MOORLACH UPDATE — Pothole — August 19, 2015

It was a fun opportunity to present my first bill this morning. Including those who testified in support and opposition, it lasted nearly an hour. The members of the Senate Transportation and Infrastructure Development Committee asked good questions of me, a representative from both the Legislative Analyst’s Office and Caltrans. A representative of the Professional Engineers in California Government (PECG) also provided some fun discussion.

It became glaringly clear that Caltrans needed to be much more transparent. The discussion was very illuminating. And the votes went as predicted. The Republicans were supportive and the Democrats opposed.

The first piece below is from the Flashreport and it provides a great treatise on SBX1-9. It makes you wonder how someone could vote against the bill.

It is followed by our press release.

The second piece is from Digital Communities, which provides a discussion on how I spent yesterday afternoon: enjoying a hearing on drones flown at fires.


…on California’s most significant political news…

Katy Grimes

The Road to Caltrans is Pitted With Potholes

Posted by Katy Grimes

As the California Legislature returned from summer recess yesterday, top on most political insiders’ minds is Gov. Jerry Brown’s special legislative session to increase taxes through approval of a group of transportation bills. Brown and Democrats claim the tax increases are needed ostensibly to improve California’s deplorable roads and crumbling bridges, long neglected by Caltrans. However, it was Brown who failed to properly fund transportation needs through the new budget – the largest state budget in California history.

Sen. John Moorlach R-Costa Mesa, says the “transportation” special session appears to be an exercise “designed to pressure legislators into supporting a tax hike on gasoline – even though Californians already pay the nation’s highest taxes.” And especially concerning is this regressive tax would hurt low income families, and the working poor the most. “How can you do this to the poor?” Moorlach asked. “This takes a larger percentage of their budgets.”

The Democratic Party claims to be for the poor, but continues to impose regressive, higher taxes that cannot be offset by higher hourly minimum wage or welfare benefits.

Moorlach, the Legislature’s only CPA, is correct. “We’re trying to say something needs fixing. You can’t have the highest tax rates and the worst roads,” Moorlach said in an interview Monday. “With 62 percent of Caltrans projects over budget, our Caltrans CEO isn’t really reining it in at all.”

“While we find that Caltrans has achieved some successes in delivering individual projects and has made minor improvements to the COS program in recent years, the program generally lacks accountability and is not operating efficiently,” the Legislative Analyst’s Office wrote in The 2014-15 Budget: Capital Outlay Support Program Review. “For example, the Governor’s proposals would result in the program being overstaffed by about 3,500 full-time equivalents (FTEs) beginning in 2014-15, at a cost of more than $500 million.”

Before the recent LAO report, the California State Auditor sounded the warning gong: “Based on our review of the data provided by Caltrans, 62 percent of the projects that completed construction in fiscal years 2007–08 through 2009–10 had support costs that exceeded their respective budgets. These overruns totaled more than $305 million of the $1.4 billion in support cost expenditures for the projects that completed construction during these fiscal years.”

These ignored warnings, together with Gov. Brown’s special session tax increase proposal, led Sen. Moorlach to introduce Senate Bill X1-9. It will be heard in the Transportation Committee’s Special Session meeting on Wednesday.

Senate Bill x1 9 prohibits the use of one-time, nonrecurring funds to support permanent ongoing state positions within the Department of Transportation. This bill also requires Caltrans to increase contracting for architectural and engineering services decreasing the use of permanent civil service positions for this workload.

Moorlach said his bill is about the breadth of contracting opportunities, and not about how the bidding process actually works.

However, “if no-bid contracting is something that Caltrans does as a policy, then there is even more restructuring that needs to be done within this agency,” Moorlach added. “According to Caltrans regulations on their own contracting policy, there are several stages of qualifying contracts and if Caltrans is following the process, then there are negotiations and the cost should be held to reasonable levels.”

