Tuesday, December 20, 2011

What does federal government desperation look like when it comes to high-speed rail?

They don't have a clue about how to pay for this. You have to wonder if anyone is actually serious about anticipating nearly $100 billion -- and it could be a lot more -- for this fancy luxury train for California.  The only possible source is the federal government.  

They are desperate for this project to start now, since it makes such a loud political statement.  But, future funding? And in the hands of this inept bunch of mis-managing back room politicians?  You would think this project doesn't have a chance to even get to the starting line.  Don't underestimate the power of money and politics.
Kathy Grimes spells this out very well in the article from the CalWatchDog web-site.  There are reasons for the push for this project's start, even if there are no more funds in the future. 

In California, the federal funds -- $3.3 billion worth  -- are political pork that makes Jerry Brown look good to his constituents, such as the Unions.  Look what I am doing for you guys, he will say, the jobs I'm creating, the benefits to the state economy.  Yeah, right.

At the federal level, California is the Obama Administration's last best hope to salvage the idea of high-speed rail.  Most of the ARRA funds have been sent to Amtrak upgrades, labelled as high-speed rail.  Without California, all those dollars lose their panache and the association with that vague slogan, "Winning the Future."  Amtrak upgrades may be more practical and functional (or not) but they certainly have little to do with glamorous and photo-ops high-speed rail. 

We are headed for a level of confrontation politics that no one yet imagines.  Unless we are willing to let this disaster befall us, we need to be assertive and adversarial to a far greater degree than we have demonstrated so far.  It is shaping up to be a civil war between the government and its agenda, and all the rest of us who reject that agenda.

Do we appreciate yet the gravity of this situation?
NEW: Feds Insist On Rail Funds For CA

DEC. 19, 2011

If it is built, California’s High-Speed Rail would be the largest public works project in state history. That fact alone appears be intoxicating to state officials, in a perpetual quest to have California be the first state to do anything.
Despite the warnings of a nearly $100 billion ballooning price tag, no track laid, no trains running, decreasing legislative support and even opposition from diehard rail advocates, the High-Speed Rail Authority is steaming ahead full throttle with plans to build the most expensive high-speed rail system in history.

But there is pushback coming from so many places that it must be difficult to keep up the cheerleading. Even the latest Field poll found that two thirds of Californians want a new referendum on the project. And by a two-to-one margin, they say they’d vote to derail it.

Many say that the plans will only unveil a state-subsidized train system, wrought with malfeasance, payola and unscrupulousness.

And even more question the need for another rail service, with Amtrack already operating throughout California. Others say that California already has high-speed travel — airplanes.

Kangaroo Court
The state legislative hearings with the High-Speed Rail Authority have become something of a bad joke. Legislators ask most of the right questions. They even ask the tough questions. However, High-Speed Rail Authority board members never answer the questions.

Assemblywoman Diane Harkey, R-Dana Point, has been asking where the money to build the rail system is going to come from. However, Harkey’s questions have also been ignored, by rail authority members who appear accountable to no one, particularly if they are not answering legislators’ questions.

Federal, State and Local Politics
Last week, U.S. Transportation Secretary Ray LaHood practically insisted that California take and use the $3.9 billion in federal money to build the Central Valley segment of High-Speed Rail. A hearing of the House Transportation and Infrastructure Committee was held to look at “mistakes and lessons learned” from President Barack Obama’s rail initiative. House Republicans were critical that the Obama administration mistakenly tried to push high-speed rail in the West, instead of the Northeast, where rail travel is already popular.

But the $3.9 billion offered to California was American Recovery and Reinvestment Act funds, federal stimulus money, and came with a requirement of use in the economically depressed Central Valley.

While the Central Valley is desperate for jobs of any kind, many in the region are welcoming High-Speed Rail with open arms.

“The fear is that they are going to use the federal funds anyway,” said Harkey. “But the High-Speed Rail Authority is not answering questions.”

Harkey recently attended the High-Speed Rail draft business plan presentation to the Orange County Transportation Authority board.

The OCTA addressed concerns with the rail authority, and called the funding plan “largely speculative,” and cost comparisons “theoretical.”

They were being kind.

Harkey said that she reiterated to the OCTA board that if a rail system is going to be built, High-Speed Rail needs to start in a more realistic location, such as Los Angeles to Anaheim, or San Jose to San Francisco. And she urged the OCTA board to “demand a new and independent ridership study.”

But Harkey also warned the OCTA that if they agreed to support the High-Speed Rail deal, there wouldn’t be any money for local transportation.  One of the funding sources the rail authority is counting on in the future is “cost sharing with local agencies.”

The other worry Harkey has is that the Legislature is not making any moves to take money away from the rail authority. “It’s the governor who wants this,” said Harkey. “I hope he will eventually realize that it’s got to stop.”

Many suspect that Gov. Jerry Brown is looking ahead with an eye toward Central Valley votes if he brings jobs to the region. But the untold story about High-Speed Rail jobs creation is that any construction jobs created by the rail project will be paid with borrowed money. The net effect will be financially negative.

The Emperor Has No Clothes
The state has no extra money for a brand new infrastructure project costing more than $100 billion before completion. 

California is facing a structural deficit of $35 billion.

The state ended last fiscal year with a cash deficit of $8.2 billion. And by next month, California will be facing an estimated $12 billion cash-flow deficit.

Long-term borrowing is even worse, and has grown from $60 billion to $90 billion over just the past four years. Harkey said that California is nearly maxed out of borrowing capacity and facing a credit downgrade.

A recent report by the Legislative Analyst found that future High-Speed Rail funding sources are “highly speculative,” and the economic impact analysis included in the rail authority’s plan “may be incomplete and imbalanced, and therefore portrays the project more favorably than may be warranted.”

And, congressional Republicans have refused to appropriate rail funds. Private investors, wherever they may be, are said to be demanding a revenue guarantee, which is yet another violation of the 2008 ballot measure.

Stating that its plan for the Central Valley portion of the rail line violates sections of Proposition 1A, a lawsuit filed against the High-Speed Rail plan contends that an operating subsidy will be needed for construction of the Central Valley segment. 

But an operating subsidy is outlawed under Prop. 1A. Complicating matters, the first segment of the rail system won’t even run high-speed trains until the entire system is build. The initiative required the train to be only high-speed.

Fact Versus Fantasy
At the hearing before Congress last week, LaHood said that California’s High-Speed Rail is “not a cheap project” but “the people in California want this.” But that’s not accurate given the recent Field poll results that found that 37 percent of voters who supported the High-Speed Rail bond measure in 2008 would vote against it today.

Calling the plan a “high-speed spending path,” Harkey said, “We can’t afford to accept the match funding from the federal government… match funds that will be repaid with tax bond dollars by our children. We don’t have a plan, we don’t have a route, and we don’t have the money to repay the costs.”

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