projects are likely to be categorically excluded, about 15 to result in negative declarations, and only 3 percent require full EIRs.
Recommend That Caltrans Make Greater Use of Federal Delegation of Authority. One way to streamline the environmental review process is to make greater use of a process (referred to as a "programmatic agreement") by which FHWA delegates authority to Caltrans to approve categorical exclusion of NEPA review for certain projects. This type of agreement has the potential to be extremely useful given the large portion of Caltrans projects that are categorically excluded from NEPA.
Caltrans does not know what percentage of categorical exclusions currently go through the programmatic agreement process, but estimates that it may be as few as 15 percent, although many more are probably eligible. According to Caltrans, there are so many exceptions to the programmatic agreement that many districts disregard it, relying instead on FHWA's standard approval process. Caltrans does not track the length of time for projects to be reviewed under the programmatic agreement process versus the standard FHWA review process. As a result, there are no baseline data to determine the time savings achievable through greater use of this approach. Nevertheless, the department estimates that the standard FHWA review may take about three months longer than following the programmatic agreement process. We recommend that Caltrans (1) direct the district offices to use the programmatic agreement process whenever possible and (2) provide necessary technical assistance to the districts to do so. Additionally, we also recommend that Caltrans renegotiate the agreement with FHWA to broaden its applicability.
Recommend Caltrans Evaluate Use of Programmatic Agreement. Given the number of categorical exclusions in the STIP and the SHOPP, failure to make optimal use of the programmatic agreement may add considerable unnecessary delay and cost to transportation projects. We recommend the adoption of supplemental report language requiring Caltrans to report on the use and benefit of the programmatic agreement. Specifically, we recommend that the following supplemental report language be adopted:
By December 1, 2000, the department shall submit to the Legislature a report regarding the use and benefits of the programmatic agreement with the Federal Highway Administration (FHWA). Specifically, the report shall describe (1) the length of time categorical exclusions take under standard FHWA review; (2) the length of time categorical exclusions take under the programmatic agreement; and (3) the percentage of eligible projects using the programmatic agreement from 1998 to present.
The intercity rail program was established to provide motorists traveling long distances with a safe, efficient, and cost-effective transportation alternative to the automobile. Currently, the state 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.
The Capitol intercity rail service is administered by the Capitol Corridor Joint Powers Authority (CCJPA) which started on July 1, 1998, following the enactment of the Intercity Passenger Rail Act of 1996 (Chapter 263, Statutes of 1996--SB 457, Kelley). Caltrans administers service on the remaining two rail corridors. In addition to providing for the operation of service, Caltrans and CCJPA also plan for the capital improvements needed to upgrade their respective corridors to provide expanded service. Capital improvement projects include acquisition of rolling stock (cars and locomotives), maintenance facility and station improvements, and track and signal improvements. Both Caltrans and CCJPA contract with Amtrak for the operation and maintenance of the intercity rail service.
State Focuses Primarily on Intercity Rail Service. The passenger rail transportation system in California includes two major components--intercity rail, and commuter and urban rail.
Chapter 622, Statutes of 1997 (SB 45, Kopp), defined the state's role in mass transportation as primarily providing for and enhancing interregional mobility. As a result, within the rail program, Caltrans concentrates primarily on providing intercity rail service while also providing administrative support and oversight for state and federal grant programs for commuter and urban rail services.
For 2000-01, the budget requests $64 million for Amtrak to provide intercity rail service. Additionally, as part of the Governor's Transportation 2000 Initiative, the budget requests $50 million from the General Fund for intercity rail track improvement and equipment purchases.
In the following sections, we discuss:
The frequency of intercity rail service, measured by the number of daily round trips, has increased in recent years across all intercity rail corridors. Revenue has also increased, but not as quickly as state costs for providing rail service.
