Transfer the State Preservation Board s Excess Funding to General Revenue; Seek Federal Funds for Capitol Grounds Restoration

The Legislature should reduce the State Preservation Board s 1994-95 appropriations to save $8 million in Capitol restoration funds no longer needed for the project . The State Preservation Board and the Texas Department of Transportation should work together to gain federal funding for Capitol grounds restoration and improvements to North Congress Avenue.

The State Preservation Board (SPB) was created in 1983 to preserve, maintain and rest ore the Capitol, the old General Land Office Building, their contents and their grounds. In 1989 and 1991, SPB received total general revenue appropriations of $188.6 million for restoration of the Capitol and General Land Office Building and construction of the Capitol extension. However, SPB s appropriations are higher than necessary to complete these projects.

The Capitol extension, the Capitol exterior restoration and the Old General Land Office Restoration projects will be substantially completed by e arly 1993. In September 1992, a contract for the Capitol interior restoration was signed for $57 million, with completion scheduled for the end of calendar 1994. As of October 1992, SPB identified $8 million as available surplus over the amount currently r eserved for all project contingencies. 1

This surplus is the result of cost-efficiency revisions and modifications to the restoration project after a first round of bids came in substantially over budget. Moreover, the restorers increasing experience on the Capitol project, as well as additional architectural plan reviews, uncovered areas in which modifications or additional information would lower total project costs. Finally, furnishings expenditures for the Capitol extension were $1.2 million below the budgeted amount. 2

SPB surplus funds may be much higher than $8 million. When contracts for the Capitol extension project are completed, construction contingencies reserved for these projects may be released, adding to the surplus. The 1993 opening of th e cafeteria and potential gift- and bookshops in the Capitol extension and a Visitor s Center in the Land Office will provide SPB with other revenue sources.

SPB s executive director has stated that this surplus should be retained to meet unforeseen demands and guarantee the project s completion. SPB plans to purchase new furnishings for reception areas in Capitol offices with the $1.2 million left over from furnishing the extension. 3

A related issue concerns the fact that SPB has requested additional ge neral revenue to restore the Capitol grounds and improve adjacent areas along North Congress Avenue. SPB has asked for additional appropriation authority to spend its unexpended balances on this project. But even without the identified surplus, existing mo ney in SPB s budget could be used to attract matching federal funds to complete this project.

New federal legislation, the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA), will support activities beyond traditional highway and public tran sportation projects. Activities qualified for federal aid under this act include landscaping and other scenic beautification and historic preservation projects that have a direct relationship, either through function, proximity or impact, to highways. The Texas Department of Transportation (TxDOT) requires that allowable projects not be profit-making ventures; have long-term economic, environmental, historic or public health benefits; have the support of the local community; provide benefits that are not pu rely local; comply with appropriate standards, and be completed within three years or less. 4 Other states are also using ISTEA funds for similar purposes.

TxDOT and the Federal Highway Administration have indicated that the North Congress Avenue project should be eligible for funding from federal Surface Transportation Funds as a highway project. TxDOT would have to designate this portion of North Congress A venue as a state highway during the project. Furthermore, as the Capitol grounds are in direct proximity to this highway project, their restoration could be eligible for federal Transportation Enhancement Funds. 5 Both federal programs pay $80 in federal matching aid for every $20 of state funds. Written applications from SPB and TxDOT and approval by the local metropolitan planning authority would be necessary to determine these projects final eligibility.

A. The Legislature should reduce State Preservation Board s (SPB) 1994-95 appropriations for unexpended balances by $8 million.

According to SPB, this money will no longer be needed to complete the Capitol restoration. Throughout the remaining course of the restoration project, the Legislature should examine SPB s project contingencies to determine whether additional amounts will be available for return to general revenue.

B. The Legislature should mandate through an appropriation rider that SPB and Texas Department of Transportation (TxDOT) work together to fund the restoration of the Capitol grounds and North Congress Avenue.

S PB and TxDOT should work to obtain funding from SPB project contingencies, the Surface Transportation Program and the Transportation Enhancements Program for North Congress Avenue improvements and the restoration of the Capitol grounds. The Legislature sho uld authorize through an appropriation rider the use of SPB unexpended balances up to the required federal match and for federal funds sufficient to complete the Capitol grounds restoration. SPB should schedule work on the grounds restoration to be complet ed by December 1994, to coincide with the completion of the Capitol interior restoration.

Fiscal Impact
General revenue would gain $8 million in 1994-1995 by reducing SPB budget request. Additional general revenue could be made available after the Capitol extension and exterior restoration projects are complete and a review and reduction of the project conti ngency is made in early 1993.

Additional savings to general revenue would result from gaining federal funds to pay 80 percent of the cost of the Capitol grounds restoration and from using federal and state highway funds for all of the North Congress Avenue costs. Since SPB s current legislative appropriations request asks for $3 million in reappropriated general revenue for the Capitol grounds restoration, this recommendation would result in shifting a projected $2.4 million in costs from general revenue to federal funds.

SPB will have sufficient general revenue funds to provide the match for federal funds for the Capitol grounds project. SPB contin ues to carry $2 million in their operating budget for Capitol extension furnishings, while actual costs for the furnishings have dropped to $800,000. From this excess $1.2 million, the Legislature should authorize SPB to provide matching funds for the Capi tol grounds restoration project to use to obtain funding under the Transportation Enhancement Program.

Highway Fund 006 should be used to provide any federal fund matching requirement for the North Congress Avenue project. No estimate of the North Congress Avenue costs is available at this time.

Fiscal Gain to the General Gain to Change
Year Revenue Fund 001 Federal Funds in FTEs

1994 $8,000,000* $ 0 0
1995 0 2,400,000 0
1996 0 0 0
1997 0 0 0
1998 0 0 0

* This fiscal note assumes that the Legislature will appropriate all unexpended balances less the $8 million to SPB and authorize the expenditure of $600,000 in general revenue from the project contingencies for the Capitol grounds restoration project.

1 Letter from Dealey Herndon, Executive Director, State Preservation Board, to Comptroller of Public Accounts, November 13, 1992.
2 Interview with Dealey Herndon, Executive Director, and Steve Adrian, Financial Officer, State Preservation Board, Austin, Texas, October 14, 1992.
3 Ibid.
4 Texas Department of Transportation, TxDOT Transportation Enhancement Program, Proposed Program Framework (Austin, Texas, October 5, 1992), pp. 4-5.
5 Interview with David Soileau, Federal Policy Analyst, Division of Planning and Policy, Texas Department of Transportation, Austin, Texas, November 12, 1992; and interview with Frank Mayer, Texas Division of the Federal Highway Administration, Austin, Texa s, November 13, 1992.