1. Division of Budgets Caltrans July Presentation State Highway Account Balance Presented to the California Transportation Commission July 22, 2003

2. Contents Review of June Forecast Impact of Budget delays Options for dealing with low cash balances

3. Review of June Forecast At the June CTC meeting the Department presented the following: nThe forecast projected a June 2004 shortfall of $52 million if the Department continued with the current allocation plan and a balance in June 2005 of $749 million. nThe Department assumed borrowing from other Departmental funds and borrowing from the General Fund in the first quarter of FY 2003-04. nThe Department believes the planned SHOPP allocations for FY 2003-04 can be made. The timing of the allocations will be depend upon the State and Federal budget issues and revenue levels that are not yet resolved.

4. Review of June Forecast Since the June meeting, the Department has determined that the revised June 2004 forecast balance considering the June vote will be $123 million. The Department will continue to monitor resources and expenditures and will report to the Commission monthly. The next cash update will be presented in September. No reliable forecast can be made until the State Budget is passed.

5. Review of June Forecast SHA Forecast includes negative balances: nAs presented in June, the current SHA forecast shows three months with month-end balances dropping into the negative (see attached graph). nPrevious forecast also had periods in the first and second quarters with monthly balances dropping into the negative. nIn addition, there are days within these months in which the balance will drop into the negative by as much as $400 million. nThe Department intended to manage by internal borrowing, and when needed, a General Fund loan.

6. 24-Month State Highway Account 2003-04 Cash Forecast ($ in millions)

7. Impact of Budget Delays in the First Quarter No HUTA revenues will be transferred nWithout a budget, HUTA (excise tax revenue) transfer will be delayed. This amounts to approximately $175 million per month. nThe significant impact of this delay will be in September when two payments are due. Weight Fees will be received nThe State budget does not impact weight fees and the Department is projected to receive $156 million in weight fees and $23 million in other revenues. No General Fund loan will be available nWithout a State budget, the DOF has informed the Department that no loan can be made without a budget.

8. Federal Issues in the first half of FY 2003-04 Federal reimbursement in this quarter will be lower than the previous quarters due to accelerated collections of Federal Funds in the 2002-03 fiscal year. Federal revenue levels for FY 2003-04 remain uncertain because of no consensus on the Federal Budget. Without a Federal reauthorization, there may be a delay in claiming prior year federal obligations. If continuing resolutions are passed in lieu of a budget act, full-year federal allocations will not be available. This is a significant impediment to annual cash management.

9. Status for FY 2003-04 There is continuing uncertainty concerning FY 2003-04 allocations at this time. nThere needs to be a State budget passed to determine program and revenue levels for FY 2003-04. nShort-term cash issues need to be worked out. nUncertainty about Federal revenue levels for FY 2003-04 make it impossible to accurately forecast cash levels.

10. Options to address SHA cash issues Departmental actions to ease cash shortfall as outlined in the July 18, 2003 letter to the CTC: nDelay awarding contracts until budget is passed. nSuspension of 30 recently awarded contracts nWork with contractors to continue work on projects and accept delayed payments. nSome Cities and counties will advance funds in the form of payments to contractors for projects partially funded by the local agencies. nUtilize Local Assistance Federal Obligation Authority to provide cash for existing projects. nSeveral Self-Help Counties have agreed to provide temporary funds to continue projects in their counties. nSuspend additional projects if the budget impasse lasts for several months and other actions are not found to generate necessary cash.