Analysis of the 2005-06 Budget Bill Legislative Analyst's Office February 2005

Department of Parks and Recreation (3790)

The Department of Parks and Recreation (DPR) acquires, develops, and manages the natural, cultural, and recreational resources in the state park system and the off-highway vehicle trail system. In addition, the department administers state and federal grants to local entities that help provide parks and open-space areas throughout the state.

The state park system consists of 278 units, including 31 units administered by local and regional agencies. The system contains approximately 1.5 million acres, which includes 4,100 miles of trails, 300 miles of coastline, 970 miles of lake and river frontage, and about 14,800 camp sites. Over 80 million visitors travel to state parks each year.

The budget proposes $429.7 million in total expenditures for the department in 2005-06. This is an overall decrease of $636.3 million below estimated current-year expenditures. Most of this reflects a decrease in available bond funds.

The budget proposes $337.5 million in departmental support, $44.1 million in local assistance, and $49.6 million in capital outlay expenditures. Of the total proposed expenditures in 2005-06, about $101 million (24 percent) will come from the General Fund; $52.8 million (12 percent) will come from bond funding; $123.8 million (29 percent) from the State Parks and Recreation Fund (SPRF); $65.9 million (15 percent) from the Off-Highway Vehicle Trust Fund (OHVF); and the remainder $85.2 million (20 percent) from various other state funds, federal funds, and reimbursements. Major budget proposals include: (1) $11.8 million ($11.2 million General Fund and $600,000 OHVF) to continue modifications to state park facilities in compliance with the Americans with Disabilities Act (ADA); (2) $6 million (SPRF) to repair and improve state park water systems; and (3) $1.3 million (General Fund) for the operation of the planned Hearst Ranch Conservation Area.

Shift ADA Project Funding From General Fund

We recommend that $11.2 million in General Fund support for Americans with Disabilities Act (ADA) projects be replaced with a combination of bond and federal funds. We recommend the Legislature achieve this cost shift by (1) appropriating the remaining $3.4 million from unallocated Proposition 12 funds specified for state parks and (2) redirecting support for selected projects proposed in the budget from Proposition 12 and federal funds ($7.8 million) to ADA projects. Finally, we recommend the adoption of budget bill language to specify the use of the selected funds for ADA purposes. (Reduce Item 3790-001-0001 by $11.2 million; Increase Item 3790-301-0005 by at least $3.4 million.)

ADA Budget Proposal. As a result of a lawsuit, DPR is required to spend $110 million over 14 years (beginning in 2002-03) for modifications to existing state park facilities in order to make state parks more accessible for visitors with disabilities. These modifications include modifying restrooms, parking areas, picnic sites, and trails to allow for greater access. Toward this end, the department developed an ADA Transition Plan. The budget proposes about $11.8 million for the continued implementation of its transition plan. Of this amount, $11.2 million is from the General Fund and $600,000 is from the OHVF.

As shown in Figure 1, between 2002-03 and the current year, DPR has spent $17.3 million to implement the ADA Transisition Plan. The General Fund and Proposition 12 have provided the bulk of funding for the modifications.

Unallocated Proposition 12 Funds Available to Fund ADA Proposal. Our review of the Proposition 12 fund condition finds that there are $3.4 million of unallocated funds remaining that could be used to support ADA modifications. By unallocated, we mean funds that have not been previously appropriated, proposed for expenditure in the budget year, or set aside for future expenditure. Proposition 12 allows the funds in question to be used to support the development and rehabilitation of state parks and to provide for improved access and safety. As shown in Figure 1, Proposition 12 has previously been used to support ADA modifications.

Budget Proposes Bond and Federal Funds That Could Fund ADA Projects. Our review of DPR's proposed capital outlay budget finds that it includes several proposals for the use of Proposition 12 and federal funds. Of the expenditures proposed from Proposition 12, we find that about $1.4 million is for (1) the planning phase of three projects not yet approved by the Legislature and (2) the construction of minor projects, namely trails and interpretive exhibits. Additionally, our review finds that the department has set aside $6.6 million of Proposition 12 bond funds for future-year construction costs of the three projects in the planning phase. Finally, the federal funds are proposed for unspecified acquisitions or improvements. We think that funding proposed or set aside for this particular group of projects—as detailed in Figure 2—could be redirected to ADA-related projects.

Recommend Shifting ADA Funding From General Fund to Bond and Federal Funds. We recommend the Legislature shift support for ADA projects in the budget year from General Fund to bond and federal funds, thereby generating a one-time General Fund savings of $11.2 million. The savings consists of three components. First, $3.4 million in unallocated Proposition 12 funds would replace an equivalent amount of General Fund monies. Second, $5 million in federal funds currently proposed for unspecified acquisition and improvement projects would be redirected to fund the ADA projects, freeing up a like amount of General Fund. Thirdly, the remaining $2.8 million would be derived by redirecting an equivalent amount of Proposition 12 bond funds from projects proposed by the department but not yet approved by the Legislature. Proposed funding for these projects totals $8 million, more than enough to fund the remaining $2.8 million.

General Fund Savings. Implementing our recommendation to shift funding for ADA projects from the General Fund to bond and federal funds would result in a General Fund savings of $11.2 million. We therefore recommend that the Legislature make the corresponding $11.2 million reduction in DPR's General Fund budget and provide the necessary increases in Proposition 12 expenditure authority and federal funds. Finally, we recommend the adoption of budget bill language to specify the use of the selected funds for ADA project purposes.

Concession Proposals

The budget includes four concession-related proposals requiring legislative approval. While we find three of the proposals warranted, we recommend the Legislature withhold approval of the ferry service concession proposal for Angel Island State Park until the Department of Parks and Recreation, based on the completed economic analysis, provides the Legislature with information on the specific minimum rent to be paid to the state.

Under current law, the Legislature is required to review and approve any proposed or amended concession contract that involves a total investment or annual gross sales over $500,000. In past years, the Legislature has provided the required approval in the supplemental report of the budget act.

As shown in Figure 3, the department has included four concession proposals in its budget that require legislative approval. While we find three of the proposals warranted, we recommend the Legislature withhold approval of the ferry service concession proposal for Angel Island State Park.

Recommend Withhold Approval for Angel Island State Park Ferry Service Concession. The department requests approval to solicit bids for ferry services between the mainland of Marin County and Angel Island State Park. Our review of the request to solicit proposals found that the department has not yet completed the economic feasibility study that is used to determine the minimum revenue share to be paid to the state. The study is also important because it will determine the availability of dockage and ferry routes from Marin County to Angel Island. The DPR anticipates the report will be completed this spring. Without this information, the Legislature is not able to determine whether the proposal is in the state's best interest. Accordingly, we recommend the Legislature withhold approval of the proposal for Angel Island State Park until the department, based on the completed economic analysis, provides the Legislature with information on the specific minimum rent to be paid to the state.