There was a June 3, 2011 article in the Sacramento Bee about the theft of our California Off Highway Vehicle (OHV) Trust Fund moneys. See: http://www.sacbee.com/2011/06/03/3673670/public-eye-lawmakers-take-10-million.html
The actual number was almost $31 million, but let’s not quibble or get caught up with details. That was the amount taken from the Off OHV trust fund at the time this article was written.
Although it has an attention grabbing title, this article is full of inaccuracies and distortions.
In order to understand these distortions it is necessary to take a look at California law. The OHV Division of State Parks and Recreation is a creature of the Legislature. You have to look at the California Codes and Regulations to understand what is going on. You can also look at the history of legislation to get a clearer picture of legislative intent when the legislation was passed.
Some of you might find this a bit boring, but I have done all the leg work and all you need to do is follow along.
California statutes can be found by going to http://www.leginfo.ca.gov/calaw.html and click on the code you are searching for, like, for example “Public Resources”, then put the number of the code in the box at the bottom and click search.
Just because someone says it’s so doesn’t make it so. So here goes…
1. The OHV Division has been insulated from money woes affecting California parks because, according to state tax law, most of its revenue comes from a slice of gas taxes attributed to off-road vehicle use.
This is a total mischaracterization of the situation. The Off Highway Vehicle Division of State Parks and Recreation is completely self-funded. Other California State Parks obtain the majority of their money from the general fund which is under enormous pressure due to California’s some fourteen billion dollar deficit.
When Governor Brown cancelled the sale of state buildings, initiated under the previous administration, the state proposed closing some seventy state parks to make up for the loss of immediate cash. In short, this is the reason why the regular state parks are now desperate for money and the OHV division is not affected by the cuts.
The OHV division does not take a “slice” of gas taxes, but it takes a carefully calculated dollar amount based on fuel tax paid for gas used in off road vehicles.
See: Revenue and Taxation Code Section 8352.6.
(a) (1) Subject to Section 8352.1, on the first day of every month, there shall be transferred from moneys deposited to the credit of the Motor Vehicle Fuel Account to the Off-Highway Vehicle Trust Fund created by Section 38225 of the Vehicle Code an amount attributable to taxes imposed upon distributions of motor vehicle fuel used in the operation of motor vehicles off highway and for which a refund has not been claimed…
(b) The amount transferred pursuant to paragraph (1) of subdivision (a), as a percentage of the Motor Vehicle Fuel Account, shall be equal to the percentage transferred in the 2006-07 fiscal year. Every five years, starting in the 2013-14 fiscal year, the percentage transferred may be adjusted by the Department of Transportation in cooperation with the Department of Parks and Recreation and the Department of Motor Vehicles. Adjustments shall be based on, but not limited to, the changes in the following factors since the 2006-07 fiscal year or the last adjustment, whichever is more recent:
The factors are then listed in sections (1) through (4).
(1) The number of vehicles registered as off-highway motor vehicles as required by Division 16.5 (commencing with Section 38000) of the Vehicle Code.
(2) The number of registered street-legal vehicles that are anticipated to be used off highway, including four-wheel drive vehicles, all-wheel drive vehicles, and dual-sport motorcycles.
(3) Attendance at the state vehicular recreation areas.
(4) Off-highway recreation use on federal lands as indicated by the United States Forest Service’s National Visitor Use Monitoring and the United States Bureau of Land Management’s Recreation Management Information System.
Revenue and Taxation Code Section 8352.6 subsection (c) then goes on to recount that it is the intent of the Legislature that transfers from the Motor Vehicle Fuel Account to the Off-Highway Vehicle Trust Fund should reflect the full range of motorized vehicle use off highway.
The OHV Division of California State Parks is funded exclusively by taxes paid on gasoline used recreating off-highway, red and green sticker registration fees and entrance fees to the State Vehicular Recreation Areas (SVRA’s) The funding sources are described in Vehicle Code Section 38225.
Vehicle Code Section 38225
(c) All money transferred pursuant to Section 8352.6 of the Revenue and Taxation Code (gas tax), all fees received by the department pursuant to subdivision (b) (registration fees), and all day use, overnight use, or annual or biennial use fees for state vehicular recreation areas received by the Department of Parks and Recreation shall be deposited in the Off-Highway Vehicle Trust Fund, which is hereby created.
The other California State Parks (the ones in trouble because of cuts in the state budget), in contrast to the California OHV Division, obtain their money from a variety of sources; the biggest portion coming from the General Fund. Other sources include the Public Resources Account in the Cigarette and Tobacco Products Surtax Fund; the Safe Neighborhood Parks, Clean Water, Clean Air and Coastal Protection Bond Fund; and the California Environmental License Plate Fund, among others. Users of these other state parks do not pay to play like we do at the OHV Division, but instead rely on other California taxpayers to fund their parks.
In short the OHV Division has been insulated from money woes affecting California parks because it is funded by a user financed trust fund. It is insulated not because it gets most of its revenue from a slice of gas taxes attributed to off-road vehicle use but because it does not rely on money from the general fund. We pay to play unlike other state park users. The other California Parks are in trouble because of cuts to appropriations from the general fund.
2. As a result, critics have long pressed the division to share fuel tax revenue with the other parks, especially considering that many conventional parks have decaying dirt roads that visitors use to reach trailheads, campgrounds and other amenities.
The division does share the revenue with other parks. According to the Tax and Revenue Code and the Public Resources Code other parks are entitled to apply for OHV trust fund money in the form of grants and cooperative agreements. They are eligible for money for motorized off-road access to non-motorized recreation and for rehabilitation of habitat damaged by OHV use.
Revenue and Taxation Code Section 8352.6
(c) It is the intent of the Legislature that transfers from the Motor Vehicle Fuel Account to the Off-Highway Vehicle Trust Fund should reflect the full range of motorized vehicle use off highway for both motorized recreation and motorized off-road access to other recreation opportunities.
Public Resources Code Section 5090.50 (A)
Fifty percent of the funds appropriated by the Legislature pursuant to subdivision (a) of Section 5090.61 shall be expended solely for grants and cooperative agreements for the acquisition, maintenance, operation, planning, development, or conservation of trails and facilities associated with the use of off-highway motor vehicles for recreation or motorized access to nonmotorized recreation.
See also Public Resources Code Section 5090.
State parks also get money for restoration.
5090.11. “Restoration” means, upon closure of the unit or any portion thereof, the restoration of land to the contours, the plant communities, and the plant covers comparable to those on surrounding lands or at least those that existed prior to off-highway motor vehicle use.
Public Resources Code 9050.50 (c) (2) provides as follows:
(c) Eligible grant and cooperative agreement applicants include: (2) State agencies for projects under paragraph (2) of subdivision (b).
Paragraph (2) of subdivision (b) includes funds for restoration.
(b) When appropriated by the Legislature for grants and cooperative agreements, available funds shall be awarded in accordance with the following categories:
State parks which provide off road access to nonmotorized recreation are entitled to OHV funds as provided in Subpart C under (b) (2) of Public Resources Code Section 5090.50.
C) Funds identified in this paragraph shall be available for grants and cooperative agreements for projects that provide ecological restoration or repair to habitat damaged by both legal and illegal off-highway motor vehicle use.
(E) Eligible applicants include local, state, and federal entities, Native American tribes, educational institutions, and eligible nonprofit organizations.
There is absolutely no truth to the assertion that our fuel tax revenue is not shared with other parks. They only need to apply for grants and cooperative agreements which includes up to 50% of all OHV trust fund money. The State Parks also get money from the Highway Users Tax Account which is where the majority of fuel tax ends up.
Public Resources Code 5090.61.
Moneys in the fund shall be available, upon appropriation by the Legislature, as follows:
(a) An amount, not to exceed 50 percent of the annual revenues to the fund, shall be available for grants and cooperative agreements pursuant to Article 5 (commencing with Section 5090.50).
Do other parks apply for funds that they are entitled to receive? I don’t know the answer to that question, but it is clear that they are legally entitled to apply for grants and cooperative agreements pursuant to Article 5 of the Public Resources Code.
3. The division does help a few parks, but only where registered off-road vehicles – so-called “green sticker” vehicles – are allowed, said division chief Phil Jenkins. An example is the Mammoth Bar motorcycle riding area at the Auburn State Recreation Area.
This may be true for other state parks, but Mammoth Bar is a special case. Mammoth Bar OHV Area is part of the Auburn State Recreation Area. OHV trust fund moneys were used to resurface an access road to Mammoth Bar. It was also used for restoration of some areas and to maintain and build an off road trail system.
Mammoth Bar was used almost exclusively by off road vehicles until kayakers discovered our resurfaced access road and started using it to launch their kayaks inside our OHV Park on the American River. Nobody complained of any conflicts, that is, until the kayakers objected to the motocross track located near the river which disturbed their experience communing with nature.
As a result of their complaints the park was closed to OHV use three days during the week and one day on the weekend. It is currently open Sunday, Monday and Thursday. This meant that weekend events had to be curtailed because setting up the events for Sunday on Saturday was prohibited. Specifically our PITS trials club had to stop using Mammoth Bar to put on trials events after this closure.
Led by a politically appointed commission closely tied to the off-roading industry, the division has long resisted a broad sharing of fuel taxes. This continues despite a 2009 legislative counsel opinion, which concluded that fuel tax money can legally be spent in the 270 conventional parks on non-OHV programs.
The commission is made up of a variety of different interests.
Public Recreation Code Section 5090.15 …(b) In order to be appointed to the commission, a nominee shall represent one or more of the following groups: (1) Off-highway vehicle recreation interests. (2) Biological or soil scientists. (3) Groups or associations of predominantly rural landowners. (4) Law enforcement. (5) Environmental protection organizations. (6) Nonmotorized recreation interests. It is the intent of the Legislature that appointees to the commission represent all of the groups delineated in paragraphs (1) to (6), inclusive, to the extent possible.
Basically the commission is run by a majority of people who are not representative of off-highway vehicle recreation interests. Often they are directly opposed to our sport.
The law is very clear that fuel taxes on fuel used off road are transferred into the OHV trust fund and the code explicitly describes what the OHV trust fund moneys can be used for.
The only way that these funds can be legally used in the 270 conventional state parks is on off road access to non-OHV recreation and restoration of areas damaged by illegal off road vehicle use. The commissioners are bound by their particular duties and responsibilities as delineated by Public Recreation Code Section 5090.24 and other provisions in the Public Recreation Code that define how OHV trust fund moneys must be used.
The legislative counsel’s opinion was that money Motor Vehicle Fuel Tax Account is fungible. From that premise it was concluded that fuel tax money can legally be spent in the 270 conventional parks on non-OHV programs.
This legal conclusion is suspect. All money is fungible in the sense that a dollar bill is a dollar bill no matter where you got it. It is always worth one dollar. If I trade my dollar bill for your dollar bill it is still worth exactly one dollar.
The frangibility argument is just playing with semantics because it is meaningless under these facts.The legislature takes tax dollars used by off road vehicles and transfers them to the OHV Trust Fund where they are used for OHV recreation. The money appropriated by the legislature is for a specific purposes and is not fungible like the dollar that I have in my pocket book.
The OHV trust fund is created by Vehicle Code Section 38225. Even if it is true the money in the Motor Vehicle Fuel Account is fungible (it’s not), that concept shouldn’t apply to money transferred into the Off-Highway Vehicle Trust Fund which is in trust and dedicated by law to the preservation of “ecologically balanced recreation” and “sustained long term use” (Public Resources Code 5090.02).
California courts have held over and over that trust fund money can only be used for trust purposes as delineated by statute and cannot be used for other purposes (California Association for Safety Education v. Kathleen (1994) 30 Cal.App.4th 1264). Trust funds are administered by the government in a fiduciary capacity and are not available for the general purposes of the government (The Harper Collins Dictionary of American Government and Politics by Jay M. Shafritz published in 1992).
Therefore, the commissioners cannot legally divert OHV trust fund moneys to non-OHV programs except to provide off road access provide restoration funds.
4. “It has been troubling, because it’s a change in fundamental philosophy,” Jenkins said of the $10 million loss. “If they decided this year to take $10 million, there’s always the possibility in future years they could take any amount.”
The $10 million dollar transfer is not a one-time deal. As a part of the state’s budget this year the legislature added a provision to
Revenue and Taxation Code Section 8352.6
(2) The Controller shall withhold eight hundred thirty-three thousand dollars $833,000) from this monthly transfer, and transfer that amount to the General Fund.
This is a permanent transfer of almost $10 million dollars a year from the OHV trust fund into the general fund. In other words the transfer will occur every month in every year from now until kingdom come. Of course, as Jenkins says there is always the possibility that in future years they could take more.
This transfer is troubling and clearly illegal. The legislature has been using the OHV trust fund as a piggy bank for years using the pretext of temporary transfers to be paid back in the future. This despite the fact that none of the almost two hundred million dollars in loans taken from the OHV fund have been repaid.
The unpaid loans keep getting larger despite the fact that California Vehicle Code Section 38225 that requires that temporary transfers be paid back within two fiscal years. Never-the-less this permanent taking is a dangerous change in fundamental philosophy as Jenkins stated.
Trust funds are administered by the state in a fiduciary capacity and are not available for the general purposes of the government. They are protected and cannot be raided even to balance the budget.
The concept of a trust was first introduced in estates and trust law. Using a living trust a person can avoid probate, control his assets and direct their distribution after death by executing a trust instrument. The trustee has a fiduciary duty to abide by the terms of the trust and cannot transfer money for spending not authorized by the trust document. A violation of that duty can result in civil penalties and the restoring of the unlawfully diverted moneys.
The Legislature creates certain departments in the state government funded by special accounts called trust funds. The California courts agree that the Legislature cannot divert trust fund moneys from their intended purpose. Trust fund money held in special funds is not a part of the general fund from which other government programs draw their money
In a fairly recent case, California Association for Safety Education v. Kathleen (1994) 30 Cal.App.4th 1264, the court said that trust fund moneys cannot be diverted from their intended purpose, but the legislature could transfer money from the DTPAF fund to the general fund because it wasn’t a trust fund. Among other reasons the court held that it wasn’t a trust fund was because it was not called a trust fund. Also, the DTPAF relied on the annual budget act and had no continuing source of funding. The OHV trust fund has a continuous source of funding (registration fees, park use fees and gas tax on gas used off road).
In Daugherty v Riley, the court said, “It would appear to be self-evident that the legislature may not on the one hand set up a department to authorize, regulate and supervise business transactions large and small, imposing fees upon those affected for the purpose of carrying out the purposes of the law and on the other hand permanently divert the funds thus raised and constituting the life blood of the department to the general fund or other general tax purpose. Daugherty v Riley (1934) 1 Cal.2nd 298, 309
In the case of the OHV trust fund the statutory authority is clear.
Vehicle Code Section 38225
(c) All money transferred pursuant to Section 8352.6 of the Revenue and Taxation Code (fuel tax), all fees received by the department pursuant to subdivision (b) (registration fees), and all day use, overnight use, or annual or biennial use fees for state vehicular recreation areas received by the Department of Parks and Recreation shall be deposited in the Off-Highway Vehicle Trust Fund, which is hereby created… All money shall be deposited in the fund, and, upon appropriation by the Legislature, shall be allocated according to Section 5090.61 of the Public Resources Code.
The Legislature specifically created the OHV Trust Fund in Vehicle Code Section 38225 which directs that money thus transferred has to be allocated according to Section 5090.61 of the Public Resources Code. Public Resources Code Section 5090.61 describes how the money is to be allocated among the State OHV Parks Department and for grants and cooperative agreements.
