Tuesday, September 27, 2011

For High-Speed Rail, The Future Lies Ahead (thanks, Mort Sahl)

High-Speed Rail in California -- Some thoughts on what to watch for:

Congress. The Senate has their version of the transportation budget extension for FY2012, with a last minute amendment for $100 million, stuffed in by Senator Feinstein, among others. It should be noted that, given the costs of developing HSR anywhere in the US, and especially in California, $100 million is a drop in the bucket.  Many tens of billions of dollars will be required to get California's train project off the drawing board, on the ground and operational.

There are many differences in the basic transportation budget re-authorization, and it seems like it will be a long, drawn-out struggle. However, this budget extension had to be passed before September 30 in order to prevent government shut-down. Even if this extension passes soon, which is quite likely, it is unlikely that the re-authorization will be accomplished before next year's elections.  With the House in recess, the Senate measure to extend government funding through Nov. 18th has to wait for the House to consider.  The Senate voted to wait until October 4.

Meanwhile, although the high-speed rail funding future in Washington seems more unlikely than ever, the Administration is proceeding as if nothing stood in the way of the flow of tens of billions of dollars to build high-speed Amtrak corridors around the US, as well as the very fast California corridor. One of the things to watch for is when reality will set in for Obama and Ray LaHood who are now selling the program as a jobs project.  So far, not so much. 

Sacramento.  Our governor, Jerry Brown, has indicated that he wants to wait for the new HSR business plan to be made public before he makes any decisions regarding high-speed rail.  Whatever.  We can be fairly confident that Brown, who was in on the ground floor of high-speed rail planning during his prior years as governor, won't back away from it now.

Brown has made it forcefully clear to the Democrats in the State Legislature that he intends to hold fast and it appears that his pro-HSR agenda is driven by the opportunity of $3.5 billion from the Department of Transportation.  It's been "awarded" already (Define 'awarded.') and now waits to be actually sent to California upon meeting certain deadlines, the first being September 2012 when construction must begin.

There's also the matter of several billion from the general obligation bonds from Proposition 1A that will be added to the $3.5 as a partial required match.  That means, the CHSRA will have over $6 billion to spend in the Central Valley.  While miracles do happen (such as a successful lawsuit with a court-ordered injunction/stop-order), I don't expect one in this instance.  Regardless of how many laws will be violated, I believe that the rail authority will begin construction on time.  And that's how the Governor wants it. 

Future funding is an entirely different matter.  It's become clear that any of the numbers provided by the rail authority indicating the actual costs of this project have been, and will continue to be, low-ball underestimates.  The most recent arithmetic has come up with more than $65 billion.  There is lots of conjecture that it will go well beyond $100 billion. Let's see if the rail authority acknowledges the costs increases of which everyone is already aware, in their next business plan.

Then, the question becomes, where will those dollars come from?  Sacramento? A state with borderline default issues? Or the federal government with a Congress that is more polarized than it has ever been in memory? Isn't that a critical problem that can't be ignored?  Will high-speed rail be yet another "unfunded mandate" of which the government is so fond?

All the recent buzz about Infrastructure Banks and Public/Private Partnerships complexifies the basic truth that HSR is a lousy investment for the the financial industry.  HSR is unprofitable anywhere.  It barely breaks even in two or three rail corridors on earth. What kind of an investment is that?  

In California, watch for the release of the October Business Plan.  First, watch to see if the rail authority brings it in on time.  Procrastination has become standard operating procedure.  Is there a connection between the rail authority postponing its October meeting into November and the possible lack of a business plan in hand?

As the swelling cost projections becomes ever better publicized, we should begin to see that these enormous, un-affordable numbers will have some impact on decision-making at the state and national levels. 

My point here is that at some moment in time, the disparity between the public fantasy rhetoric about the train and the promised blessings it will bestow upon California and the realities of its costs will be stretched to the breaking point.  

The promises of the train, its benefits to society and its panacea-like qualities will finally be appreciated for their science-fiction un-attainability.

Meanwhile, the ceiling-less cost growth and the diminishing likelihood of obtaining such financial support should shock a large enough portion of the population to demand a termination of this endeavor before it is too late and too much damage has been wreaked on California.

So, bottom line.  What to watch for if there is no more funding:

The rail authority intends to build a 100 mile, more or less, rail corridor, with tracks but no other technologies for high-speed rail, such as electrification, signalling, PTC, etc.  They claim that Amtrak can always use it. When the funding runs out, so does the project in the Central Valley.  They will continue to keep their offices open in Sacramento, and they will keep their lobbyists fully occupied in Washington for further funding.  

Meanwhile, there will be a lot of small-potatoes finagling in both the Bay Area and in the LA Basin to obtain land/corridor rights to run a future HSR.  In the Bay Area, area politicians are determined to bring HSR on the Caltrain corridor and have devised various devious ways (see: "blended solution" and "phased implementation") of achieving that end.  They are also seeking federal funding for electrification of the corridor in order to use that as a stalking horse for bringing HSR to the corridor in the future.  All that demands a separate detailed discussion.

If there is further funding, the rail authority will doubtlessly seek to complete as much of the entire route as funds allow, even if it means using the funds only as the means for first acquiring/'marking' the rail corridor route, buying rights of way, etc.  As we have said many times, the rail authority intentions are to get and spend funds.  They will build what they can, cover as much territory as they can, and continue to seek funds as a permanent bureaucracy dedicated to this one purpose. Only a Legislative act, signed by the Governor, can bring this project to shut down permanently. 

There can never be sufficient funding to complete this project, but it will proceed piece-meal as an endless and growing sense of anguish for many Californians,  with major upheavals in all urban areas and immense harm in the rural and farm regions.  Costs will continue to increase.  There will be legislation to find further state funding, such as another bond measure.  (See: Galgiani, Bonnie Lowenthal)

Needless to say, there must be no future further funding.  Perhaps all Californians will wake up to the harsh realities of what the downsides of this project will be and demand termination.  We can only hope.

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