Wednesday, November 30, 2011

The California Legislative Analysts' Office dumps on the High-Speed Rail Project

1. What the CHSRA intends to do in the Central Valley with its initial construction violates the edicts of Prop. 1A and is illegal.

2. There will be no further funding to add to the currently available $6+ billion for Central Valley construction.

3. The rail authority will not build an operational high-speed rail in the Central Valley.  Without further funding, that will be the only construction completed; one hundred miles of tracks usable only by Amtrak.

4. The voters were misled by the Proposition 1A bond issue ballot measure in 2008. The current plans call for a very different project, with three times the cost and a construction period of 22 years, 14 years more than in the initial plan.

5. The costs of this project take funding away from far more urgent needs in the state.

These are some of the bullet points that are finally being acknowledged in high and official quarters in Sacramento and around the state.

At the federal government level, we have the Congressional Budget Office, an independent body that reviews legislation and governmental processes both to clarify the meaning in the legalistic jargon so often used, but also to ascertain the legitimacy of both the legislation and how it is being honored in practice. On all these scores, the CHSRA isn't doing so well. 

The equivalent at the state level in California is the Legislative Analysts' Office (LAO).  They have issued a highly critical report on the 2012 Business Plan of the California High-Speed Rail Authority.

We have provided the opportunity to read the nine page LAO Report here:

As an extra bonus, and at no additional cost, we provide articles about this report from two leading state newspapers, the Los Angeles Times, and the San Jose Mercury News.  It should be pointed out that both papers have a pro-HSR editorial position.  Nonetheless, both articles are highly critical of the business plan.

Apparently, even CHSRA Board members have now been put on the defensive. Perhaps, the tides are finally turning.

Top analyst warns state could waste $6 billion over high-speed rail
By Mike Rosenberg and Steve Harmon
Staff writers

Updated: 11/30/2011 09:38:09 AM PST

The state's top analyst on Tuesday not only questioned the legality of launching a high speed-train, but also warned legislators that starting construction on the rail line could be a $6 billion waste of tax funds at the expense of social services, education and other transportation projects.

In the sharpest critique yet of the state's newly revised plan to spend two decades and $99 billion building a bullet train line, the Legislative Analyst's Office bashed planners for relying on "highly speculative" funding sources.

As a result, the analyst concluded that it's "highly uncertain" the full project will ever get built. Even so, the state intends to start construction in the Central Valley next year by spending $2.7 billion in state bonds plus a $3.3 billion federal grant to build a stretch of track too short for bullet train service -- a move that has already triggered a lawsuit. But passengers won't start zipping between San Francisco and Anaheim unless Congress bankrolls more than half the project, a dubious scenario considering federal lawmakers have killed all high-speed rail funds for two straight years.

"It appears doubtful that substantial additional federal support will be forthcoming anytime soon," the report says. "This makes it increasingly likely that the (initial stretch of track) may be all that is ever built," a project that is "unlikely to justify (the) expense."

The report, unveiled at an Assembly oversight hearing, appears to give lawmakers the strongest ammunition yet to kill the project instead of starting construction, which would bury the state even deeper in debt.

"You may also have to look at making other cuts to social services programs or education," and not funding other transportation projects, report co-author Farra Bracht told the Assembly Committee on Transportation.

Even the officials backing the project conceded the review has merit.

"High-speed rail certainly faces a challenge that it does not have a dedicated revenue source like the gas tax," said Dan Richard, one of Gov. Jerry Brown's appointees to the California High-Speed Rail Authority board. "If the federal government chooses not to continue to fund high-speed rail, it's going to be very difficult to see how we can complete this."

The analyst's nine-page report also concluded that the rail authority's estimate of the cost to scrap the rail line, and instead to expand freeways and airports, was "overstated" and not realistic. Further, they say it's "unproven" that high-speed rail would really solve the state's future transportation demand, that their economic impact study is "incomplete and imbalanced" and that rail authority staffing is "inadequate."

