Wednesday, April 13, 2011

Forbes Blog on the current high-speed rail situation. William Warren's analysis of HSR federal funding.

Well, the press is full of it today.  High-Speed Rail cut from the rest of the FY 2011 budget.  Game over for high-speed rail. "High-speed rail drops dead" says the Forbes blog headline. 

Living in California, I don't see it through such optimistic lenses. It's far from over.  The California Rail Authority has several federal billions awarded that haven't been "clawed back."  I don't expect that rescission happening.  So, the Happy Builders will do their engineering studies and push to get shovels in the ground in the Central Valley by the Fall of 2012. 

Also, it seems that the FRA is still sitting on about $5 billion of unspent dollars for high-speed rail that they haven't obligated yet.  A lot of bad stuff can still happen.  

Let me offer William Warren's astute analysis of the current financial situation regarding the availability of federal dollars.

Here is his verbatim text from his email to me:

1.  The FY11 Budget Request for HSR was $1.4 B.  It is now zero.  This means the drop within the FY11 Budget(ending 9/30/11) is $1.4 B.
2.  They also rescinded $0.4 B of unobligated balances in the Prior Year (FY10).
The FY10 Enacted Budget for HSR was $2.5 B.  So, if you measure the current "zero" compared to the FY10 level of $2.5 B, the reduction was $2.5 B.  In addition, they clawed back (rescinded) $0.4 B in FY10 that had not been obligated, so they are claiming another $0.4B, for a grand total of $2.9 B from the FY10 Budget level.
So, for the rest of FY11, through 9/30/11, the FRA has "zero" for HSR from the FY11 budget, and they are going to have to return $0.4B that they were holding from FY10.
HOWEVER, as a matter of background, the FRA had two sources of money for HSR other than the FY11 Budget:
1.  $8.0 B in the Recovery Act (ARRA)
2.  $2.5 B in the FY10 Budget
We learned today that of this $10.5 B, $5.37 B had been obligated, leaving $5.13 B unobligated.  We also now know that $0.4 B has been rescinded (see above), so their pot of unobligated money is now down to "only" $4.73 B.
We believe the $0.715 B that was awarded to California in October 2010 is in this pot.  I would presume the $2.4 B that just came back to the FRA from Florida is also in this pot.  These add up to $3.115 B.  And there is another $1.6 B flapping around, somewhere. 
So my conclusion is that while we may have an emotional victory in getting the FY11 amount "zeroed out", the FRA still has $4.73 B to play with, and California was promised $0.715 of it in October and California has applied for all $2.4 B of the Florida money.  Nothing in the FY11 Budget Battle over the past week dealt with these very large ticking time bombs.  (Worst case is that Calif. could still get from $3.1 B to $4.7 B in the next few months.)
Note that any or all of these monies would be in addition of the $2.9 B that has already been obligated ($0.4 B for the Transbay Terminal, $0.2 B for HSR Planning and Engineering, and $2.2 B for the north of Fresno to Bakersfield "First Section")

Thank you, Bill. 


High-Speed Rail Drops Dead
Apr. 13 2011 - 1:50 pm

If anything good came out of last week’s spending agreement, it was that President Obama’s high-speed rail boondoggle is now on the ropes. There is no money budgeted for the program the rest of this year, and a portion of the money allocated last year has been clawed back. This is likely a mortal blow to what the Obama administration envisioned as a $500 billion program to give 80 percent of Americans access to high-speed rail in the next 25 years.

For those who believe that the amount of government spending is perversely large in relation to what voters would like, this is a small but symbolic victory. High-speed rail was rolled out as a futuristic makeover of an aging American infrastructure, not an in-demand reform to the main kinds of transportation we already have. Decades of experience subsidizing Amtrak have shown that trains only make sense for the urban Northeast corridor, and even there the only route that is profitable is D.C.-to-New York.

Even with volatile gas prices, drivers have shown that they will amortize the gains from improved fuel economy standards for long commutes to work rather than cluster around train stations. That’s why annual Amtrak ridership is just a quarter of daily automobile traffic, as Washington Post columnist Robert Samuelson pointed out. Furthermore, subsidizing rail hasn’t produced a price point that makes sense for most commuters or even long-distance travelers who can usually get a better deal from the airlines.

Obama chose swing-state Florida as his high-speed guinea pig, where outgoing governor Charlie Crist had made the Tampa-to-Orlando route shovel-ready for federal funds to cover most of its $2.6 billion cost. But outside of politics, this project never made sense because it linked two cities just 84 miles apart and without serious public transportation systems of their own. Crist’s successor Rick Scott bravely rejected the train money from Washington, joining three other new Republican governors in Ohio, Wisconsin, and New Jersey who knew that their states would be left holding the bag for cost overruns and continuous subsidies.

Until Obama got some sense of budget realities last week, California was the last place where high-speed rail still seemed likely, as voters had approved a Los Angeles-to-San Francisco line. Anyone who has driven the Interstate 5 through the Central Valley can picture the absurdity of a bullet train track alongside the open stretch of freeway through farm country. Fully-funded, it was supposed to open in 2020. Now all it has left is what the New York Times report calls a “small down payment.”

From the start, high-speed rail came across like other Obama initiatives: vague, expensive, and European. In Joe Biden, a former Amtrak commuter to the U.S. Senate who claims to have enjoyed 7,500 roundtrips between Delaware and D.C., he had a surrogate to champion the cause.

But as this concession in last week’s budget showdown showed, Obama’s idealistic spending style will not hold up against voter sentiment for some general level of fiscal restraint, if not specific cuts. Two months after envisioning a makeover of American transportation, the president will now have to try again on a debt reduction plan instead.