It’s the beginning of a brand new year and this is an exciting time for Caltrans! California is investing more in its transportation system than ever before. In November, California voters approved $19.9 billion for transportation bonds, a key element of the Strategic Growth Plan to relieve traffic congestion on California's roads, to expand mass transit and rail systems and to improve the air quality around ports. The bond measure funds are an addition to our regular transportation funding which comes from state and federal fuel taxes, the sales and use tax on fuel, motor vehicle licensing and registration fees, weight fees for trucks and local sales taxes.
Separately from the bond action taken by the people, the Governor has released his proposed budget for the new fiscal year, which proposes $12.8 billion, including $11.2 billion from non-General Fund sources, for the Department of Transportation. This is an increase of $1.5 billion from the revised 2006-07 Budget, due primarily to Proposition 1B. The Department’s proposed budget, by character, consists of: Capital Outlay, $5.8 billion; Local Assistance, $3.2 billion; and State Operations, $3.8 billion.
As Acting Business, Transportation and Housing Secretary Barry Sedlik explained, “Those dollars are going to enable substantial expansion of statewide construction for transportation programs…this is a very healthy sign.”
This is also a perfect time to bring a clearer understanding of how our California state budget process works. A brief review may be helpful! The State of California has three separate but equal branches of government: the Executive, the Legislative and the Judicial Branches. In our form of government, the Legislature holds the purse strings, and passes and adopts the budget every year that our Governor then signs into law. Each January, the Governor proposes a draft budget as the executor of the will of the Legislature. The Legislature then drafts the laws. And the Governor, as head of the executive branch, executes those laws. By proposing the budget, it lays a framework for what the Governor feels that really needs to be done next year in order to make the state run efficiently and effectively.
Then the Draft Budget goes through the Legislative process. There are debates and discussions between the two houses of the legislature and the executive branch, about where each feels the appropriate place is for the state to be over the next year. As part of that process, along with input received from that process, the Governor again proposes a Revised Budget in May, at which point the Governor and the Legislature get down to final discussions of what the appropriate priorities are for the state for the next year in order to move forward. This will result in a final budget, passed by the Legislature and signed by the Governor.
I would also like to share with you these additional issues, proposals and propositions:
Major Proposals & Issues
Proposition 1B Bonds. The Budget proposes to appropriate $8.3 billion to begin implementation of the transportation element of the Proposition 1B bonds. $5.2 billion is projected to be allocated, or committed, in 2007-08. $523 million is proposed to be allocated through urgency legislation to enable high priority projects that are ready to go to construction.
Proposition 42. The Governor's Budget proposes to fully fund the Proposition 42 transfer and the Proposition 1A loan repayment for fiscal year 2007-08. Proposition 1A, in addition to limiting the conditions under which the Proposition 42 transfer can be suspended, requires all outstanding loans be repaid in annual increments by June 30, 2016. The total transfer, including the annual loan repayment, would be distributed as follows: $684 million to the Traffic Congestion Relief Program (TCRP), $699 million to the State Transportation Improvement Program (STIP), and $175 million to the Public Transportation Account (PTA).
Public Transportation Account:
• The Budget proposes to authorize the reallocation of PTA revenues, including spillover, to higher priority General Fund transportation uses including: Home-to-School Transportation ($627 million); Developmental Services-Regional Center Transportation ($144 million); and Transportation General Obligation Bond debt service ($340 million). If insufficient money is available from the PTA in future years to sustain Home-to-School Transportation or Regional Center Transportation, any needed funding will be provided by the General Fund.
• The Budget proposes a lower State Transit Assistance Fund (STAF) transfer in 2007-08 to offset an overpayment in 2006-07. The Budget also proposes to exclude spillover revenues from the STAF distribution formula because of the volatility of spillover revenues and projected increases to future transit operating funds from Proposition 42 transfers beginning in 2008-09.
• The Budget proposes to permanently cease transfer of non-Article XIX revenues from the State Highway Account (SHA) to the PTA, and instead use these funds to reduce the backlog in pavement maintenance in the State Highway Operations and Protection Program and Maintenance Program.
Tribal Gaming Funds. Because several lawsuits have prevented the issuance of bonds, the proposed budget now assumes the spending of tribal compact cash only as it is received until bonds can be sold. $100 million in tribal compact cash is annually deposited with the state, and consistent with current law, $100 million in 2006-07 and $100 million in 2007-08 will be deposited in the SHA.
What all of this means is that, even with all of these proposals, we need to do more to keep California’s world-class transportation system moving forward. And even with the increase in construction that has been noted by Acting Secretary Sedlik, our Governor, Arnold Schwarzenegger, noted in his State of the State speech, that we still do not have enough funding to operate and maintain our transportation system as it exists today. That is why you see more distressed pavement, the inability to remove graffiti or pick litter as quickly as we would like. And you see more landscaping that may be getting older and deteriorating.
Our Governor, in discussions with the Legislature this year, will readdress the operations and maintenance of the state highway system to help bring it back to that world-class system that we can continue to be proud of.
And together with all of you, the Caltrans family, we will continue to take make the best use of that funding and put it to work on important transportation projects, which will have positive and meaningful impacts for California’s motorists, as Caltrans continues its mission to IMPROVE MOBILITY ACROSS CALIFORNIA.