Service Frequency and Revenue Have Increased. Figure 12 shows the number of daily round trips for the intercity rail service since 1995-96. Service frequency levels were relatively constant through the first half of the 1990s, but as the figure shows, service began to increase in 1997-98. Since 1995-96, revenue mainly from fees has also increased. Specifically, average annual revenue growth has ranged between 6.6 percent on the San Diegan to 15 percent on the Capitol between 1995-96 and 1998-99.
|Intercity Rail--Service and Financial Data|
|(Dollars in Thousands)|
|1995-96||1996-97||1997-98||1998-99||Average Annual Growth|
|Number of Round Trips Per Day|
State Costs Have Increased More Quickly. As Figure 12 displays, the amount of operating support the state has provided intercity rail service since 1995-96 has grown at a high rate. For instance, state costs on the San Joaquin have increased at an average rate of 15 percent a year over the four-year period, while costs on the Capitol have increased substantially more at an average annual rate of 36 percent. These increasing costs are, in large part, a result of the expanded train service on all three corridors during this period. The climb in state costs is also attributable to the change in how Amtrak charged the state for passenger rail service. Beginning in 1996-97, Amtrak changed the basis for calculating state cost and increased the portion charged to the state.
Intercity rail ridership levels and service performance, as measured in terms of "farebox ratio," have improved. However, increasing costs have elevated the amount of state subsidy per passenger.
We recommend the adoption of supplemental report language requiring the Business, Transportation and Housing Agency to develop multiyear intercity rail performance standards, and provide those standards to the Legislature as part of the annual budget request for the intercity rail program. Such information should be designed to assist the Legislature in determining whether additional capital investments are cost-effective.
Ridership and Farebox Recovery Have Improved. Figure 13 shows three measures of intercity rail performance--ridership, farebox ratio, and state cost per average passenger trip. As the figure shows, since 1995-96 ridership has grown at an appreciable rate, with average annual growth rates ranging between 4.2 percent on the San Diegan to 10.5 percent on the Capitol. As a performance measure, ridership indicates the relative usage of the rail service. Year to year, ridership levels may fluctuate, thereby indicating whether changes in train service are successful. Over time, however, the ultimate goal is for ridership levels to increase.
|Intercity Rail Performance|
|1995-96||1996-97||1997-98||1998-99||Average Annual Growth|
|Ridership (in thousands)|
|Farebox Ratioa (percent)|
|State Cost per Average Passenger Trip ($)|
|a Percentage of operating costs recovered from passenger fares.|
Likewise, the farebox (recovery) ratio--an indicator of the rail service's ability to recoup its operating costs--has also grown, albeit marginally. Thus, in 1998-99, for every dollar spent operating the San Diegan, about 45 cents were recovered through fare revenues. Since 1996-97, the farebox ratio has increased across all three corridors, with farebox ratios in 1998-99 ranging between 31 percent on the Capitol to 45 percent on the San Diegan. Figure 13 also shows that the farebox ratio dropped substantially between 1995-96 and 1996-97--for example, the farebox ratio on the San Diegan dropped from 56 percent to 37 percent. This drop was mainly attributable to the change Amtrak made in the costs charged to the state, as mentioned above.
State Subsidy Per Passenger Trip Also Increased. In addition to the farebox ratio, another measure of the cost-efficiency of the service is the state subsidy per passenger trip. This measure reflects the extent of operating loss to the state per passenger trip. (This measure is derived by multiplying the state operating cost of service per passenger mile by the average passenger trip length.) As Figure 13 shows, over the four-year period the state subsidy for each passenger trip has increased. For instance, on the San Joaquin in 1995-96, the state cost per average passenger trip was $18, while four years later in 1998-99, when the average passenger trip length was essentially unchanged, the state cost had increased to $26.
Though Performance Has Improved, It Is Still Short of Target. As required by SB 457 (Kelley), the Business, Transportation and Housing (BT&H) Agency and Caltrans generated performance standards starting in 1997-98 to measure service performance. Figure 14 shows the standards for three key performance measures--ridership, farebox ratio, and on-time performance. The figure shows standards set for 1997-98 through 1999-00, and the actual performance for each route for 1997-98 and 1998-99. No actual data are yet available for the current year.
