Friday, January 27, 2012

Governor Brown turns the world upside down riding high-speed rail into our town

Here are two articles by Adam Summers of the Reason Foundation that lays bare the unreality of this project and the cognitive dissonance of the Governor who is so determined to spend money he doesn't have.

Well, let's amend that last statement.  The Governor does have, or has been promised, around $3.5 billion from the Federal Railroad Administration. Giving the Governor the benefit of the doubt, we can assume that he knows, just like we all do, that the likelihood of more dollars after this is zero.  It would take a miracle election this November to re-open the HSR money pipeline from Washington. 

Therefore, this can mean only one thing. Governor Jerry Brown doesn't give a damn about further funding for this train.  All he cares about is getting and spending those $3.5 billion in California.  He can spin this every which way, such as jobs benefits, economic stimulus, environmental this, highway-congestion that. 

Talking about this train and how that will give California a future it doesn't now expect, as well as all those other just mentioned points, is pure spin.  It doesn't really mean anything.  The train won't really do any of those things.

This is about one thing, and one thing only.  The money.  All the budget and debt deficiencies now giving such pain to this state will, Governor Brown believes, be mitigated by these free federal funds.  

On the other hand, he may not even believe that. But, bringing those dollars into California will make him look good, a successful Governor who appears to be successfully wrestling with the state's biggest problem, which is its economic deficiencies.

These federal dollars are a form of show-business for our politicians, like Dianne Feinstein, Barbara Boxer, Nancy Pelosi and the others. These dollars will make all of them look good and they will seize every opportunity to let all of us know how hard they worked to obtain those dollars for all of us in California. 

That is the only plausible explanation for the situation so admirably described by Summers in his two articles.  It answers the question of why is our Governor insists on flying in the face of logic and reality.  It's not about the train; it's about the money.
Out of Control Policy Blog 
Jerry Brown Continues to Push High-Speed Rail Boondoggle while California Drowns in Debt
Posted on January 27, 2012, 2:59pm 
Adam Summers

The California high-speed rail project has become a disaster before the first track has been laid. Perhaps that is a blessing because it may allow the state to pull the plug on the project before sinking billions of dollars it does not have into it. Assemblywoman Diane Harkey (R-Dana Point) has introduced a bill, AB 1455, which would eliminate any bond funding for the project that has not already been contracted, state Senator Doug LaMalfa (R-Richvale) has promised to bring forth legislation that would authorize a revote on the project, and Beverly Hills resident Peter Seidel has started circulating a petition for an initiative called the No Train Please Act which would kill the project entirely.

Considering that cost estimates have soared from between $40 billion and $45 billion just a couple of years ago to between $98.5 billion and $117.6 billion now, and ridership estimates have plummeted from 117 million passengers per year by 2030 to between 23 million and 34 million per year by 2035, while the state is running a $9.2 billion budget deficit, a $10 billion unemployment fund deficit, and an unfunded pension liability in the range of $400 billion to $500 billion, pushing forward with the high-speed rail project is unconscionable and incredibly fiscally irresponsible. Yet Governor Jerry Brown is trying to move ahead with the project at the same time he is pushing a $35 billion tax increase ($7 billion a year for five years).

Time to Face Reality on the California High-Speed Rail Project
Cost estimates keep soaring but Gov. Brown keeps pushing the rail system

Adam Summers
January 27, 2012

Several recent events have thrown some cold water on the dreamers who seem to view the California high-speed rail project as the solution to all of the state’s problems. Unfortunately, this has not dissuaded them from pushing for the project to go full speed ahead. 

The cracks in the high-speed rail project continue to grow into deep chasms. California High-Speed Rail Authority (CHSRA) CEO Roelof van Ark recently announced he is going to resign, although he said he may then stay on the project and profit as a consultant, of course. 

A December 2011 Field Poll revealed that, by a two-to-one margin, voters oppose the California high-speed rail project and would like to re-vote on it. There was a pair of recent state and federal legislative hearings that were highly critical of the project. And there is the matter of the revised high-speed rail business plan, which now projects costs of $98.5 billion to $117.6 billion—compared to the $40 billion to $45 billion estimate issued less than two years ago. 

To supporters of high-speed rail, the soaring cost estimates and other problems may be a rude awakening but California must acknowledge reality if it is to tackle its monstrous budget problems and return to any semblance of fiscal responsibility. 

