Report 98022 Summary - December 1998
Department of Transportation:
Seismic Retrofit Expenditures Comply With the Bond Act
RESULTS IN BRIEF
This is the third in a series of annual reports on Depart- ment of Transportation (department) revenues and expenditures authorized by the Seismic Retrofit Bond Act of 1996 (Bond Act). Chapter 310, Statutes of 1995, requires the California State Auditor to ensure that the seismic retrofit projects funded by the bond proceeds are consistent with the purpose of the Bond Act.
Seismic retrofit expenditures for seven toll bridges and approximately 1,155 bridges in Phase II of the retrofit program qualify for Bond Act funding. As of July 1998, the expenditures totaled $815 million, including approximately $114 million of expenditures and commitments incurred during fiscal years 1994-95 and 1995-96.
The State Highway Account (SHA), the Consolidated Toll Bridge Fund (CTBF), and other state funds provided interim funding for expenditures incurred during fiscal years 1994-95 and 1995-96. The Bond Act required that bond proceeds be used to reimburse the SHA and the CTBF for these prior year expenditures. For fiscal years 1996-97 and 1997-98, the State used loans from its Pooled Money Investment Account to cover expenditures until bonds could be sold. As of July 1998, the department had received three loans totaling $1.548 billion. General-obligation bonds related to the Bond Act were issued in March and October 1997, and in October 1998, totaling $694.8 million.
In general, the department has ensured that the seismic retrofit projects are consistent with the purpose of the Bond Act. In fiscal year 1996-97, the department encountered difficulties in complying with the Bond Act requirement to reimburse the SHA and the CTBF for the fiscal year 1994-95 and 1995-96 seismic retrofit expenditures. The State Treasurer's Office and the Department of Finance objected to the reimbursements because they would have resulted in the loss of the bonds' tax-exempt status; however, certain provisions of Chapter 327, Statutes of 1997, now allow the department to make the reimbursements without losing the bonds' tax-exempt status and without violating the terms of the loan. Thus, the department plans to begin the reimbursement process in fiscal year 1998-99.