As the figure shows, while overall service performance in terms of ridership and farebox ratio has improved over time, performance in terms of ridership has in general fallen short of the performance target. For example, ridership was projected to grow by 16 percent on the San Joaquin after additional service was added in 1998-99, but grew by only 1 percent between 1997-98 and 1998-99. Similarly, on-time performance has improved along all three corridors, but generally not to the degree projected by the performance standards. Caltrans maintains that establishing realistic performance standards for rail service is a complex and uncertain enterprise. A variety of unpredictable factors--natural disasters, contractor delivery delays, fluctuations in freight rail traffic--can impact the ultimate performance of the service. The department states that more robust analyses of ridership demand and cost are needed in order to more accurately set performance standards.
|Intercity Rail Performance--Targets Versus Actual|
|Ridership (in thousands)||536||462||716||544||752||NA|
|Farebox ratio (percent)||30.0%||30.4%||31.0%||31.2%||32.0%||NA|
|Ridershipa (in thousands)||1,793||1,571||1,844||1,540||1,936||NA|
|Farebox ratio (percent)||38.0%||34.1%||41.4%||45.4%||42.2%||NA|
|Ridership (in thousands)||691||668||799||675||839||NA|
|Farebox ratio (percent)||41.0%||41.6%||42.0%||44.0%||43.0%||NA|
|a Ridership data for all trains, including Amtrak and state-supported service.|
|NA - Not available.|
Upcoming Intercity Rail Analysis Will Assist With Development of Performance Standards. According to Caltrans and Amtrak, a comprehensive statewide intercity rail analysis is currently in the final stages of completion, with preliminary results expected to be released this spring or early summer. The report is expected to provide ridership and cost projections 20 years into the future for both existing and proposed intercity rail corridors. Caltrans expects that it would be able to establish more realistic performance standards based on the report's ridership and cost projections.
Multiyear Performance Standards Would Facilitate Assessment of Capital Investment Proposals. Currently, performance standards are set on a year-by-year basis for the three intercity rail corridors. The standards do not extend beyond one fiscal year. Thus, they do not provide an indication of how the services are expected to perform beyond one year, and what performance targets are to be achieved over time. Instead, multiyear performance standards, while not precise projections, would provide a better sense as to how the rail services are expected to perform beyond one year in the future.
Such multiyear standards would be particularly useful in assisting the Legislature in determining whether additional capital investments are warranted and cost-effective. For instance, the department's draft of a new ten-year rail plan (covering 1999-00 through 2008-09) calls for significant capital improvement and service expansion of intercity rail service, and the 2000-01 budget proposes $50 million of track improvement and equipment procurement for service expansion. Without some indication of target performance to be achieved through such investments, it is difficult for the Legislature to assess whether the investments have merit.
In order for the Legislature to be able to measure the program's performance and assess the cost-effectiveness of proposed capital investments, we recommend the following supplemental report language:
It is the intent of the Legislature that the Business, Transportation and Housing Agency sets performance standards for the three state-supported intercity rail corridors annually. These standards should be projected for three years into the future, and be revised on an ongoing annual basis. It also is the intent that the regional boards administering any intercity rail service and the Department of Transportation (Caltrans) incorporate these performance standards into their annual business plans for the service.
In order to facilitate the evaluation of capital investment proposals, Caltrans should provide multiyear performance standards. Specifically, beginning in the 2001-02 budget, as part of its annual budget request, Caltrans should provide performance standards for a three-year period beginning with the budget year, to measure the usage (for example, ridership), cost-efficiency (for example, farebox ratio), and quality (for -example, on-time performance) of the intercity rail service funded by the state.
We withhold recommendation on $64 million requested to continue existing intercity rail services because the amount needed will likely be different from current estimates. Specifically, more current cost estimates will be forthcoming from Amtrak in March 2000. We recommend that the department provide the updated cost estimates at budget hearings. Based on that information, the Legislature should adjust the amount of support for intercity rail services accordingly.
The budget requests $64 million to support Amtrak's costs for continuation of intercity rail services in 2000-01.
