Legislative Analyst's Office Analysis of the 2002-03 Budget Bill

Enhanced Security Antiterrorism Programs

Security activities were enhanced throughout state government immediately after the terrorist attacks of September 11, 2001. The administration indicates that it expects to receive a total of $350 million in federal funds to offset the costs of antiterrorism security activities. Of this total, the budget allocates $164 million in the current and budget years to implement specific enhanced security measures. The goal of the enhanced security programs is to maintain a level of security sufficient to protect the state's vital facilities, its supply of drinking water, and the health of its citizens. The focus of the programs is on prevention, although they also contain provisions for response to terrorist attacks.

Budget Proposal

Figure 1 shows the expenditures proposed for various departments to carry out the enhanced security activities in the current and budget years. For 2002-03, the budget proposes a total of $96.2 million for specific enhanced security programs. As shown in Figure 1, this includes about $89.6 million (93 percent) for the California Highway Patrol (CHP).

In addition to the expenditures specifically identified in the Governor's budget, the Governor's Budget Summary indicates that the administration expects to spend another $10 million in the current year and $176 million in the budget year for security programs. However, the expenditures of these funds are not identified in the budget.

California Highway Patrol Will Play Major Role in Enhancing Security. The budget proposes a number of antiterrorism measures, from increased fencing and surveillance equipment to increased aerial patrols, truck inspections, and larger security patrols at bridges, nuclear power plants, and other facilities. The majority of these security measures would be implemented by CHP. For 2002-03, as shown in Figure 2, the budget proposes $89.6 million from the Motor Vehicle Account (MVA) to add 316 positions (including 27 supervisory positions) for CHP to carry out the additional security duties. The requested funds will provide the following:

• 100 officers to operate the state's 18 commercial vehicle (truck) inspection facilities 24 hours each day.
• 50 officers assigned to inspect carriers of hazardous materials.
• 40 officers to provide security for nine major bridges and the Trans Bay Terminal in San Francisco.
• 33 officers for the State Capitol and state office buildings and facilities.
• 24 officers to serve on various antiterrorism task forces and to staff a new Emergency Notification and Tactical Alert Center (ENTAC).
• 24 pilots and flight officers to operate five new helicopters for aerial patrols.
• 18 officers to patrol nuclear power plants and state health laboratories.
• $32.5 million for staff overtime in the event of tactical alerts and $2.5 million for equipment to protect officers against chemical weapons.

Enhanced Security Programs by Other Agencies. As shown in Figure 1, the budget also proposes antiterrorism expenditures by the Department of Transportation (Caltrans), the Military Department, and the Office of Emergency Services (OES) in the current and budget years:

• Caltrans will spend about $24 million from the State Highway Account in the current year to install additional surveillance cameras, fences, gates, and locks on the state's toll bridges.
• The Military Department will spend $3.9 million in General Fund money in the current year and $6 million in federal funds in the budget year for 97 National Guard members to patrol major bridges.
• The Office of Emergency Services will spend $562,000 in 2002-03 to support the State Strategic Committee on Terrorism (SSCOT), a multiagency advisory group on terrorism response.

The Governor's Budget Summary also lists several other security programs in other agencies. However, there are no specific expenditures proposed in the Governor's budget for these programs. These programs include:

• The Department of Justice proposes to spend $5 million over two years to support a new California Antiterrorism Information Center (CATIC).
• The Department of Health Services will spend $5 million in the current year in grants to local public health agencies to increase their ability to detect and respond to bioterrorism and chemical attacks.

Our review of the enhanced security request raises a number of issues that the Legislature should consider when evaluating the administration's proposal. We discuss these issues in the following sections.

State Role and Responsibilities Need Clear Definition  

The proposal assigns state personnel to protect private facilities, such as nuclear power plants, and nonstate facilities, such as the Golden Gate Bridge. We recommend that the Legislature determine whether it is the responsibility of the state to protect private facilities and nonstate facilities on an ongoing basis.

The budget calls for CHP to dedicate six positions to protect privately owned nuclear power plants, and 12 officers to patrol the Golden Gate Bridge. For the budget year, funds for these activities are proposed from the MVA.

