Report 2000-010 Summary - September 2000

Department of Transportation:

Seismic Retrofit Expenditures Are in Compliance With the Bond Act

RESULTS IN BRIEF

Legislation passed in 1995 requires the California State Auditor to ensure that projects funded by the Seismic Retrofit Bond Act of 1996 (Bond Act) are consistent with that measure's purposes, which are to reconstruct, replace, or retrofit state-owned highways and bridges, including toll bridges. This is the fifth in a series of annual reports on the Department of Transportation's (department) revenues and expenditures, authorized by the Bond Act, for retrofitting California's highway and toll bridges.

As of June 30, 2000, the department had spent $1.36 billion for projects on more than 1,150 bridges and seven state-owned toll bridges, completing 97.4 percent of the retrofitting for highway bridges and having all of the toll bridges either in retrofit design or under construction. Our review found that the department has done a good job of ensuring that seismic retrofit projects do meet the criteria for funding under the Bond Act. However, the department has not resolved a long-standing issue of reimbursing other accounts for interim funding obtained during fiscal years 1994-95 and 1995-96. During those years, the State Highway Account (highway account) and the Consolidated Toll Bridge Fund (toll bridge fund) provided a total of $114 million in expenditures and commitments for retrofitting California's bridges. The Bond Act requires that the department use bond proceeds to reimburse the highway account and the toll bridge fund for these prior expenditures.

In attempting to make the reimbursements, however, the department encountered opposition from the State Treasurer's Office, which pointed to a possible loss of the bonds' tax-exempt status, and the Department of Finance, which objected that the department's source of reimbursement funds could be used only for current expenditures. Provisions in 1997 legislation removed both of these objections. However, the department had not taken any action as of June 30, 2000, to reimburse the expenses. The department recently prepared a reimbursement plan, which will take effect in fiscal year 2000-01.

AGENCY COMMENTS

The Business, Transportation and Housing Agency agrees with the information provided in our report.


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