Updated Amtrak Cost Estimates Will Be Forthcoming. The budget request is based on cost estimates provided by Amtrak in 1999. We understand that Amtrak will provide Caltrans with updated estimates in March 2000. Accordingly, we withhold recommendation on $64 million for intercity rail services. We further recommend that Caltrans provide updated cost estimates at budget hearings and that the Legislature adjust the proposed appropriation based on the updated information.
The draft ten-year rail plan covering 1999-00 through 2008-09 calls for a major expansion of intercity rail service, including more round trips and new routes. If all new services are implemented, total capital costs are estimated to be approximately $3.1 billion over ten years.
Due to inadequate justification, we withhold recommendation on $30 million requested for two new train sets (two locomotives and ten passenger cars) for the intercity rail system pending receipt of information to be provided in writing by the department, prior to budget hearings, on projections on ridership, cost, and revenues of future service.
Draft Rail Plan Envisions Substantial Expansion of Intercity Rail Service. Current law requires the department to develop a ten-year state rail plan to be updated biennially. In November 1999, Caltrans submitted to CTC the draft version of the 2008-09 Rail Passenger Program Report which delineates the department's plans for intercity rail service expansion, assuming no potential fiscal constraints or limitations. The plan provides both a review of the current operations of state-supported intercity rail service and an outline of plans for capital improvements and service expansions over the next ten years. Based on the goal of improving customer service by increasing a traveler's schedule flexibility and augmenting the existing system with new routes, the report envisions a substantial expansion of the state's intercity rail service over ten years. Specifically, by 2008-09 the draft plan calls for expanding service on existing routes as follows:
The draft plan also recommends expanding the intercity rail system by adding new rail routes, including:
More Intercity Rail Service, at a Huge Price. Figure 15 shows the projected capital cost over the ten-year period required to expand service as envisioned in the draft rail plan. The cost of capital improvements on the three existing routes is estimated at about $2.5 billion. This cost estimate includes costs for acquiring rolling stock as well as track and signal improvements. As for the proposed new routes, the capital cost is projected to be approximately $601 million. The total capital cost, therefore, for both existing and proposed routes is estimated at about $3.1 billion in current dollars. Of this amount, the bulk would be for track and signal improvements, totaling an estimated $2.3 billion over ten years.
The above projected costs are for capital improvements only. They do not include state costs for ongoing operations and maintenance. According to the draft plan, if all services contained in the report were implemented, annual state operating costs would amount to approximately $192 million by 2008-09 (inflated at a 2.3 percent annual rate beyond 1999-00). In addition, there would be significant ongoing costs for heavy maintenance of rolling stock (including rebuilding and replacing various parts of locomotives and train cars). The 2000-01 budget proposes approximately $6 million for annual heavy maintenance of the existing state-owned rail fleet. While the 2000-01 proposal appears to be warranted, heavy maintenance constitutes an ongoing cost that increases as more equipment is purchased.
Projected Ten-Year Capital Cost
|San Joaquin and Capitol||206.7|
|Proposed New Routes||601.4|
Budget-Year Request First Step Toward Ten-Year Rail Plan. The 2000-01 budget proposes (1) $20 million from the General Fund for track improvements on the San Joaquin corridor and (2) $30 million from the General Fund to acquire two new train sets (consisting of two locomotives and ten passenger cars) for service expansion in late 2001-02.
Track Improvement for San Joaquin Corridor Warranted. Our review shows that double-tracking and improving signals on the San Joaquin corridor would reduce train running times and improve on-time performance. According to the private railroad owner, work is ready to proceed on the line in the budget year.
Withhold Recommendation on Funding for More Trains. We withhold recommendation on the funding for additional train sets requested in the budget for the following reasons:
Accordingly, we withhold recommendation on $30 million requested to fund the acquisition of two new train sets until the department provides the Legislature in writing, prior to budget hearings, projections on ridership, cost, and revenues for future service with the addition of the proposed new trains. Based on these projections, the Legislature would be better able to determine if the train purchase is warranted.
The Legislature should consider numerous policy issues related to the state's role in providing rail service in general, and intercity rail service in particular.
We recommend enactment of legislation requiring the Department of Transportation to conduct a comprehensive rail study that incorporates the various forms of rail--commuter, urban, and intercity--in order that the Legislature can determine what the state's role should be in funding passenger rail service.
