Monday, October 31, 2011

High-Speed Rail: Construction and/or Destruction?

What California got was "seed money."  They are now intent on spending that seed money.  They, the rail authority, and we know that there won't be any more money.  They have less than $10 billion total, to spend on a $100 billion train.  Should they go ahead, knowing they will quickly run out of money, with no further funds becoming available?

They want to use the money they have to lay a little more than 100 miles of track.  That track isn't needed, especially if there will be no high-speed trains to run on it. Should they go ahead with this project?

The FRA requires them to begin building in the low population agricultural region, away from the major population areas where transit ridership is essential. Does that make any sense?

What they intend to build in the Central Valley will come at severe costs to farm lands, businesses and residents.  They will take property, including farm lands, rendering them no longer useful or profitable. They will hurt and close many businesses. Should they build as they intend anyhow?

While claiming to hire many unemployed people, their project will lead to the firing of many people. Should they go ahead with this project?

They will be using state bond funds for this initial construction.  Those bond funds will require the state to pay interest and eventually repay the borrowed funds.  It will cost state taxpayers two dollars for every dollar borrowed.  Should the rail authority go ahead with this project?

Although the rail authority indicates that it has over $6 billion for this construction, that first 100 miles will cost considerably more than the forecast. They will run out of money sooner, and with fewer miles built, than they now predict.  Should the rail authority go ahead with this project?

The train they want to build will be a luxury train for the affluent. Should they use our tax dollars to build this train?

There will be so few riders for this train that it will require enormous subsidies to cover operating costs forever.  Should they build this train?

The answer to all these questions is no.
STATE: Rail-cost wreckage
Published: 28 October 2011 05:23 PM

California cannot build a high-speed rail system on wishful thinking. But the financing plans for the bullet train look increasingly fanciful. The Legislature should derail this runaway project, and protect taxpayers from wasting billions of dollars on an indulgence the state cannot afford and does not need.

The California High-Speed Rail Authority plans to release an updated financial plan on Nov. 1. But a report the agency submitted to the Legislature this month gives some new insights into the project’s financing. And those signals suggest an onrushing fiscal train wreck.

The rail authority proposes a $43 billion system that would whisk passengers between Southern California and the Bay Area at speeds of up to 220 mph. The agency plans to start construction next year on a stretch of track running from Bakersfield to Merced.

But the agency’s financial plan makes no sense. The state’s legislative analyst and others put a more realistic price for the system at about $67 billion, to start with. And the plan counts on infusions of money that look increasingly improbable.
The rail authority’s latest report, for example, says that the $10 billion to $12 billion in expected private funding is unlikely to appear until the system is operating. At that point, the argument goes, the revenue the train produces will bring investors running.

Except that few expect the bullet train to actually make enough money to pay for itself. The rail authority’s ridership projections have faced sharp criticism from several groups, including UC Berkeley transportation experts.

The authority promises updated passenger projections in the new business plan. But without enough riders, there will be no profit to attract investors. And starting the first phase in the low-traffic Central Valley hardly bolsters the chances for booming ridership. So who fills the financial gap if the private investment never materializes?

Nor is the $17 billion to $19 billion in proposed federal funding particularly plausible. The federal government so far has provided $3.6 billion for the bullet train, but federal finances and Beltway politics make more funding unlikely any time soon. If no more federal money appears, the rail agency says it might be able to fund the train through bonds subsidized by the federal government. But no such program exists for railroads, nor would current proposals in Congress be likely to provide enough money. And the federal subsidy would only cover interest costs; someone — California taxpayers, perhaps? — would still have to pay off the principle.

Or the state could just build what it can afford with existing funds, and maybe use the track for faster Amtrak service through the Central Valley — which hardly offers much of a return on taxpayers’ investment.

California has no need for a project that poses huge financial risks while serving no pressing public priority. The state should sideline the bullet train, before the program turns into a high-speed fiscal disaster.

No comments: