Legislative Analyst's Office

Analysis of the 2001-02 Budget Bill

Overview—Capital Outlay

Funding for capital outlay totals about $2 billion. Half of this amount is for projects financed using general obligation bonds and lease-payment bonds. Most of the remainder ($780 million) is provided through direct General Fund appropriations.

The 2001-02 Governor's Budget proposes $2 billion for capital outlay programs (excluding highway and rail programs, which are discussed in the Transportation section of this Analysis). This is spending on physical assets—college buildings, state parks and prisons. The proposed amount is a decrease of $116 million (6 percent) from current-year appropriations. Major increases are $349 million for the Department of Mental Health for a sexually violent predator facility and $137 million for the Department of Transportation for a District 7 office building in Los Angeles. These and other increases are offset by reduced amounts in resources (-$674 million, largely due to significant one-time appropriations in the current year) and judicial (-$50 million).

Spending by Area

Figure 1 compares the amounts appropriated for capital outlay in the current year to the amounts proposed in the budget for each general organizational area. As shown in the figure, most of the decrease is in the resources area.

Figure 1
State Capital Outlay Program
2000-01 and 2001-02 (In Millions)
	2000-01 Appropriations	2001-02 Governor's Budget	Difference
Legislative, Judicial, and Executive	$69.2	$19.2	-$50.0
State and Consumer Services	54.7	141.7	87.0
Business, Transportation (excluding highways and rail), and Housing	26.9	170.7	143.8
Environmental Protection	0.3	3.1	2.8
Resources	972.2	287.1	-685.1
Health and Human Services	18.7	360.0	341.4
Youth and Adult Corrections	123.7	115.3	-8.4
Education	8.0	2.6	-5.5
Higher Education	826.1	862.3	36.2
General Government	11.3	32.0	21.6
Totals	$2,111.0	$1,993.9	-$116.2

Spending by Department

Figure 2 shows the amounts each department requested for capital outlay funding in 2001-02, the amounts included in the Governor's budget, and the future cost for these projects. As shown in the figure, an estimated $1.5 billion will need to be appropriated in the future to complete these budgeted projects. Thus, the request before the Legislature represents a total cost of nearly $3.5 billion.

Figure 2
Summary of Proposed 2001-02 Capital Outlay Program
All Funds (In Thousands)
		Governor’s Budget
Department	Requests	Proposed 2001-02	Future Cost	Totals
Legislative, Executive, and Judicial
Judiciary	$1,958	$1,958	$24,658	$26,616
Office of Emergency Services	1,275	1,275	4,586	5,861
Justice	15,933	15,933	—	15,933
State and Consumer Services
California Science Center	$10,525	$10,525	—	$10,525
Franchise Tax Board	447	447	—	447
General Services	130,688	130,691	$75,451	206,142
Business, Transportation, and Housing
Transportation	$221,173	$150,859	$67,617	$218,476
Highway Patrol	9,694	9,694	6,338	16,032
Motor Vehicles	10,111	10,111	9,941	20,052
Resources
Tahoe Conservancy	$21,756	$21,756	—	$21,756
Conservation Corps	12,923	12,140	$11,667	23,807
Forestry and Fire Protection	65,572	61,029	36,516	97,545
Fish and Game	5,125	4,442	—	4,442
Wildlife Conservation Board	21,235	21,235	—	21,235
Boating and Waterways	9,425	8,541	10,413	18,954
Coastal Conservancy	56,435	56,435	—	56,435
Parks and Recreation	73,327	62,936	33,896	96,832
Santa Monica Mountains Conservancy	14,250	14,250	—	14,250
Water Resources	33,263	24,305	41,384	65,689
Environmental Protection
Air Resources Board	$2,199	$2,199	—	$2,199
Toxic Substances Control	1,118	900	$17,176	18,076
Health and Human Services
Health Services	$2,183	$2,183	$47,545	$49,728
Developmental Services	5,367	5,367	—	5,367
Mental Health	353,505	352,494	32,800	385,294
Youth and Adult Corrections
Corrections	$125,004	$92,692	$83,600	$176,292
Youth Authority	23,218	22,646	10,398	33,044
Education
Education	$2,568	$2,568	—	$2,568
Higher Education
Community Colleges	$143,901	$143,569	$278,216	$421,785
California State University	207,000	207,000	82,316	289,316
University of California	511,720	511,720	583,856	1,095,576
General Government
Food and Agriculture	$21,922	$21,922	$18,373	$40,295
Military	13,275	2,665	13,475	16,140
Veterans’ Homes of California	5,697	5,448	1,298	6,746
Unallocated Capital Outlay	2,000	2,000	—	2,000
Totals	$2,133,834	$1,993,935	$1,466,862	$3,458,839

Funding Sources for Capital Spending

The Governor's budget proposes funding the capital outlay program from bonds, the General Fund, special funds, and federal funds. Figure 3 compares the sources of funds for the 2000-01 capital outlay program to those proposed for 2001-02. The budget proposes increasing the amount for direct appropriations from the General Fund by $108 million and from special funds by $39 million. General Fund appropriations include an increase of $203 million for the University of California. With regard to bond appropriations, the budget includes $667 million from general obligation bonds ($554 million for higher education) and $349 million from lease-payment bonds for the Department of Mental Health.

