BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 1102|
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THIRD READING
Bill No: SB 1102
Author: DeSaulnier (D)
Amended: As introduced
Vote: 21
SENATE TRANSPORTATION & HOUSING COMMITTEE : 7-0, 3/27/12
AYES: DeSaulnier, Gaines, Harman, Kehoe, Pavley, Simitian,
Wyland
NO VOTE RECORDED: Lowenthal, Rubio
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Transportation capital support costs
SOURCE : Author
DIGEST : This bill requires the California Transportation
Commission to review and approve the Department of
Transportation's project construction support cost overruns
of 20 percent or more on certain transportation projects.
ANALYSIS : Existing law assigns the Department of
Transportation (Caltrans) the responsibility of overseeing
the design, construction, maintenance, and operation of the
California state highway system. The capital outlay
support (COS) program within Caltrans provides the
resources necessary to develop and deliver the majority of
highway projects on this system. COS functions encompass
all project development efforts required to begin
construction of projects, including engineering and design
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work, environmental studies, and right of way acquisition.
Once under construction, the COS program also conducts
construction support management, such as testing materials
used in the project and working with the contractor when
changes or problems arise. Private contractors undertake
the actual construction of most highway projects.
In addition, existing law requires the California
Transportation Commission (CTC) to adopt the State
Transportation Improvement Program (STIP) every
even-numbered year, with each new STIP adding two new years
to prior programmed commitments. The STIP is the biennial
five-year plan for future allocations of certain state
transportation funds for state highway improvements,
intercity rail, and regional highway and transit
improvements.
Besides adopting the STIP every other year, the CTC is also
responsible for allocating the construction funding for
STIP projects when these projects are fully developed and
ready to begin construction. The CTC does not allocate
funding for any of the COS functions conducted by Caltrans.
These functions are funded separately through the annual
budget process, and that annual appropriation is only
loosely tied to projects in the STIP.
This bill:
Requires the CTC to allocate construction support funding
for each project in the STIP overseen by Caltrans at the
time it allocates construction capital funding.
Requires the CTC to review and approve a supplemental
project allocation request for a project that experiences
a construction support cost overrun of 20 percent or
more.
Requires Caltrans to report to the Legislature on the
difference between construction costs allocated on each
project and the actual costs after the project has been
completed.
Comments
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Local partners most often choose Caltrans to do
construction support activities. Local and regional
transportation agencies have the ability to either use
Caltrans for construction support or hire a private
contractor to do the work on STIP projects. If the local
agency chooses not to use Caltrans, then the CTC allocates
the construction support funds at the same time as the
construction capital funding. If the local agency
overspends by more than 20 percent, including on
construction support, then it must request a supplemental
allocation from the CTC which is taken from the county's
share of future STIP funds.
If a local entity uses Caltrans for construction support,
then the support costs are not allocated by the CTC. In
addition, as the auditor indicates, if Caltrans spends more
than budgeted on construction support, neither Caltrans nor
the project sponsor is penalized. Local partners can
benefit from this situation and often choose Caltrans to
oversee STIP projects, because if Caltrans underestimates
the support costs for a project it creates more capacity
within the local jurisdiction's allotment of STIP funds to
program additional projects.
2011 State Auditor report . In April 2011, the auditor
conducted a review of Caltrans' COS program. Among the
auditor's conclusions was that neither counties nor
Caltrans is held accountable when capital support costs
exceed estimates. The CTC does not allocate construction
support funds at the time of capital construction
allocation. In addition, the CTC cannot change project
budgets to reflect variations in construction expenditures
after construction funds are allocated, except through
supplemental project allocations. Because the CTC does not
track support cost budgets, it is unable to charge any cost
overruns against either Caltrans' budget or the local
project sponsor's share of future funding. Therefore, no
one is held accountable for deviating from construction
support cost budgets.
The auditor examined 55 STIP projects that completed
construction during fiscal years 2007-08 through 2009-10
and found that 47 percent of these projects experienced
overrun greater than 20 percent. Caltrans experienced
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budget overruns totaling $305 million out of the $1.4
billion expended on the COS program for the highway
projects completed between fiscal years 2007-08 and
2009-10. To increase accountability for budget overruns of
capital support costs, the auditor recommended legislation
that would expressly require the CTC to review and approve
project construction support costs when they differ from
the amount budgeted by 20 percent or more.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 4/30/12)
American Federation of State, County and Municipal
Employees
California Transportation Commission
ARGUMENTS IN SUPPORT : This bill seeks to implement the
California State Auditor's recommendation relating to
Caltrans' construction support costs for STIP projects.
According to the author's office, given limited state
transportation funds, overruns on current projects directly
diminish the state's ability to undertake future projects.
Granting the CTC a greater oversight role during the
construction phase of projects that Caltrans oversees will
reduce cost overruns on these projects.
JJA:do 4/30/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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