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LAO Urges Improved Resources Bond Accountability

Since 1996, California voters have approved $11.1 billion worth of resource bonds. However, tracking how that money has been spent, how the remainder is proposed to be allocated and even determining how much money is available have proven tricky. No one is alleging government fraud. Rather, the issues are accountability and legislative oversight. For example, the governor's proposed budget does not provide fund balances for four of the five bond funds. In its annual review of the governor's proposed budget, the Legislative Analyst's Office (LAO) presented a number of recommendations to make the bond expenditures and, therefore, the administration's resources spending priorities easier for lawmakers and the public to track. "There are a lot of state agencies involved in acquiring land and restoring land for environmental purposes, and it would be advantageous for the Legislature to look at those expenditures in total," said Mark Newton, director of resources and environmental protection for the LAO. "You would still give the agencies a fair amount of flexibility to acquire land, but you need to have at least broad categories of how the money is going to be spent." The LAO has compiled fund conditions for the five resource bonds Proposition 204 from 1996, Propositions 12 and 13 from 2000, and Propositions 40 and 50 from 2002 (see chart). The LAO further breaks down the funds by program area: Parks and recreation (state and local parks, historical and cultural preservation): $2.3 billion in Propositions 12 and 40. Proposed spending during the 2003-04 fiscal year is $708 million, leaving a balance of $141 million. Water quality (wastewater treatment, watershed and beach protection, drinking water infrastructure): $2 billion in Propositions 204, 13, 40 and 50. Proposed spending is $293 million during 2003-04, leaving a balance of $579 million. Water management (supply, flood control, desalination, recycling, conservation, security): $1.7 billion in Propositions 204, 13 and 50. Proposed spending for 2003-04 is $213 million, leaving $560 million. Land acquisition and restoration: $3.2 billion in Propositions 204, 12, 40 and 50. Proposed spending is $590 million for 2003-04, leaving $935 million. CalFed Bay-Delta Program: Propositions 204, 13 and 50 allocated money explicitly for CalFed, although many of the bonds' purposes are consistent with the program. Proposed spending from 204, 13 and 50 during 2003-04 is $400 million, leaving $617 million specifically earmarked for CalFed. Air quality: $50 million in Proposition 40. The administration proposes spending the remaining $23 million during 2003-04. The LAO recommended that one agency be designated for overall implementation of Propositions 40 and 50, where the bulk of the money remains. The LAO also urged more oversight of $1.2 billion allocated to the Wildlife Conservation Board via those two propositions. The bonds provide the money to the agency as a continuous appropriation, meaning the money would be spent "outside the budget process and without legislative appropriations." The proposed budget contains $412 million for capital outlay, including $386 million for "unscheduled projects." Technically, the administration's proposal follows the law, Newton said. But the Legislature has the option of bringing the expenditures into the budget process, as the LAO recommended. However, the Wildlife Conservation Board, composed of the finance director, the president of the Fish and Game Commission, and the director of the Department of Fish and Game, disputes the recommendation and the implication that it lacks oversight. The board has a six-member advisory committee of legislators that is briefed on all proposals before the board makes decisions, said Georgia Lipphardt, the board's assistant executive director. The board also provides notice of proposed actions to the Legislature 10 and 30 days in advance. Besides the board's process, the bonds themselves provide guidance, she said. "We couple the language in the bonds with our mandate, which has habitat protection, land acquisition and public access as our primary focus," Lipphardt said. There is no doubt that the bonds have provided a great deal of money for environmental enhancement and resource development. A study by the Public Policy Institute of California (PPIC) last year found that spending on natural resource programs, as a percentage of total state spending, shrank from 4% in 1979 to 3.4% in 2000 before increasing in 2001. The study also found that general fund support for these programs diminished as the state boosted special fees. Capital investment was "erratic" because it relied on general obligation bonds, whose drafting was subject to the political winds, the study found. Importantly, said PPIC study author Fred Silva, governors since the 1990s have used bond funds to cover administrative costs, rather than spending the money only on capital projects. "Departments are using bond funds to operate their programs. I don't blame the agencies. It's the way the state finance system works," Silva said. "The resource conservation programs really get stiffed." Still, one of the primary authors of Propositions 12 and 40, former Democratic Assemblyman Fred Keeley, said those bonds have made a big difference. "There are substantial areas that have been preserved and protected that would not have been protected, or would have been protected later and at a much greater price," said Keeley, who is now executive director of the Planning and Conservation League (PCL). Prior to Proposition 12's passage in 2000, there had not been a park bond approved since 1990, meaning there was a pent up demand, Keeley said. Proposition 12 quenched some of that thirst, while Proposition 40, whose money is supposed to be spent over five years, helps the state "get ahead of the growth and development in California," he said. Under a contract with the Resources Agency, PCL is scheduled to release a report this month on the efficacy of Propositions 12 and 13. Contacts: Mark Newton, Legislative Analyst's Office: (916) 445-4656. Georgia Lipphardt, Wildlife Conservation Board: (916) 445-8448. Fred Keeley, Planning and Conservation League: (916) 313-4522. LAO budget analysis: www.lao.ca.gov/analysis_2003/analysis_2003_contents.html PPIC resources spending report: www.ppic.org/main/publication.asp?i=308
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