Figure 3
Sources of Funds for Capital Outlay Program
(In Millions)
Funds	2000-01	2001-02
General Fund	$650.9	$758.5
General obligation bonds	1,299.1	667.2
Lease-payment bonds	—	349.3
Special funds	176.1	215.2
Federal funds	6.2	3.7
Totals	$2,132.3	$1,993.9

Figure 4 displays the proposed funding for each department.

Figure 4
Proposed 2001-02 Capital Outlay Program Appropriations by Fund Type
(In Thousands)
Department	Bonds	General	Special	Federal	Total
Legislative, Executive, and Judicial
Judicial Council	—	$1,958	—	—	$1,958
Emergency Services	—	1,275	—	—	1,275
Justice	—	15,933	—	—	15,933
State and Consumer Services
California Science Center	—	$10,525	—	—	$10,525
Franchise Tax Board	—	447	—	—	447
General Services (seismic retrofit)	$823	28,037	—	—	28,860
General Services (other)	—	101,831	—	—	101,831
Business, Transportation, and Housing
Transportation	—	—	$150,859	—	$150,859
Highway Patrol	—	—	9,694	—	9,694
Motor Vehicles	—	—	10,111	—	10,111
Resources
Tahoe Conservancy	$5,517	$15,043	$1,196	—	$21,756
Conservation Corps	—	12,140	—	—	12,140
Forestry and Fire Protection	—	61,029	—	—	61,029
Fish and Game	451	1,665	2,126	$200	4,442
Wildlife Conservation Board	—	—	21,235	—	21,235
Boating and Waterways	—	—	8,541	—	8,541
Coastal Conservancy	48,235	5,000	1,200	2,000	56,435
Parks and Recreation	43,058	11,030	7,348	1,500	62,936
Santa Monica Mountains Conservancy	14,250	—	—	—	14,250
Water Resources	1,000	23,305	—	—	24,305
Environmental Protection
Air Resources Board	—	—	$2,199	—	$2,199
Toxic Substances Control	—	$900	—	—	900
Health and Human Services
Health Services	—	$2,183	—	—	$2,183
Developmental Services	—	5,367	—	—	5,367
Mental Health	$349,287^a	3,207	—	—	352,494
Youth and Adult Corrections
Corrections	—	$92,692	—	—	$92,692
Youth Authority	—	22,646	—	—	22,646
Education
Education	—	$2,568	—	—	$2,568
Higher Education
Community Colleges	$143,569	—	—	—	$143,569
California State University	207,000	—	—	—	207,000
University of California	203,311	$308,409	—	—	511,720
General Government
Food and Agriculture	—	$21,250	$672	—	$21,922
Military	—	2,629	—	$36	2,665
Veterans’ Homes	—	5,448	—	—	5,448
Unallocated	—	2,000	—	—	2,000
Totals	$1,016,501	$758,517	$215,181	$3,736	$1,993,935
a Lease-payment bonds.

Bond Funding and Debt Payment

Over the last several years, the majority of capital outlay has been funded with bonds. In the 1990s, the voters authorized $30.1 billion in general obligation bonds. Most of these authorizations have been for K-12 schools ($13.1 billion), higher education ($4.8 billion), transportation ($5 billion), and natural resources ($5.1 billion). In addition to these general obligation bonds, the Legislature has authorized $7 billion in lease-payment bonds since 1990. These bonds have funded higher education facilities, prisons, state office buildings, state laboratories, and state homes for veterans.

Debt Payments

As shown in Figure 5, the state's debt payments on bonds will be around $3.2 billion in the budget year—an increase of 10 percent over current-year costs. There are two components of this debt:

General Obligation Bonds. The estimated budget-year cost of debt payments on general obligation bonds is $2.6 billion from the General Fund—an increase of $296 million over current-year payments.
Lease-Payment Bonds. The state's cost for debt on lease-payment bonds will be about $574 million in 2001-02—an increase of 1 percent over the current year. We estimate that about 94 percent of this debt is paid by the General Fund.

Return to Capital Outlay Table of Contents, 2001-02 Budget Analysis