Mismanaged Reckless, Unrestrained Caltrans

Caltrans is a mess. I’ve been covering the mismanaged agency for many years. In 2013, Caltrans Director Matthew Dougherty was reconfirmed by the Senate, despite overwhelming evidence of gross mismanagement during his leadership. It was under Dougherty’s watch and decades in management at Caltrans that many mishaps, corruption, mistakes and cover-ups have taken place. The San Francisco Oakland Bay Bridge, destroyed by the 1989 Loma Prieta earthquake, took 24 years and billions in cost overruns to rebuild. To this day, the faulty construction of the bridge is due to Caltrans gross mismanagement.

But it didn’t stop there with Caltrans’ reckless mismanagement:

* There were significant construction delays, new bridge cost overruns, the outrageous $10 million public relations contract, irresponsible vehicle purchases and vehicle rentals.

* There were Caltrans employees falsifying overtime and test data and stealing state property.

* There are more than 20,000 Caltrans employees making more than $100,000 annually.

* The Bay Bridge was so grossly neglected that the state auditor blamed $3.2 billion retrofit cost overruns in 2010 on the neglect.

“There is more. And it is all under the watch of acting Director Malcolm Dougherty.

A 2011 Senate Budget committee agenda addressing a contracting proposal shows committee analysis found contractors cost $243,000. However, if you read further, they acknowledge that better contracting could get the cost down to $209,000. That includes overhead calculations in full time employees totaling $96,000 a year.”

I wrote this in 2013. And yet today, in August 2015, the governor is proposing raising huge taxes to cover additional transportation costs for the transportation agency still operating under a cloud of mismanagement and corruption.

But even more telling are the outrageously poor rankings Caltrans has received over 20 years:

* Ranked 50th in overall highway performance and spending efficiency

* Ranked 49th for having urban interstates in poor condition

* Ranked 48th for having rural interstates in poor condition

* Ranked 48th for having rural arteries in poor condition

* Ranked 41st for having rural arteries with narrow lanes

* Ranked 35th for having deficient bridges

* Ranked 34th for having urban interstate congestion

According to Caltrans regulations on their own contracting policy, there are several stages of qualifying contracts and if Caltrans is following the process, then there are negotiations and the cost should be held to reasonable levels.

In June, Cathrina Barros, president of the Professional Engineers in California Government, the labor union for Caltrans engineers, claimed in an op ed that awarding contracts to private firms cost twice that than having the work performed by Caltrans employees. And again last weekend, she wrote a letter to the editor in Sunday’s OC Register Commentary Section attacking Moorlach’s bill. “I am honored to have the President of PECG go after me, falsely, but going after me all the same…”

“They argue that the cost per employee is less than that of private sector architects or engineers,” Moorlach said. “But, the union is relying on pre-1999 data, so the hefty pension plan contributions are understated in their numbers. Other studies suggest that the in-state employee costs may be higher when long-term pension costs and debt payments are fully considered.”

Moorlach explained that the benefit of outsourcing “is that you can quickly and adeptly expand or reduce the number of contractors. This is not as easily done with employees. Consequently, Caltrans has 3,500 more employees than it needs. A simple calculation of this opportunity cost, of roughly $500 million per year, brings the costs to $143,000 per employee.”

The committee analysis on Moorlach’s bill says that state staff costs $158,000 per employee per year. “The low-state numbers are usually averages of all ranges of state engineer costs and do not reflect the higher costs of specialized needs that a contractor can provide with more flexibility,” Moorlach said. “Further, when a contract is complete, there are no lingering costs. But when state employees are hired for long-term positions, Caltrans cannot justify their salaries when they are not working on actual projects.”

Moorlach said given the mismanagement within Caltrans, cutting costs is a much better option that should not be passed over.

Moorlach’s Senate Bill X1-9, the Responsible Contracting for Caltrans Act. It addresses the glaring flaws at Caltrans:

1. CA’s gas taxes are the 4th highest in the nation. According to the American Petroleum Institute, California’s 61-cent-per-gallon gas taxes are the 4th highest in the nation, behind only Pennsylvania, New York and Hawaii. This does not include the recent addition of extra cap-and-trade taxes resulting from bringing fossil fuels under California’s AB 32 law.

2. CA’s gas prices are the nation’s highest.

According to AAA, the current national average price for a gallon of ‘regular’ gasoline is $2.63. California’s current average price is $3.69 per gallon (as of 8/5/15).