The state is running a $9.2 billion budget deficit (not to mention a $10 billion unemployment fund deficit and a projected unfunded pension liability in the range of $400 billion to $500 billion). 

Gov. Jerry Brown has proposed a $35 billion tax increase ($7 billion a year for five years) to plug the gap and stave off deeper cuts to education and welfare, among other things, and yet the governor persists in pushing a high-speed rail plan that numerous agencies, government officials, and groups—from the Legislative Analyst’s Office (see here, here, and here), to the Bureau of State Audits, to the prior Inspector General, to the California High-Speed Rail Peer Review Group, to the UC Berkeley Institute of Transportation Studies, to Treasurer Bill Lockyer, to influential Democratic state Senators Alan Lowenthal, Joe Simitian, and Mark DeSaulnier, to organizations such as Reason Foundation, Howard Jarvis Taxpayers Association, Citizens Against Government Waste, Community Coalition on High-Speed Rail, Californians Advocating Responsible Rail Design, and California Rail Foundation—have criticized for its lack of a realistic financing or business plan; overoptimistic assumptions regarding costs, benefits, and ridership (to name but a few); poor planning and management; and route and engineering/design decisions. 
Even under optimistic scenarios, the CHSRA has identified only about 15 percent of the funding necessary to build the project. The other $85 billion or so is supposed to somehow come like manna from heaven, primarily from the federal government, which is engulfed in an even greater fiscal crisis than California (not to mention the fact that Congress has repeatedly indicated it is not going to support any additional high-speed rail funding any time soon—see here, here, and here). The CHSRA also claims some of the funding will from the private sector, which has shown no interest in investing in a project with poor prospects, an unrealistic business plan and massively inflated ridership predictions.

Earlier this month, the California High-Speed Rail Authority’s own Peer Review Group even recommended that the legislature not approve bond sales for the project, concluding, “We cannot overemphasize the fact that moving ahead on the HSR project without credible sources of adequate funding, without a definitive business model, without a strategy to maximize the independent utility and value to the State, and without the appropriate management resources, represents an immense financial risk on the part of the State of California.”

Nevertheless, “We’re pushing forward,” Gov. Brown said recently of the administration’s plans for the high-speed rail system. Added Brown, “We’re going to build, we’re going to invest, and California is going to stay among the great states and the great political jurisdictions of the world.”

Not if we keep spending money we don’t have on boondoggle projects, we won’t, Gov. Brown. He then reiterated his support for the project in his 2012 State of the State address and called on the legislature to approve the appropriation of bond proceeds for the first segment of the project.

This is like your neighbor, who let’s say is an average Joe struggling to get by during the ongoing economic malaise, announcing that he is going to buy an expensive Tesla Roadster (gotta support “green jobs” and all that), even though he already has a car and is having trouble paying the rent and utility bills as it is. Complicating matters are the facts that he does not know just how high the price of the car will be (it has already more than doubled since last year) and he probably won’t be using it very much anyway. Oh, and you and a whole bunch of other people who haven’t agreed to it yet will be paying for almost all of it. This is the insanity of the California high-speed rail project.

The California high-speed rail project has laid bare, in a way more obvious than usual, just how stark are the lies and how empty the promises that politicians and special interests make in order to separate taxpayers from their hard-earned money. 

Agency after agency, expert after expert, has criticized everything about the California high-speed rail project - from its lack of a feasible financing/business plan to its cost and ridership estimates, which even the CHSRA has begrudgingly admitted are off by orders of magnitude. Undaunted by reality, high-speed rail advocates obstinately cling to their claims, whether out of unquestioning faith in the utopian ideal of high-speed rail or out of selfish interest in partaking in the gravy train, so to speak, that the project will bestow upon them. The CHSRA and its supporters have been wrong about everything about the project thus far, yet they continue to make false promises about the boon that, they claim, high-speed rail will surely bring to the state. Why should taxpayers trust them? 

California’s budget situation is dire enough as it is. It cannot afford for Sacramento to fiddle with this fiscal black hole of a high-speed rail project while California is buried in debt. The high-speed rail project plug should be pulled as soon as possible before the state wastes even more money it does not have. 

Adam B. Summers is a senior policy analyst at the Reason Foundation.

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