California Budget Proposal Would Merge Caltrans with Other Transportation Agencies

California Governor Jerry Brown’s initial Fiscal 2012-2013 budget proposal is causing quite a stir for its combination of proposed hikes in sales and income taxes, cuts to social programs and reorganization of state government structure.

Only a few state programs would receive increases over the prior budget, including K-14 schools. But many of the proposed budget figures depend on voter approval of tax hikes at the November 2012 ballot box.

Somewhat less publicized is the fact that the Governor’s proposal would eliminate and consolidate 48 boards, commissions, programs, and departments. This includes Caltrans — which would be merged into a new umbrella Transportation Agency — and several other bodies related to the transportation, education, environmental and water markets.

As of now, this is just a proposal — and a proposal short on key details at that. While we haven’t had a chance to thoroughly analyze the full 258-page document released (inadvertently) last week, here are a few of the items that jumped out as it relates to the AEC industry and the markets it serves.


Agency and Commission Consolidation. The Governor’s proposal would create “The Transportation Agency,” which would consolidate the Department of Transportation (Caltrans), the Department of Motor Vehicles (DMV), the High-Speed Rail Authority, the Highway Patrol, the California Transportation Commission (CTC) and the Board of Pilot Commissioners into a single agency.

Brown would also eliminate the Office of Traffic Safety, transferring its functions to the DMV (or what’s left of it, we suppose). The State Infrastructure Bank would be absorbed along with several other agencies into the Governor’s Office of Business and Economic Development.

Finally, the responsibilities of the Department of Boating and Waterways would be transferred to the Department of Parks and Recreation, and the California Boating and Waterways Commission would be eliminated.

Some state legislators have proposed eliminating Caltrans in the past. And while this is not exactly the plan that many envisioned — whereby the functions performed by the state would transfer to counties and local governments — it is an interesting development nonetheless. The debate over this issue should be…spirited.

Five-Year Infrastructure Report and Caltrans Review. The budget announcement leaves many questions unanswered about transportation spending in Fiscal 2012-2013. Based on the sketchy details of his January 5 release, Brown is proposing to cut funding to the High-Speed Rail Authority from about $16.6 million to $15.9 million. The Governor is also directing Caltrans to “perform a detailed review and analysis of all of their programs to evaluate whether the functions need to exist and the level of resources needed to accomplish them.” The proposal adds that the required Five-Year Infrastructure Report will be released in the spring, so we may have to wait until then to see what the Governor’s office really has in mind for transportation in Fiscal 2012-2013.

Future capital projects for Amtrak and other Mass Transportation would also seem to suffer under the plan.


School Funding and Tax Increases. The Governor’s proposal calls for $52.5 billion in funding for K-14 education – still less than the amount from the Fiscal 2007-2008 budget, but up nearly $5 billion from Fiscal 2011-2012. The message for state-funded higher education is that there will be no further cuts – assuming the tax increases go through – and that growth in higher education funding will return in fiscal 2013-2014. However, the California Budget Project reports that Governor Brown threatens $4.8 billion in automatic cuts from K-14 funding and $200 million each from the University of California and California State University systems if the tax hikes fail. This prompted Dan Schur, a former aid to Governor Pete Wilson, to call it “the most expensive ransom note in California political history.”


Changes for CalRecycle, State Geology and Mining Board, and Department of Toxic Substances Control. The Governor’s proposal would transfer the Department of Resources, Recycling and Recovery (CalRecycle) to the California Environmental Protection Agency, stating, “hazardous waste, electronic waste, used oil, used tires, and landfill permits are typically not considered ‘natural resources’ but wastes that should be regulated under the California Environmental Protection Agency, not the Natural Resources Agency.” It would also eliminate the State Geology and Mining Board and transfer its responsibilities into the Office of Mine Reclamation within the Department of Conservation.

Under the Department of Toxic Substances Control, the Expedited Remedial Action Program, Private Site Management Program, California Land Environmental Restoration and Reuse Act Program, Hazardous Waste and Border Zone Property Designations, Abandoned Site Assessment Program and Registered Environmental Assessor Program would be eliminated.

Cap and Trade. Governor Brown pledges that the new Cap-and-Trade Program “will create fiscal incentives for businesses to reduce their greenhouse gas emissions. The proceeds generated from the program, potentially $1 billion in the first year, will be used to invest in clean energy, low-carbon transportation, natural resource protection, and sustainable infrastructure.” The claim has been met with skepticism from economists and environmentalists alike.


The Delta Habitat Conservation and Conveyance Program. The proposal states that the Delta Habitat Conservation and Conveyance Program is developing a plan that will provide the basis for issuing permits for the operation of state and federal water projects. “The Budget proposes $25 million and 135 positions to complete preliminary engineering work. Future funding requests to address the state’s water needs will be necessary.” It is unclear how much of this work would be available to private firms.

The proposal also consolidates regional water boards and the Colorado River Board, and eliminates the Watershed Coordinator Initiative Program.

We’ll follow up with more on the effects of the Governor’s budget as information becomes available.

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