Passenger rail service has expanded significantly in the state during the last 20 years. As mentioned above, the draft ten-year rail plan envisions further, significant expansions in the state's intercity rail program. When determining the state's role in funding these rail investments and providing rail service, there are a number of issues the Legislature should consider. Below, we first discuss broader policy issues, beyond intercity rail. We then discuss issues related to the state's funding of intercity rail services.
What Are the Role and Objectives of Passenger Rail? Before the state invests heavily in rail capital improvements (intercity, commuter, or urban rail), the Legislature should reexamine the role and objectives of passenger rail transportation. Specifically, what role should rail play in the state's transportation strategy? Is the state's primary role to fund long-distance, interregional travel? Or, does the state want to include other objectives for passenger rail service, such as traffic congestion relief, air quality mitigation, and urban mobility enhancements? In the latter case, the state should assess where its investments in rail transportation can most effectively and efficiently advance those additional objectives.
How Should Regional and Interregional Rail Transportation Be Defined? Currently, the state's major transportation corridors continue to be developed and urbanized (for example, Oakland to Sacramento; San Joaquin Valley, Central Valley to San Jose; San Diego to Santa Barbara). As this growth occurs, the distinction between what constitutes "interregional," "regional," or "commuter" rail transportation becomes more blurred. The Legislature should reexamine the current definition of interregional and regional rail transportation and determine if current law best meets the needs of the state. There is currently no definition in state law for commuter or intercity rail service. Rather, the state relies on federal law definitions for these services. How a rail service is categorized affects whether the service is eligible for state funding under different programs. For instance, commuter rail service in general is not eligible to use interregional transportation funds. A reexamination of what constitutes intercity versus commuter rail is warranted in order to ensure that the state's resources for rail improvement projects are allocated in the most effective manner.
Given Substantial Anticipated Costs, What Is the Priority of Intercity Rail Relative to Other Transportation Programs? In addition to the approximately $3 billion in capital needs over the next ten years identified by Caltrans for the state's intercity rail network, other substantial capital investment needs have been recognized. For example, the recently released Inventory of Ten-Year Funding Needs for California's Transportation System, prepared pursuant to SR 8 (Burton), provides the first statewide estimate of future transportation investment needs for the next ten years. Though the report acknowledges that its cost projections are rough estimates, they do provide an order of the magnitude of future costs that the state faces. Beyond investments in intercity rail, the report provides estimates for other forms of passenger rail service, including commuter and urban rail needs. Specifically, the report projects a shortfall in funding for rail capital improvements ranging between $2 billion (to maintain existing levels of rail service) and $9 billion (to increase ridership by 50 percent over the next ten years). These projections do not include the estimated shortfall in funding for commuter and urban rail operations, which ranges between $141 million and $522 million over ten years, depending on the level of service desired.
In light of the substantial anticipated future capital and operating costs for commuter and urban passenger rail systems, the Legislature should consider the relative priority of intercity rail compared to the needs of the state's other mass transportation systems in order to provide cost-effective transportation services.
How Will Intercity Rail Be Funded in the Long Run? In a recent report on the condition of the Public Transportation Account (PTA) (please see our January 2000 report Public Transportation Account: Options for Addressing Projected Shortfall), we projected a funding shortfall in the PTA of about $53 million over four years (2000-01 through 2003-4), with the shortfall increasing to approximately $158 million over six years (2000-01 through 2005-06). Funding for state-supported intercity rail service constitutes a large portion of PTA expenditures, comprising nearly 25 percent of current-year estimated PTA expenditures. The PTA is the state's primary and most flexible source of funding for mass transportation, other than the General Fund. To the extent that expenditures for intercity rail increase, funding for other programs such as assistance to transit operators and transportation planning and research activities will be restricted or reduced. Nonetheless, with a substantial account shortfall projected for the future, there is currently no capacity for expanding intercity rail service as planned by the department.