While these facilities are undoubtedly vital to the state, they nonetheless are not state facilities. Besides, the facilities each have their own security personnel. For instance, the Golden Gate Bridge District has its own police division responsible for security of the bridge. In determining which security activities the state should engage in on an ongoing basis, and how to fund these activities, the Legislature should consider the relative roles and responsibilities of the state versus nonstate (including local and private) entities. This would provide for a clear definition of authority, responsibility, and funding for the program on an ongoing basis.

The current California Terrorism Response Plan was adopted as a part of the State Emergency Plan in 1999 and updated in February 2001. The plan outlines procedures for state and federal responses to terrorist threats and incidents, but does not address the issue of responsibility for the protection of private and nonstate facilities.

Issues for Legislative Consideration. We recommend that the Legislature consider the following issues when evaluating proposals for enhanced security against terrorism:

• What are the appropriate areas and levels of responsibility for the state, federal, and local governments and private entities to assume for protecting citizens and facilities against terrorism? For instance, should the state be responsible, in whole or in part, for the protection of all areas or facilities with statewide importance, even if these are not state facilities? What should be the role of local law enforcement agencies?
• Who should pay for ongoing security services at the local level? Who should pay for the security of private facilities and nonstate facilities that have statewide importance?
• How should these services be funded?
• Of the security services the state is responsible for providing, which should be under the jurisdiction of CHP, and which should be provided by other agencies?
• What is the appropriate allocation of resources between programs to prevent terrorism and those that respond to terrorist incidents?

Level of Federal Funding Remains in Doubt

We withhold recommendation on $89.6 million requested for enhanced security by the California Highway Patrol in the budget year because it is not known at this point how much money the federal government will provide for the cost of state antiterrorism programs. The level of federal funding will be better known by the time of the May Revision.

We further recommend the adoption of budget bill language to restrict the California Highway Patrol from using funds requested for overtime for tactical alerts to pay for regular overtime costs.

The President's 2002-03 federal budget proposes to provide $37.7 billion for homeland security programs, including $3.5 billion for states and local governments to equip and train first responders such as firefighters, police, and paramedics, but it does not indicate how much of that amount would go to California or other states. It also does not specify the process by which allocations would be determined, or the conditions and requirements that recipients of federal aid would be required to meet.

Withhold Approval of CHP Request Until Federal Funding Level Is Known. The budget anticipates that the proposed $89.6 million for CHP expenditures on security will be reimbursed by federal money. It is likely that better information regarding the availability of federal funds will be forthcoming by the time of the May Revision. Thus, we withhold recommendation on the requested amount. (Consistent with this recommendation, we also withhold recommendation on $6 million requested for the Military Department. Please see Item 8940 in the "General Government" chapter.)

Segregate Overtime Funds for Tactical Alerts From Regular Overtime. The CHP carries out various activities for which officers and staff are paid overtime. In the current year, the base level of overtime support is $55 million. The budget proposes an additional $32.5 million (out of the $89.6 million requested) to cover the costs of staff overtime for tactical alerts. The amount would pay for an equivalent of 780,000 hours of overtime, and is proposed so that CHP has the authority to spend for staff overtime in the event additional security is needed in such emergencies.

We do not object to allocating a portion of the funds to staff overtime. However, we think these funds should be made available only for CHP tactical alerts and not for regular overtime. Accordingly, we recommend that the following budget bill language be adopted in Item 2720-001-0044:

Of the funds appropriated in this item, $32.5 million is allocated for overtime costs for security tactical alerts. If the amount used for overtime for tactical alerts is less than $32.5 million, the remainder of that sum shall revert to the Motor Vehicle Account.

If the amount to be allocated for CHP tactical alert overtime is changed as a result of the May Revision, the amount specified in the budget bill language should be adjusted accordingly.

Expenditure Priorities Needed for Additional Federal Funds; Legislative Review Should Be Provided

We recommend that the Department of Finance provide the Legislature by the time of the May Revision an expenditure plan that describes the administration's priorities for the use of these additional federal funds.

We further recommend that a separate control section be added to the budget bill that would allow the Director of Finance to expend any portion of the anticipated federal funds in accordance with the expenditure plan, upon 30-day notification of the Legislature.

