Wednesday, February 23, 2011

A reconsideration of Senator Alan Lowenthal's legislation, Senate Bill 517, which seeks to can the CHSRA

While this is not new news any longer, it's more important than I first thought.  Indeed, I was dismissive of this step and argued in this blog why it was underwhelming.

I apologize and have changed my mind.  This legislation is important and here's why.  It's a dramatic step by Alan Lowenthal,  a leading Democrat.  I don't have to belabor the fact that the Democrats in California are dedicated HSR supporters.  That's true at the state and at local levels.  (People like me are statistical outliers; Democrats who oppose the train.)  While Lowenthal has no intention of terminating the HSR project, he is without doubt absolutely fed up with the disgraceful behavior of the CHSRA Board.  That's why he is really going out on a limb to have them discharged and replaced.  That's politically risky for him.

So, what's good about that?  While the problems with the mismanagement, incompetence and deviousness of the rail authority has become well-known in California, it has been assiduously ignored by the US Department of Transportation and the FRA.

They have tossed a number of earmark-like funding awards our way (primarily for political reasons) regardless of the shenanigans and hanky-panky of the rail project's managers in our state, as if that didn't matter to the Democrats in Washington.  You would think that if the Mafia had come to California to build a high-speed rail brothel for $100 billion dollars, the DOT would also have funded them with start up funds.  OK, that's a slight exaggeration, but you get the idea.

The point here is that Lowenthal's legislation -- SB517 -- is the most definitive expression of concern about a project that certainly should oblige the federal government to reconsider its awards.  I mean reconsider on the merits, not the Republican intention to terminate on sheer cost grounds for deficit reduction purposes. 

With this bill, we have the State Legislature saying that, although they continue to support HSR development, they reject the developers.  Since California has received the largest portion of federal largesse, presumably based on the compelling case made by the CHSRA in Washington, wouldn't you think that a thorough re-examination of what the feds. believed they were doing is now called for?  Hasn't this become a problem for the DOT Inspector General?

The litany of CHSRA problems identified by government agencies in Sacramento, as they say,is as long as your arm.  The Legislative Analyst Office, the Inspector General, the State Auditor, the rail authority's own peer review committee, all very unhappy with the way this project has been managed, or more correctly, mis-managed.  And now, after endless State Senate hearings with endless conflicts, demands, and failure in the part of the rail authority and its CEO, to meet those demands, the Legislature has had enough.

Attention Democrats in Washington,take a good, hard second look at what you are funding.  If you don't, it will be perceived as your failure and become your embarrassment as we enter the 2012 election cycle. 

All this is great ammunition for Republicans.  And Lowenthal's bill puts a cap on it.  What California is hereby saying is we want the train and the money to build it, but we don't have anyone who can do this right and we're firing the guys who have been screwing it up.  This should raise even cynical Washington's eyebrows.

Bill a rebuke the rail authority deserves


For two years – even as independent outside groups offered scathing assessments of the state’s high-speed rail project – the California High Speed Rail Authority and its supporters have depicted critics as anti-rail zealots and small-government ideologues.

Now, however, state Sen. Alan Lowenthal, D-Long Beach, once a strong advocate of the project, has demolished that narrative. 

He’s introduced legislation that would replace the authority’s board of directors – which is dominated by politicians and the politically connected – with a panel of experts. The authority would lose its independence and be folded into the state Business, Transportation and Housing Agency.

Lowenthal’s frustrations came to a boil over the decision by the authority – under pressure from the Obama administration – to approve building an initial segment in the Central Valley even though it lacked a vetted business plan, hadn’t figured out its operating model and was basing decisions on ridership projections of dubious value.

The former Senate transportation committee chairman also stressed the most fundamental problem of all: the huge obstacle created by the wording of Proposition 1A, the 2008 ballot measure that provided $9.95 billion in bond seed money for the $43 billion joint public-private project. It forbids taxpayer subsidies for operations. But the rail authority’s analysis suggests that it will be unable to attract the minimum $10 billion in private funding it needs without a revenue or ridership guarantee. The Legislative Analyst’s Office says such a guarantee amounts to a promise of a subsidy if the project doesn’t meet expectations, and is thus illegal.

This should have stopped the project in its tracks. But most legislative Democrats, former Gov. Arnold Schwarzenegger and current Gov. Jerry Brown remain strongly supportive to the point where they might even go along with an attempt to get around the subsidies ban with semantic gamesmanship and legal trickery. The Obama White House has given it momentum with billions in federal funding. Billions more may be forthcoming in funds from states – Florida is the latest – that have decided to return federal high-speed rail grants because of a fear that the projects would end up as costly boondoggles.

All the concerns raised by these states – questionable ridership, cost and job-creation projections and exceedingly optimistic forecasts of long-term profitability or cost-neutrality – apply in California’s case. Between these concerns, the ban on subsidies and the enormous long-term financial problems facing state government, it is difficult to see the state’s high-speed rail project as viable. If experts are allowed to replace politicians on the rail authority board, we suspect they will quickly come to this conclusion.

Ultimately, what’s most needed on this issue is leadership from the governor. Brown should share Lowenthal’s frustrations, not ignore them. In coming weeks and months, we’ll see if he does – or if he just keeps pushing the high-speed rail happy talk.

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