State Parks Funding

California officials now unsure of size of hidden fund for off-road parks

The amount of money hidden by California state parks officials in one of two special funds has suddenly become unclear, preventing the Legislature from spending the money to repair and reopen parks.

A dedicated pot of money known as the Off Highway Vehicle Trust Fund holds the majority of the "hidden assets" that officials at the state Department of Parks and Recreation kept off the books when they filed annual reports with the Department of Finance.

When the scandal was first reported by The Bee on July 20, officials in the administration of Gov. Jerry Brown reported that the hidden assets totaled $54 million. The OHV fund held about $34 million, and the balance of $20 million was in the State Parks and Recreation Fund.

Unlike general government spending for basics such as payroll and paper clips that are covered by the state's general fund, these special funds collect revenue generated at the parks themselves, through entrance fees, souvenir sales and other site-specific sources. The OHV fund serves the state's eight parks dedicated to off-road vehicle enthusiasts, as well as grants for trail projects elsewhere. The State Parks and Recreation Fund helps cover operating costs at the state's 270 other parks.

For reasons still unclear, parks leaders squirreled away the $54 million for as long as 12 years, according to a preliminary investigation by the Natural Resources Agency and the Finance Department. This continued even as parks officials moved last year to close 70 parks to comply with cuts to the state's general fund.

Parks director Ruth Coleman resigned as the scandal broke. Separate investigations are under way by the attorney general, the state auditor and the Legislature.

Late last week, Finance Department chief deputy director Michael Cohen told the Senate Budget Committee that his agency is no longer sure how much money was hidden in the OHV fund, and that clear answers would have to await the outcome of the investigations, expected to last the rest of the year.

He said it also was unclear how much of that final amount would be available to spend on parks vs. what has already been committed to particular projects.

"What exactly was going on with that fund is not clear," Cohen said. "Because we don't have full information on the fund, we don't think it's appropriate to make additional ... decisions based on information that may or may not be accurate."

His testimony came during debate over Assembly Bill 1478, by Assemblyman Bob Blumenfeld, D-Woodland Hills, to spend the $20 million discovered in the State Parks and Recreation Fund. The bill was approved by the Senate on Thursday and awaits the governor's signature. It appropriates $10 million from the fund for park maintenance projects and $10 million as matching funds for private grants for parks.

Cohen said the Finance Department has enough information to know that the $20 million in the parks and recreation fund actually exists, and so the committee approved the bill.

There was bipartisan support to amend the bill to begin disbursing the $34 million hidden in the off-highway fund, as well. But the senators were outraged to learn there is far less certainty about these funds.

"What I don't understand is that we're OK going ahead with the $20 million, but we have to have ongoing investigations for some months on the OHV fund," said Sen. Doug Lamalfa, R-Richvale. "Why is the OHV fund being discriminated against? It's deplorable."

Steady funding for off-road division

Lamalfa's frustration follows years of political tension over the funding for off-highway vehicle parks. The Democrat-controlled Legislature has repeatedly tapped the lucrative OHV fund to subsidize other state functions. Off-roading groups and their mostly Republican allies consider this tampering to be improper and unfair.

The OHV fund was created through the foresight of the off-roading community to establish a steady source of operating funds. The other state parks have never enjoyed such consistency. Efforts to create a dedicated fund for the 270 non-OHV parks have repeatedly failed, most recently in 2011 with the rejection of Proposition 21, which would have attached a surcharge to vehicle license fees.

The OHV fund collects money from three sources: licensing fees paid by owners of off-road vehicles; entrance fees paid at the state's eight off-highway vehicle recreation areas; and a portion of all the gas taxes paid at the pump in California.

The fuel taxes bring in about $65 million annually, representing the vast majority of money collected by the trust fund. It is a relatively large sum compared with state general fund support for the 270 conventional state parks, which shrank to $99 million in 2012.

The fund is overseen by the Off Highway Vehicle Division at state parks, which manages eight parks dedicated for use by all-terrain vehicle enthusiasts. The fund primarily is spent to operate and expand these parks, and to acquire land for new OHV parks. By law, the fund also is used to make grants to agencies for off-highway vehicle trails on other public lands.

At the end of the 2011-12 fiscal year, parks officials falsely reported to the Department of Finance balances of $67.2 million in the OHV fund and $15.7 million in the State Parks and Recreation Fund. These numbers did not include the $54 million in hidden money discovered in July.

Because of the historically large balances in the OHV fund, it has been tapped repeatedly by various governors and the Legislature to help balance the state's general fund and, more recently, to subsidize the 270 conventional state parks.

Since 1974, according to off-roading groups, $196 million has been diverted from the OHV fund for other government purposes. Much of this money was considered loans, but very little has been paid back.

Off-roading groups are bitter about this, saying it has compromised recreation access for their members.

"My feeling is, the OHV trust fund has actually kept state parks out of trouble for the past 40 years," said John Stewart, a consultant for the California Association of Four Wheel Drive Clubs. "The fact that the state now says there was $34 million hidden in the OHV trust fund doesn't surprise me a bit. In fact what surprises me is, is that all?"

A 2009 legislative counsel opinion concluded that fuel taxes collected by the OHV fund can legally be spent on non-OHV park projects. The opinion was based in the argument that at many of the state's conventional parks, visitors must travel on dirt roads to reach trailheads, campgrounds and scenic vistas.

In the current budget year, the Legislature appropriated $11 million from the OHV fund to buoy other parks threatened with closure and service cutbacks.

Off-roading groups say they think the "hidden assets" just masked another diversion of OHV funds.

"As a Californian, I feel so deceived," said Dave Pickett, Northern California representative of the American Motorcyclists Association. "I think the (hidden) money was squirreled away by parks for possible acquisition of non-OHV land."

Funds saved for land purchases

Even with the diversions, the OHV fund has routinely maintained a large balance. Managers of the division have said this was necessary to keep money in reserve to acquire land for new off-roading parks.

Yet the department has not opened a new off-roading park in 15 years.

State officials maintain that finding appropriate locations has been difficult. OHV parks tend to be controversial. Potential neighbors find the noise and dust objectionable. Environmental concerns inevitably arise.

"Anyplace you put it, it's going to have an impact," said Karen Schambach, state director of Public Employees for Environmental Responsibility. "It's such a damaging activity that nobody wants it near them, and they can't get through the issues like air quality and wildlife impacts."

Pickett contends a different dynamic is often at work: The OHV Division saves money to acquire land for a new park, but the Legislature – pressured by environmental groups – refuses to appropriate the money for the purchase and then "borrows" it for something else.

"Every time we save up money, we're a target," Pickett said.

Even so, because the off-roading parks have revenue dedicated in the OHV fund, they are comparatively well-funded. The eight OHV parks averaged $3.5 million in operating expenses and 23 full-time employees per park in the 2010-11 fiscal year. The 270 other state parks averaged $604,800 in operating expenses and six full-time employees per park.

If the ongoing investigations confirm there was, in fact, hidden money in the OHV fund that is available to spend, the Legislature will decide how to spend it.

But it's not clear how soon that will happen. The investigations are likely to stretch out until December, Cohen said, meaning the Legislature will not be able to allocate any surplus OHV funds until it reconvenes in 2013.