Our review shows that while some components of the enhanced security program have been in place since September 11, other parts are far from ready to be implemented.

Proposal Needs More Details. Although the administration indicates that it expects to receive $350 million in federal funds to offset the cost of antiterrorism activities, the budget allocates only $164 million of those funds for programs during the current and budget years. We find that there are no specific proposals regarding the agencies and programs that are expected to receive the additional $186 million in federal funds, including $176 million which would be expended in 2002-03. Additionally, it is not clear from the budget whether all components of the program are proposed to be ongoing and the budget does not identify long-term funding sources.

Expenditure Priorities Should Be Identified. While we understand that the availability of the federal funds is still uncertain, we think that to the extent the administration expects their availability, it should provide the Legislature with its priorities as to how the funds should be expended. This would provide the Legislature better information to assess the pro grams already proposed in the budget, as well as to determine what additional security activities should be implemented if additional funds are available. It would also clearly lay out the priorities of activities to be funded in the event the state receives less than the amount of federal funds expected.

In October 2001, the Governor issued an executive order requiring the SSCOT to evaluate the potential threat of terrorist attack and review California's readiness to prevent and respond to an attack. The Governor also ordered the SSCOT to establish and prioritize recommendations for prevention and response.

Accordingly, we recommend that the Department of Finance provide the Legislature, by the time of the May Revision, an expenditure plan for the additional anticipated federal funds. The plan should identify the administration's priorities and specify the various departments that would be allocated funds and the activities they are to carry out. It should also incorporate the findings and recommendations made by the SSCOT in response to the Governor's executive order.

New Control Section to Provide Expenditure Flexibility With Legislative Oversight. Our understanding is that the administration intends to use the Control Section 28.00 process to authorize the expenditure of additional federal funds it may receive in 2002-03 with a 30-day notification of the Legislature. However, in our view, this would be an inappropriate use of the process. This is because Section 28.00 is restricted to augmentations for the expenditure of unanticipated federal funds, and is not intended to provide an alternative budget process.

If additional federal funds are received for state security programs, they would not be unanticipated. As such, the Legislature should be able to exercise the same level of oversight and scrutiny over the expenditure of these funds as with other expenditures approved through the regular budget process.

In order to provide the administration with the flexibility to authorize the expenditure of up to $176 million in potential additional federal funds while ensuring legislative review and oversight, we recommend the creation of a separate control section in the budget bill. This control section would authorize the Director of Finance to authorize the expenditures of these additional federal funds in accordance with the expenditure plan discussed above, no sooner than 30 days after notification has been provided the Legislature. The following language is consistent with this recommendation:

The Director of Finance may authorize the expenditure of federal funds the state receives for security purposes in addition to the amount already approved in this act. The expenditures of such funds shall be in accordance with the expenditure plan submitted by the department and as approved by the Legislature. Such expenditures may be authorized no sooner than 30 days after notification in writing of the necessity therefor to the chairs of the fiscal committees and the Chair of the Joint Legislative Budget Committee, or not sooner than whatever lesser time the Chair of the Joint Legislative Budget Committee, or his or her designee, may in each instance determine.

State Should Develop Long-Term Funding Plan For Protective Services

Many of the enhanced security activities proposed in the budget would be ongoing, but the funding for these activities is identified only for the current and budget years. We recommend that the ongoing support for California Highway Patrol (CHP) protective services and security activities be funded with a combination of General Fund, the Motor Vehicle Account, and reimbursements. The Legislature would need to address the ongoing funding of non-CHP security activities.

The administration indicates that most of the enhanced security programs proposed in the budget would be ongoing programs. However, future funding beyond the budget year has not been determined.

In our discussion of the MVA condition, we recommend that CHP's protective and security activities be funded with a mix of General Fund money, MVA funds and reimbursements. (Please see the "Motor Vehicle Account Condition" write-up in this section of this chapter.)

To the extent the Legislature approves additional security activities in other departments in 2002-03, particularly where the activities are to be funded from federal funds, it should also consider how these activities would be funded on an ongoing basis.