Democrats who support high-speed rail appear to be totally oblivious or indifferent to the bottom line.
High-speed rail is unaffordable in the United States. It is unaffordable in California. Does no Democrat get that? Do they know this but don't care? The money to build this train simply isn't there. It's not there in the private sector, it's not there in the state's capacity to borrow, and it's not there in the federal deficit/debt crisis.
This isn't rocket surgery. The California train is now pegged at $66 billion. They will never accumulate more than $8 to $10 billion at most from the federal government, to be matched with state bond funds. (Even those state bond funds are in question.) Given the costs, this is a drop in the bucket.
And, if the truth were told, the $66 billion number is also low-ball. When real contracting bids start coming in, those numbers will skyrocket, just as they did when the new Bay Bridge went out for bids. That bridge started at around estimates of $2 billion but is now over $7 billion, and climbing. (And most of that bridge was bought in China and is being assembled here.)
They will start HSR construction in the Central Valley in California, recklessly throwing money at laying tracks until it's all gone, and then stopping wherever they are. They now have only around $5, $6 billion to spend. What they do intend to build won't be usable for high-speed rail. They won't electrify the rail corridor; they won't buy any rolling stock. All they will do is lay some track. Do you see a problem with any of this?
When President Obama said he wants 80% of all Americans to have direct access to high-speed rail by 2035, what was he talking about? Where does the crazy notion come from that 80% of all Americans don't want to be where they are, and therefore must immediately take a fast train to get somewhere else? If we Americans can't get on 200 mph trains, will our economy collapse, and then will we all end up in the poorhouse to be taken over by foreign powers? Is that what this is all about?
10:00 PM PDT on Wednesday, April 13, 2011
California cannot build a high-speed rail system with fantasy money. The state should read the warning signals in the latest federal budget deal, and shunt this train to a siding. Rushing ahead with a hugely expensive public project that lacks a realistic financing plan is wildly reckless, not visionary.
High-speed rail funding was a casualty of last week's budget deal between President Barack Obama and congressional Republicans. Last year, the federal budget provided $2.5 billion for bullet train projects. But last week's agreement killed any new funding for high-speed rail this year, as well as stripping $400 million from last year's allocation.
Nor is Congress likely to be more generous with rail money in coming years. The federal government will run an estimated $1.4 trillion budget deficit in 2011 alone. The Congressional Budget Office projects the president's latest budget plan would pile up $4.4 trillion in deficits in just the next five years. The resulting interest on the debt, plus entitlement spending, is on track to consume most of the available federal revenue within a decade or two.
The federal government simply does not have money to throw into nice, but not necessary, public projects. And the election of a GOP majority in Congress determined to rein in deficit spending makes more funding for high-speed rail projects any time soon improbable at best.
California's $43 billion bullet train project runs on federal money, however. The train's financing plan calls for $17 billion to $19 billion in federal funding; so far, the state has about $3.6 billion. That leaves the state more than $13 billion to $15 billion short -- and the budget deal suggests California would be foolish to count on high-speed rail money continuing to flow from Washington.
Without that infusion of public money, however, the project is unlikely to land the $10 billion to $12 billion in private financing it proposes. The lack of federal funding undermines the bullet train's credibility with private investors, who will want to see a sizable public commitment before pouring their money into the rail plans.
Yet the California High-Speed Rail Authority plans to start construction next year anyway on a 120-mile stretch between Bakersfield and Fresno, the first leg of a planned link between Los Angeles and San Francisco. But pushing ahead without a workable financial plan risks saddling taxpayers with an unfinished line. And Californians would face a choice between abandoning the money they already poured into the bullet train, or forking over even more to complete the project.
Neither prospect is acceptable for a state with perpetual fiscal crises. Building a train system on the far-fetched premise that federal money will somehow materialize in the future only puts more pressing state needs at risk. And that list of top public priorities has never included faster rail travel between Los Angeles and San Francisco.
San Francisco to explore more payroll tax breaks
Andrew S. Ross
Wednesday, April 13, 2011
Train to nowhere? Money for high-speed rail in the agreed-upon federal budget for the rest of the year: $0. In fact, $400 million approved last year has to be returned. Future prospects: obviously, bleak.
California's high-speed rail project has enough in the bank to stay on track, said Jeff Barker, deputy director of California's High-Speed Rail Authority. But the cutbacks "send a bad signal to the private sector," whose investments are also going to be needed at some point, he said.
Right now, California can count on $3.6 billion, including $400 million for the new Transbay Terminal, in committed federal dollars. It is also hoping to get a good chunk of the $2 million left from Florida's giveback of high-speed rail funds. And there's the $9 billion in state bond money approved by voters in 2008.
Assuming state Treasurer Bill Lockyer is willing to sell some state bonds - given the current climate, Lockyer has voiced doubts - there should be enough to pay for the first leg, from Madera to Bakersfield, which has an estimated price tag of $5.5 billion.
But it's not nearly enough to cover the estimated $43 billion cost [edit. make that at least $66 billion] for the entire San Francisco-to-Los Angeles project. That's where the private sector is supposed to come in. For that, "we do need a greater level of predictability from the federal government," said Barker.
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This article appeared on page D - 1 of the San Francisco Chronicle