3. CA’s gas tax & transportation fees yield $10.6 billion annually. According to the State of California, Department of Transportation, Division of Budgets, 2014/2015 Fiscal Year estimates, the State brings in at least $10.6 billion in taxes and fees “dedicated to transportation purposes.”

4. Caltrans spends just 20% of that revenue on state road repair & new construction. Last year, Caltrans spent $1.2 billion in state road maintenance & repair, and $850 million in new construction. Similar amounts are planned for the 2015/2016 CA State budget.

5. Caltrans wastes half a billion dollars annually on extra staffing.

6. CA’s roads rank near the bottom in every category, including:

7. Poor road conditions cost Californians $17 billion yearly in vehicle repairs, $702.88 per motorist.

8. 34% of CA’s major roads are rated to be in “poor” condition.

“I’ve run a department,” Moorlach said. “Nearly every metric that I’ve reviewed coming out of Caltrans has been screaming for a reorganization of this agency. With an opportunity to provide them with another $6 billion per year, it would be a great move on the part of management and the PECG union to educate the public on how it will efficiently manage this potential income stream with the lowest overhead expense ratio possible.”

Moorlach added: “Reducing Caltrans’ bloated size before proposing that California families pay even higher taxes to fix our roads is the right thing to do.”

CONTACT: Amanda Smith, Amanda.Smith (949) 223-5037


Unprecedented Senate Hearing Exposes Caltrans for Mismanagement and Lack of Budget Transparency

“Data is poor or inflated that the Department is using in their zero-based budgeting.”
– Legislative Analyst’s Office

“The overarching numbers given by Caltrans are not supported by data.”
– Legislative Analyst’s Office

“There are problems getting data, and that has to be fixed.”
– Senator Jim Beall (D-San Jose)

(Sacramento, CA) – In a rigorous discussion today during the Senate Committee on Transportation and Infrastructure Development over Senator Moorlach’s SBX1-9 (Responsible Contacting for Caltrans), the discussion quickly shifted focus to Caltrans’ lack of transparency, poor budgeting and mismanagement of funds.

Trained as a Certified Public Accountant, Senator Moorlach pointed out, “We’re generating among the highest revenues for our roads, and yet have some of the nation’s worst road conditions. This and other available data indicates a very clear and pressing need for oversight and reform at the California Department of Transportation.”

Jessica Peters, Principal Fiscal and Policy Analyst with the Legislative Analyst’s Office (LAO) said, “Data is poor or inflated that the Department is using in their zero-based budgeting.” Peters later testified that, “the overarching numbers given by Caltrans are not supported by data,” and Peters indicated Caltrans does not actually have a an adequate data collection system.

Several Senators on the committee expressed their frustration at the lack of data and transparency, including committee chair, Senator Jim Beall (D-San Jose), who declared, “There are problems getting data, and that has to be fixed.”

In response to SBX1-9, which highlights an LAO audit finding that Caltrans is overstaffed in its planning and engineering staff by roughly 3,500 employees, costing taxpayers approximately half a billion dollars a year, Ted Toppin of the Professional Engineers in California Government (PECG) stated, “There is not overstaffing in the department” (VIDEO of statement HERE).

However, Toppin failed to provide hard data to substantiate this claim. The non-partisan LAO challenged Toppin with findings from their review of Caltrans, pointing out that, after accounting for vacant positions and other attrition, they believe Caltrans to currently be overstaffed by 3,300 employees, as they have reduced their workforce by only 178 positions in the past year.

Senator Moorlach then presented a long list of troubling economic data regarding Caltrans. Toppin responded by saying that the Senator’s data “made no sense to me whatsoever.”

Senator Moorlach concluded by stating, “The Caltrans union failed to address the most basic question, which is why Californians pay the most, but get the least for their road money. And they never directly answered the question about being overstaffed by 3,500 positions.”

“Another problem, and again a sign of needed reform, is that it has been very difficult to get accurate data from Caltrans,” continued Senator Moorlach. “If Caltrans will be more forthcoming with the data, then we can begin to understand where the needs are.”

Video clips of the hearing will be posted, as they become available, on Senator Moorlach’s YouTube Channel:


About Senator John Moorlach (R-Costa Mesa):
State Senator John Moorlach represents the 37th District of California, is a trained Certified Financial Planner and is the only CPA in the California State Senate. He gained national attention 20 years ago when he was appointed Orange County Treasurer-Tax Collector and helped the County recover from its bankruptcy filing – at the time the largest municipal bankruptcy in U.S. History.
Follow him on Twitter and Facebook.

Digital Communities

Lawmakers, Drone Advocates Disagree Over UAVs Impeding Firefighting Efforts

Though the FAA is expected to address emerging safety issues when it adopts regulations to incorporate drones into the national airspace, an action expected in early 2017, California lawmakers might consider taking action on its own.

By Timm Herdt, Ventura County Star

Just this summer in California, there have been a dozen incidents in which drones flying over wildfires have caused delays or interruptions in airborne firefighting activities, and CalFire Chief Ken Pimlott told lawmakers Tuesday he fears a collision is inevitable unless strong action is taken.

Brandon Schulman, an executive with DJI Technology, a leading drone manufacturer, offered a very different story.

Last year in Connecticut, he said, a drone hobbyist flew his aircraft over a quarry fire and was able to provide video showing the location of explosives inside the quarry, allowing firefighters to extinguish the blaze safely.

Those two stories represented the extremes of a situation explored by a joint legislative committee at a hearing designed to examine what state Sen. Hannah-Beth Jackson described as “the good, the bad and the ugly” of the use of drones in emergency situations.

Jackson, D-Santa Barbara, chaired a hearing that was inspired by a rash of incidents this summer, including a 20-minute delay in fighting a San Bernardino County fire that soon thereafter jumped Interstate 15 and set fire to 20 vehicles and a near-miss in Fresno last week in which a helicopter carrying a patient to a hospital narrowly avoiding colliding with a drone.

Tuesday’s hearing came as lawmakers are considering legislation to establish steep penalties against drone operators whose aircraft interfere with emergency operations and pondering other possible actions, such as requiring operators of unmanned aircraft to first obtain a license.

“We cannot afford to delay any further this discussion,” Jackson said.

The committee heard testimony from 16 witnesses, including fire and law enforcement officers, drone enthusiasts, a representative of NASA and a co-founder of Drone University, an institution that offers training in drone operations.

It was evident that the training and qualifications of drone operators varies wildly.

Ventura County Sheriff’s Office Cmdr. Chris Dunn testified that his agency, one of the first nationwide to receive Federal Aviation Administration approval to operate a drone throughout its jurisdiction, has established rigorous safety standards. They include always keeping the craft within line of sight of the operator, contacting local airport control towers before a drone is launched, initiating radio contact with pilots if an airplane is sighted and grounding the aircraft if another unmanned vehicle is spotted in the air.

In contrast, said Bruce Parks of the Silicon Valley chapter of the Association for Unmanned Vehicle Systems International, many amateur operators are clueless about what safety precautions they should be taking.

“Some of these hobbyists,” Parks said, “they really don’t get that they’re flying an aircraft.”

Lawmakers on the panel made clear they have little patience with irresponsible operators.

Sen. John Moorlach, R-Costa Mesa, wanted to know whether any of the operators who interfered with firefighters have been apprehended and asked, “Where was your common sense?”

Sen. Richard Roth, D-Riverside, a retired Air Force general, said pilots such as himself are frightened by the prospect of colliding with a drone.

“They’re not toys anymore,” Roth said. “I’m not sure we shouldn’t have training for these operators.”

Many of the emerging safety issues are expected to be addressed by FAA when it adopts regulations to incorporate drones into the national airspace, an action expected in early 2017.

But lawmakers heard several suggestions Tuesday that California might consider taking on its own, such as requiring drones to be equipped with transponders that would allow emergency personnel to immediately identify their owner, requiring owners to undergo training and receive a license before being allowed to operate a drone and enacting stiff penalties for irresponsible operation.

“Up until now, it’s been the Wild, Wild West out there,” said Assemblyman Jim Cooper, a former Sacramento County sheriff. “It can’t be that way. Public safety trumps the private right to fly a drone.”


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