Furthermore, the future costs for operating intercity rail are also uncertain. The state contracts with Amtrak for its intercity rail services, and the costs of these services are covered by fare revenues, federal operating grants, and state funds. As part of the Amtrak Reform and Accountability Act of 1997, Amtrak may lose all federal operating assistance funds after 2002. Although Amtrak states that its current business plan already takes into account no federal operating support beyond 2002, the U.S. General Accounting Office expressed concern in a recent report over Amtrak's ability to meet the financial targets set in its current business plan.
Given the condition of PTA and the significant future capital and operating costs of intercity rail service, the Legislature should consider how best to provide a continuing and stable source of funding for the level of rail service it chooses.
Recommendation for Comprehensive Rail Plan. Based on the above considerations, we recommend the enactment of legislation requiring Caltrans to initiate a comprehensive, statewide assessment of all existing and proposed passenger rail systems, including intercity, commuter, and urban rail. The study should be conducted in cooperation with transit operators and regional transportation planning agencies, and should emphasize how the intercity rail system integrates with other modes of passenger rail transportation, particularly if there are connections between commuter/urban and intercity rail.
The most recent ten-year rail plan produced by the department (released in 1993) is primarily focused on the three intercity rail corridors. Sections were included in the report that provided descriptions of and limited planning details for commuter and urban rail systems. The ten-year plan does not, however, provide an adequate analysis of how the various passenger rail systems integrate. Without such an analysis, the state has difficulty assessing where gaps exist between the interregional and regional modes, or even between regional systems, of rail transportation. A comprehensive assessment of the various rail systems will also assist the state in determining where the most cost-effective capital investments can be made to meet the objectives of passenger rail transportation. Therefore, we recommend that the study examine the current operations of the various intercity, commuter, and urban rail systems statewide. The study should also identify the capital and operational investments that are planned over the next ten years, including details on commuter or urban rail's rehabilitation programs, new improvement projects, and new or extended services. Instead of planning for the expansion of each type of passenger rail in isolation, this study should assess how expansion of one system complements or impacts the ridership, revenues, and costs of the other.
As explained above, a comprehensive intercity rail planning report funded by Amtrak is in the final stages of completion. While this report is expected to provide in-depth ridership, service, revenue, and cost projections for intercity rail well into the future, it will not incorporate other modes of rail into its detailed forecasting analysis. Without an assessment of intercity, commuter, and urban rail funding needs and plans for expansion, the Legislature will not be able to effectively determine where passenger rail capital investments are most needed nor evaluate the overall effectiveness of the state's passenger rail network.
The budget proposes $71 million from the General Fund for capital improvement and acquisition projects on commuter and urban rail systems. Consistent with legislative practice, we recommend that funding for individual projects not be provided in the budget act. Instead, we recommend that the amount be appropriated as a lump sum without specifying individual projects. Additionally, we recommend the adoption of budget bill language specifying that the funds will be allocated by the California Transportation Commission to commuter and urban rail projects in accordance with project application and evaluation processes under existing law.
Transportation 2000 Initiative Targets Commuter and Urban Rail Projects. As part of the Governor's transportation initiative, the budget requests $71 million from the General Fund for specific commuter and urban rail projects in both southern and northern California. Projects to be funded include rolling stock acquisition, track and signal improvements, and rail station and park-and-ride lot construction. Specifically, the proposal includes:
Funding Rail Proposals Should Use Existing Project Evaluation Process. Current law prohibits allocations for specific transportation improvement projects from being made in the budget act. Rather, the budget act provides a lump-sum appropriation to be allocated by CTC for various transportation projects. The Legislature has adhered to this practice and has generally not allocated other transportation funds for specific projects in the budget act. In general, the state uses two processes to allocate funds to specific transportation projects. The STIP process allocates state and federal transportation funds in accordance with Chapter 622, Statutes of 1997 (SB 45, Kopp) whereby funds are distributed to local and regional agencies based on county shares.
A second process provides for the allocation of general obligation bond funds for transit and rail projects. Specifically, the Clean Air and Transportation Improvement Act of 1990 (Proposition 116) established a formal passenger rail application and evaluation process. Under this law, applicants for grants for transportation improvement projects are required to submit a plan to CTC describing how the grant funds will be used, what other capital funds are available for the project, and a financial plan for operation of new services. The Proposition 116 process allows CTC to assess the viability of a project, the project's readiness, and evaluate the project's merit and priority.
