Tuesday, November 29, 2011

Playing Governor Jerry Brown's high-speed rail pipe-dream while we pay for it.

About Jerry Brown. Whether he actually thinks this rail project and the way it's been put together so far is a good idea or not is really irrelevant. 

Even if he has finally learned, and does think it's a stinker, he won't oppose it; he'll defend it. And, unless I'm  mistaken, it's for one reason and one reason only;  $3.5 billion free dollars from the Federal Railroad Administration.

That's a lot of money for a desperately cash-poor state.  Even if Jerry knows that the train will never be completed, and even if what the rail authority builds is  -- let me be very blunt here -- 100 miles of useless crap, and even if it does hurt the farmers, businesses and residents of the Central Valley in the process, those billions are a lot of money for a state in such a desperate financial condition.

So let's, just for a moment, go along with Jerry on this.  How will those billions be spent?  First of all, they have to be matched by several more billions from the Prop. 1A bonds (whether they are actually sold or not).  Those will cost the state two dollars for every dollar borrowed.  

Then, companies like Parsons Brinckerhoff or T.Y.Lin have their headquarters either overseas, or certainly not in California.  And they are the ones going to reap the fat profits from this flow of dollars.  As will the many, many, many other consulting contractors on the CHSRA payroll. 600 at last count.

For this first go-around in the Central Valley, they are not going to be buying any rolling stock or all the necessary hardware and electronics essential for running a high-speed train, so we don't have to worry on that score that US dollars (that is, California dollars) are headed overseas. (Wait a minute; wasn't this supposed to be a high-speed rail project of which the voters approved?)

However, as we've been making this point previously, these dollars will hire far fewer people, and certainly far fewer Californians than the Unions now believe.   My point here is that there will be far less "bang for the buck" in this state than our Governor probably believes.

As the article by Tom Barnidge points out, the governor will have to go to the Legislature for those funds.  I have no basis for thinking that the Legislature will deny him his request and the $6 billion will be approved.

Again I have to say I have little to no hope for California legislators doing the right thing; that is, terminating this project by de-funding it.  The water has to be cut off at the source, in Washington. 

Barnidge: Can governor railroad through his $6 billion request?
By Tom Barnidge 
Contra Costa Times columnist
Posted: 11/28/2011 11:47:58 AM PST
Updated: 11/29/2011 04:59:35 AM PST

Gov. Jerry Brown said he will make an ill-advised request when the Legislature reconvenes after Christmas. OK, he didn't call it ill-advised, but a lot of people think it is.

He will ask for $6 billion ($2.7 billion in state bonds, $3.3 billion in federal grants) to begin work next fall on the first phase of a high-speed rail project that eventually will link (a) San Francisco to San Diego and (b) California to a mountain of debt.

This first stretch, connecting travel hot spots Bakersfield and Chowchilla (motto: "Great place for a women's prison"), says something about the rationale behind this undertaking.

Those destinations were not chosen because of customer demand or population density but because environmental permitting will be simpler, residential opposition should be modest and level terrain will make for easier construction. [That, by the way, turned out not to be the case. The people of the Central Valley are raising holy hell!!!]

In other words, it's the path of least resistance to get-it-while-you-can federal stimulus funding.

The $6 billion pays for only the rail system, by the way -- not the electrification, train cars or operating personnel -- just 130 miles of track. The U.S. House Budget Committee, which specializes in mismanagement, gave "the train to nowhere" its Boondoggle Award. Not coincidentally, more federal funding for high-speed rail is in jeopardy.

Like many government projects, of course, beauty is in the eyes of the beholder. The governor sees this as a bold first step to address California's future growth, its need for jobs, its passion for a clean environment and rising energy costs.

State Sen. Mark DeSaulnier, D-Concord, agrees in principle: "The state's going to look dramatically different in 25 years. I'm a big believer that you have to change. You cannot continue to rely on single-occupancy vehicles or just aviation capacity."

But, he acknowledged, "This is a huge project. It's hard not to be concerned about the costs and the risks."

The famously frugal Brown seems oblivious to the mushrooming projections.

In 2008, when voters approved $9 billion in bonds, the California High-Speed Rail Authority estimated the project's total cost at $35.6 billion. Later, the figure was revised to $45.7 billion. Most recently -- are you sitting down? -- the estimate grew to $98.5 billion.

We told you to sit down.

This, remember, is before the first spike is driven into the ground. What's to guarantee the cost estimate won't increase again?
"Nothing," DeSaulnier conceded. "The other argument is if you don't build it, and the all the growth that's projected does happen, it's going to cost a lot more later."

That logic provides little comfort to budget pragmatists who have watched education and social services funding slashed and pension obligations spiral while the state bathes in red ink.

This hardly seems the time to assume added debt. It's like a man who can't keep up with payments on his Honda borrowing to buy a Tesla because it will save on fuel costs and help the planet. [I liked this analogy so much I highlighted it.]

DeSaulnier understands the skepticism. He admits to his own misgivings, especially regarding the project's first phase: "If I were doing it, I'd build it in the capital corridor and from San Diego to Los Angeles, to show that it works and to get ridership numbers."

If the vote were taken now, he says it would be close.

"The costs are huge," DeSaulnier said. "There's no way it doesn't give you a little lump in your breast."

When you're up to your assets in fiscal problems is a strange time to be financing a dream.

Contact Tom Barnidge at tbarnidge@bayareanewsgroup.com.

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