Thursday, October 27, 2011

Who's on First? Certainly not High-Speed Rail

This article is of particular interest to Californians who are tired of being threatened, bullied, cajoled and misled by the CHSRA.  This rail authority has been at it for years and has raised the scamming of the California voters to a high art.

Katy Grimes points out how ridiculous the rail authority's position and self-justifying double-talk appears to everyone, except, of course, the religious worshippers of the high-speed rail God.

HSR advocates persist in their claims and justification for this project -- in the face of incontrovertible evidence to the contrary -- that it will boost the economy and create jobs.  That's not fact based, it's wishful thinking and promotional marketing.

However, what we are learning each day from the rail authority itself suggests that even if the results and outcomes were to be as promised, this project is dead on arrival.  It won't  have enough funds to run HSR for one, single inch. And they know it, despite their self-promoting double-talk.  

In that case, what's the point?  There can be only one answer to this rhetorical question.  It's the basic claim of this blog.

It's not about the train, it's about the money.

NEW: High Speed Rail Spending Alert

Katy Grimes: Yesterday I received an email from the Sacramento Press Club canceling the Nov. 1 luncheon where representatives from the High Speed Rail Authority were to unveil the financial plan. “They did so via email and without offering any reason for their actions, nor have they responded to my request for an explanation,” Board President Rich Ehisen wrote.

I contacted Assemblywoman Diane Harkey, R-Dana Point, for her reaction. Harkey, the Legislature’s high speed rail expert, was planning on attending the luncheon.

Harkey had plenty to say:

The financial and reporting fiasco surrounding high speed rail is reminiscent of a classic comedy routine by Abbott and Costello.  The luncheon, cancelled for the second time, only adds to the comedy routine. It might be funny if the stakes were not so high. Who’s on First, What’s on Second and What Don’t We Know on Third?
The cancelled press lunch is undoubtedly tied to the Governor’s request to fund another $65M to the high-speed-spending crew without additional scrutiny, and without meeting the Legislature’s timeline and requirements passed last session, before appropriating any additional funds. Attempting to assuage Legislative angst, the Authority submitted a nine-page response to the Legislature on October 13th attempting to answer some of the issues. 

The “preview business plan” may be condensed as follows:

1.Subsidy or Revenue Guarantee: We said we wouldn’t need a subsidy or revenue guarantee, so we don’t.  Therefore we don’t have to report on it, but if we did, we can’t because we don’t know about it.

2.Alternative financing scenarios: We said we are not going to have lost revenues therefore it won’t happen – so we have no need to report.  But, if we did, then we build something somewhere and we use up all the money we can as quickly as possible.

3.Initial Construction Section: We have $6 billion of federal and state bond money to begin construction in the Central Valley somewhere, but it won’t really become useful until we build an “Initial Operating Section” for which we have no funding.

4.Infrastructure Bank: Qualified Tax Credit Bonds will not be available, but if they were, we could leverage the $9 billion voter-approved bonds by more than three times what the state could borrow independently from the bond market. We could get more ‘free money” with the Feds encouraging investors with tax credits, and California taxpayers repaying debt with more debt. (note: our State’s debt service has grown from 4% of GF revenues in 2007 to 7.8% in 2011.)

5.Fall-back alternative: We have $6 billion that we want to spend as quickly as possible, so if we do not get additional funding then we can attach the Initial Construction Section to the freight line and hope to complete the operating section later.  It won’t be high speed under California’s definition, but it works for the Federal Rail Authority money.

The Authority acknowledges that recent actions in Washington, DC by Congress make it very unlikely that future federal funds for high speed rail will be forthcoming. The Authority also admits the proposed Initial Construction Section will not be profitable and that private investors will not fund without a revenue guaranty. The Authority has also agreed, under separate action, to delay finalizing the Environmental Impact Report for the Central Valley to allow for an alternate route to be analyzed.

So, who’s on first?  What is the DOF request for additional money actually funding? The money, the route, and ridership are all in question, if not entirely exposed as non-existent. Even the Authority’s fall-back position of connecting the initial 100+ mile section in the Central Valley to the San Joaquin Amtrak, circumventing a segment of freight track, will rip through prime productive farmland, has the potential for funding shortages and may not qualify for dollars under the terms of the California High Speed Rail bond.

The Authority all but admits that there is no acceptable financing plan that would comply with the criteria the voters approved (no state subsidies) and that billions more could be added to Governor Brown’s “mountain of debt.” It’s up to this Governor to signal a halt to high speed spending until we know who’s on first, what’s on second, and clear up the “I don’t know’s” on third.

OCT. 27, 2011

No comments: