SACRAMENTO, Calif. (CN) — While California’s cities generally handle state funding for improving streets and roads properly, the state controller is not holding them accountable as road conditions decline.
State Auditor Grant Parks said in a report Thursday that his audit of the Local Streets and Roads Program found that the state lawfully manages how cities spend funds designed to maintain streets and roads. However, he said the state controller is not holding six cities accountable for how they manage funds, and road conditions in those cities are falling into disrepair.
The state Legislature created the Local Streets and Roads Program in 2017 after finding that California faced a $59 billion shortfall to maintain the state highway system over the next decade, and a $78 billion shortfall to maintain streets and roads. The state spent nearly $7 billion on the initiative from 2017 to 2022.
Each year, cities and counties must report their spending to the commission to qualify for program funds. The auditor studied Baldwin Park, Bell, Coronado, Oakland, Riverside and Yuba City. The cities generally spent funds on maintaining and rehabilitating streets as required, but fall short of proper maintenance and improvement, Parks said.
Parks found that the California Transportation Commission properly determined funding eligibility for cities and counties, and the state controller lawfully distributed those funds. However, he said the controller is not ensuring that cities and counties follow specified levels of local spending on streets and roads.
“There are no consequences if cities and counties repeatedly fail to meet their required local spending levels,” Parks said.
Some cities find ways to use funding to improve street conditions in disadvantaged communities. Oakland’s transportation staff use a weighting system that accounts for street conditions and underserved populations, identifying the percentage of underserved residents in each planning area and how many streets in an area are in poor condition.
Despite those efforts, pavement conditions in all six cities declined 10% between 2015 and 2022.
“The six cities we reviewed reported that the program funding they do receive is often not nearly the amount they need to maintain or improve their street conditions,” Parks said.
For example, Riverside spent $21 million in 2022 on maintenance and improvements to its roads but estimated needing $40 million each year to maintain those conditions— and $98 million each year to properly improve conditions within five years. Yuba City receives approximately $1.4 million to maintain 525 lane miles of pavement, but needs about $21 million annually to improve its streets.
Some cities look to other methods to raise money. Oakland passed a bond measure in 2016 to raise more cash for street repairs. Riverside receives around $2.4 million a year from a countywide transportation sales tax revenue adjustment. Yuba City may ask voters on the November 2024 ballot whether to approve increasing sales taxes 1% to collect $14.5 million each year for road maintenance.
Parks said the state controller’s interpretation of state law reduces accountability for the cities because they are not required to make up maintenance deficits within a year. The state controller has not performed audits to ensure that cities and counties comply with program requirements, even though dozens of cities may not have spent sufficient local funds.
On the other hand, the controller's policy for withholding funds from cities and counties that do not meet maintenance requirements is “overly punitive,” Parks said. State law does not give cities and counties enough time to improve spending plans. That puts them at risk of losing all of their funds because the controller interprets the law to mean it can withhold all total funds a city or county was supposed to receive.
Parks recommended that state legislators allow cities and counties that do not meet maintenance of effort requirements two years to budget additional local spending on road projects. The Legislature should amend state law to clarify that the controller should only withhold an amount of program funds equivalent to the local underspending that its audits have found, rather than all funds a city or county qualified for, he said.
He recommended that by October, the controller should start auditing at-risk cities and counties and allow two fiscal years for those that violate maintenance requirements to improve their spending.
The state controller responded in a statement dated March 15, saying that the agency will review more cities in 2024 despite insufficient staffing. While the office agreed that program funds should be withheld after an audit for cities and counties that do not meet the maintenance of effort requirements, it said that state law requires withholding all program funds from any city which is noncompliant for one year.
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