The analyst further warned that the rail line voters approved in 2008 only allows construction to begin when officials outline committed funding and environmental clearances for a segment long enough to run service. But the rail authority has neither, the analyst said. Kings County, where construction would start, just sued to stop the project on similar grounds, though the rail authority maintained Tuesday that its plan is legal.

With Brown supporting the plan -- his appointees helped draft it -- and most legislative Republicans opposing, the decision will come down to the will of Democratic lawmakers. While they made no decisions or major pronouncements at the hearing, some officials continued to express reservations.

"My fear is that with (an uncertain) price tag and no dedicated revenue stream, any money we do get will go to that project, to the detriment of the state's existing transportation systems," said Assemblywoman Bonnie Lowenthal, D-Long Beach, the committee chairwoman. Yet, she said high-speed rail promises "extraordinary benefits such as jobs, private investment and economic growth that has to be considered if we're to look at this honestly."

Assemblywoman Joan Buchanan, D-San Ramon, a committee member, said voters might wonder why the money isn't being spent on infrastructure that needs work now.

"In the meantime, my constituents (are) stuck on a freeway that's like a parking lot, when we could be using the money to extend BART," Buchanan said.

Still, Assemblyman Jose Solorio, an Anaheim-area Democrat, told his colleagues that they couldn't let this opportunity slip from their grasp.

In a brief statement released after the hearing, the rail authority welcomed the critiques and vowed to meet with the analyst's office "to discuss the issues for legislative consideration raised in the report."
Bullet train funding plan faulted
The Legislative Analyst's Office says the financing plan does not fulfill key requirements of the ballot measure voters approved to authorize the project.

By Dan Weikel, Los Angeles Times
November 30, 2011

The funding plan for the California bullet train does not comply with key provisions of a ballot measure that voters approved to authorize the project and $9 billion in state bonds to help finance it, according to a report released Tuesday.

The study — by the Legislative Analyst's Office, which periodically reviews the $98-billion construction proposal — concluded that the most recent funding plan does not meet important requirements of Proposition 1A because high-speed trains cannot operate on the first stretch of track to be built next year in the Central Valley.

Before bond financing can be requested, analysts said, project officials must complete an environmental review and identify a corridor, a usable segment, all sources of committed funds and a schedule for the receipt of financing.

"Our review finds that the funding plan only identifies committed funding for the initial construction segment, which is not a usable segment, and therefore does not meet the requirements of Proposition 1A," their report said.

In addition, analysts said, the California High-Speed Rail Authority has not obtained all environmental approvals for any usable segment and probably would not receive the necessary clearances before the start of construction.

High-speed rail officials discussed the report Tuesday with the analyst's office. They contend that the funding plan complies with the 2008 ballot measure and other statutory requirements.

"We have the opinion of counsel," said Dan Richard, a rail authority board member. "We have the resources and the ideas for how one could deal with it" if the report's conclusions become "a real obstacle."

The rail authority plans to build 130 miles of track that would run from south of Merced to north of Bakersfield. It is the first part of a 520-mile system that would eventually link Los Angeles and San Francisco with trains traveling at 220 mph.

Stations, maintenance facilities and the electrical system needed to power high-speed trains are not included in the first phase, which is estimated to cost at least $6 billion. Authority officials want to run Amtrak's San Joaquin service on the line until the system can be expanded.

The analyst's conclusions may lend credence to a state lawsuit filed earlier this month by Kings County and two Central Valley residents. They are seeking a court order to halt the Central Valley segment on the grounds that Proposition 1A and related state legislation call for the construction of track that high-speed trains can use.

The report by the Legislative Analyst's Office is a review of the project's draft business and funding plans. Although researchers found that the business plan largely meets state requirements, they concluded that the funding proposals were highly speculative.

Because the availability of funding to expand beyond the Central Valley section remains uncertain, analysts questioned whether operating conventional trains on the initial segment was worth the expense to build it.

Times staff writer Ralph Vartabedian contributed to this report.
Copyright © 2011, Los Angeles Times

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