If you look at the legislative history of this Vehicle Code Section 38225 which renames the OHV fund as the OHV trust fund you can determine the legislators’ intent in passing the 1994 bill.
Go down and click on Bill Information. Type in SB3717 and the year is 1994. The analysis of the assembly floor of the enrolled version of the bill is illuminating.
This bill was introduced by the author to protect off-highway vehicle revenues from diversion during the budget process.”
It is clear that the legislative intent on passing this bill was to protect the OHV fund from appropriations during the budget process by explicitly naming it a trust fund. The legislature was aware that trust funds are protected by state law. The OHV trust fund by statute is required to be devoted to specified purposes related to off highway recreation and conservation.
SB 742 passed in 2007 amended certain provisions of the vehicle code. It increased registration fees. In return proponents of off road recreation were promised that no funds would be diverted. The explanation of the final bill it contained the following description:
“This bill, on and after January 1, 2008, would impose a special fee of $33 that would be required to be paid at the time of payment of the service fee. The bill would require the special fees, moneys transferred to the fund from the fuel account pursuant to the bill, and specified use fees for state vehicular recreation areas to be deposited in the fund. The bill would require, upon appropriation, moneys in the fund to be allocated for specified purposes related to off-highway recreation…”
The state has a fiduciary duty to ensure that money in our trust goes to support off road recreation as mandated by statute. The transfer of almost $10 million a year to the general fund is a clear breach of that duty.
In addition to this transfer they “borrowed” $21 million from our OHV trust fund which will never be paid back. That despite a provision in Vehicle Code Section 38225 that requires money borrowed from the trust fund be paid back within two fiscal years.
The legislature and governor have used our OHV fund as a piggy bank to make up for budget deficits since the OHV fund was created. Not a cent has ever been repaid. It seems as if the word is out in the state capital that if they need extra money the OHV trust fund is there for the taking. Is it just is a matter of being politically correct?
Looking at Bill Information will let you know who supports the OHV trust fund and who does not support it.
5. It’s a new lesson for State Parks, Schambach said: Share it or lose it. “Parks should move it internally,” Schambach said. “There should be a process for them to access that money.”
In other words, Schambach is giving us an ultimatum, “share it or lose it” despite restrictions in the code that determine how our money is to be spent. She shows a characteristic ignorance of California law as related to the OHV trust fund and the law that dictates how that fund is used.
In addition, this is our money. Off road riders pay to play. We finance our parks with gas tax, registration fees and entrance fees. Her attitude is that we should share the pain… except she does not share the pain. Her parks are not user funded. They are funded by taxes that we all pay. In essence she wants us to be taxed twice. She wants to take money out of our self- funded trust and transfer it to state parks that we already support as California tax payers.
The non-OHV state parks have been expanded exponentially in California. There are 270 of them and only 8 OHV parks. Meanwhile many of the OHV parks get so crowded during red sticker season that people are turned away at the gate.
Maybe, rather than the non-OHV parks “accessing” or more accurately stealing our money, some of the non-OHV parks should be turned over for OHV use. In this way those parks could legitimately access OHV funds and attract more users.
Karen and her friends are already trying to shut down our riding areas. They are forcing the state to use OHV trust fund money to defend our parks from what some say is frivolous litigation. She is a member of PEER, a plaintiff in the petition to close Carnegie. She prepared a declaration in support of the petition. Now they want to pound the final nail into our coffin by taking away our money and diverting it to other state parks.
Unlike other California parks, we are forced to spend money constantly monitoring soil conditions and wildlife habitat. One of the primary reasons that the OHV trust fund was created was to maintain the OHV parks to the highest environmental standards (not for the upkeep of other state parks). We should not have to suffer because these parks have multiplied beyond the ability of the state to maintain and run them. What were they thinking?
Governor Brown’s vetoed the budget passed by the state legislature. To be honest I don’t know how the veto will affect our OHV trust fund moneys, but I have been told that the OHV Division of State Parks and Recreation is under severe financial restraint. It seems that a likely explanation for these difficulties is the pilfering of OHV funds by the legislature.