We believe that the proposed projects should be evaluated using the current process established in law. Doing so would ensure that the merits and costs of these projects are assessed relative to other rail transportation improvements based on established criteria, and that the state is allocating its funds in the most cost-effective manner.
Recommend Lump-Sum Appropriation for Commuter and Urban Rail. Consistent with the intent that specific projects not be funded in the budget, we recommend that the budget bill be amended (Item 2660-101-0001) to delete funding for individual projects, without prejudice to the merits of the specific projects proposed by the Governor. Instead, we recommend the amount be appropriated in a lump sum, and budget bill language be adopted directing the CTC to disburse the funds to commuter and urban rail projects that follow project application and administrative review processes established under Proposition 116.
The California Transportation Commission shall allocate funds provided under this appropriation for commuter and urban rail projects in accordance with project application and administrative review processes established under Proposition 116 (Clean Air and Transportation Improvement Act of 1990).
The budget proposes $12 million for the Bay Area Water Transit Authority to fund the planning and development of a water transit system on the San Francisco Bay. We recommend reducing funding for the authority by $6 million because members of the authority have yet to be appointed and no work plan exists for how the entity will work over the next fiscal year. We further recommend that budget bill language be adopted requiring that most of the funds not be allocated to the authority until a work plan has been presented and approved by the Legislature.
New Water Transit Authority Established. Chapter 1011, Statutes of 1999 (SB 428, Perata) created the Bay Area Water Transit Authority effective January 2000. The authorityconsisting of 11 members appointed by the Legislature, Governor, and a specified community advisory committeeis required to prepare and submit to the Legislature and Governor a San Francisco Bay Area water transit plan to implement and operate a ferry transit service. The intent is to have an operating ferry transit system within ten years.
Budget Requests $12 Million for Water Transit Plan; Proposes Aggressive Planning Time Line. The budget requests $12 million from the PTA to support the authority over the next year in its planning efforts. Specifically, the funds are for a variety of activities, including: personnel and support costs, legal counsel, environmental assessment work, and regional agency support.
Chapter 1011 does not stipulate when an implementation and operation plan is to be submitted to the Legislature. However, the budget proposal sets a target of July 2001 for completion of all planning work. The proposed work to be completed over the next year is listed in Figure 16.
We believe that the proposal is unrealistic in its assumption that all of the work elements identified in Figure 16 can be completed within one year. This is because of the following:
|Bay Area Water Transit Authority
Work to Be Completed by July 2001
Proposed Amount Premature; Wait Until Work Plan Developed and Costs Better Understood. We believe that compressing the ferry system planning process into one year is not realistic, especially when no work plan exists that specifies how the work will proceed. Furthermore, because the board of directors has not been appointed and no program staff have been hired, we believe it is unlikely the authority will be able to complete the proposed planning work in the budget year.
Assuming that the board of directors is fully appointed and the authority will commence planning work in the budget year, we concur that some level of funding ought to be provided. Assuming that the board is established and initial staff hired by midyear, we recommend that funding be reduced by half of the proposed amount. Accordingly, we recommend reducing funding for the authority by $6 million (reduce Item 2660-101-0046 by $6 million).
In order for the Legislature to have information on how the authority will proceed and what costs will be incurred, we further recommend that the following budget bill language be adopted to require that, before the bulk of the funds are made available, the authority submit a work plan to the Legislature that specifies (1) the intended work elements to be accomplished in the budget year, (2) when the work will be initiated and is projected to be completed, and (3) the cost associated with each item of the work.
Of the amount appropriated in this item, $5.5 million shall be available no sooner than 30 days after the Bay Area Water Transit Authority submits a work plan to the appropriate legislative fiscal committees and the Joint Legislative Budget Committee. The work plan shall specify the intended work elements to be accomplished in the budget year, when the work will be initiated and is projected to be completed, and the cost associated with each item of the work.