Monday, January 16, 2012

The Politics of California High-Speed Rail Politics

One of the things we have learned over time is that many mega-infrastructure projects in recent years have imposed far larger cost burdens on taxpayers once construction started than was originally projected.

Compared to the current cost forecasts for the high-speed rail project, the Bay Bridge, as it approaches completion, is an excellent example of such cost inflation.  Initially predicted to cost in the $2 billion range, the price climbed once actual contract bids came in and continued to climb during construction so that it is now in the $10 billion range.

Before a single inch of track has been installed, the cost forecasts for the high-speed rail project went from less than $33 billion in 2008 to the current $117 billion. Be assured that even these numbers continue to omit many other costs not brought into the equation. William Grindley's papers discuss this in great detail.  See

Some calculate the ultimate cost for this rail system in the $200 to $300 billion range. Remember it will take well over ten years to build.  That's plenty of time for the costs to rocket into outer space. The current CHSRA projection completion date is 2033. Certainly construction and manufacturing costs are not going to decline from this decade into the next or beyond. 

Now, about this article, below. Yes, several Democratic state senators are indeed balking at the current plan from the CHSRA. But, in the case of Simitian and Lowenthal, that's been going on for three years at least.  Balking is one thing; doing something about this is another.

What I'm hearing is this.  The state, especially the Governor and the Democrats in the Legislature, are desperate to obtain the promised $4 billion from the FRA.  Furthermore, they don't actually oppose high-speed rail for California, they only oppose the way that the CHSRA has been going about it. By now, nobody likes that!  But, the Democrats such as Simitian, "want it done right" -- whatever that means.

This is to say, Feinstein, Boxer, Pelosi, Simitian, Lowenthal, DeSaulnier, Governor Jerry Brown and all the other Democrats, national or state-level, want the money for California and want it spent on something, anything.  Since it's not possible to like what the rail authority keeps proposing, and with the DOT's insistence for Central Valley construction starts at that, they want to change the plan.  That is, they want to start in the two population centers and leave the Central Valley for later, a total reversal of the current agenda.

"Give us the money and we'll spend it building HSR starting with the Trans Bay Terminal in San Francisco, headed south."  This is what Feinstein wrote in a letter, only using different words. 

And in LA, they want it to start connecting Union Station with Anaheim.  Let's figure about $3 billion or less for each end.  Actually, that won't accomplish much except anger a lot of the locals in those urban environments but it will give the Democrats those precious billions that they can claim they extracted from the federal treasury to help our struggling state to recover from its high unemployment numbers and endless deficits.

All of which is to say that this project is being played out as a political game, with winners and losers. What does that have to do with the state's economy, transit and transportation problems, or all those ostensible jobs for the unemployed?


Daniel Borenstein: Key Democratic state senators balking at current high-speed rail plan
By Daniel Borenstein
Staff columnist
Posted: 01/14/2012 04:00:00 PM PST
Updated: 01/14/2012 04:56:20 PM PST

After years barreling down the track without regard to cost, California high-speed rail advocates now face serious obstacles blocking their path to the bond market.

Ignoring wilting public support and five critical, impartial analyses of the bullet-train plan, including the recent scathing peer review that warns of "immense financial risk" to taxpayers, Gov. Jerry Brown and organized labor leaders still demand full throttle.

While last week's change of engineers -- the abrupt resignation of High Speed Rail Authority CEO Roelof van Ark and Brown loyalist Dan Richard's ascendancy to board chairman -- might provide a public-relations patch, it doesn't resolve underlying problems that have drawn bipartisan objections.

Republicans are uniting in opposition, and three key Democratic state senators -- Joe Simitian, of Palo Alto, chairman of the budget subcommittee overseeing transportation; Alan Lowenthal, of Long Beach, chairman of the Select Committee on High-Speed Rail; and Mark DeSaulnier, of Concord, chairman of the transportation committee -- have started applying the brakes.

The three have supported high-speed rail and voted to put it before the electorate in 2008. But in separate interviews last week, they indicated that the current plan could not win their vote.

They voiced concerns about plans to start in the Central Valley with a 130-mile link that will not attract enough riders and could become California's version of the Alaskan "Bridge to Nowhere."

"This is an albatross potentially," Lowenthal said.

Instead, they are pushing to begin in urbanized areas. "You need to spend the money where the need is and where it will attract private-sector funds," DeSaulnier said. "You need to put it where the ridership is."

They criticized the High-Speed Rail Authority's poor planning, unreliable numbers, horrible community outreach and push for quick state action to meet deadlines for federal money.

"Whether they are federal funds or not, they should be used wisely," Simitian said. "Whenever someone tries to hustle you into a quick decision, that should give you pause. I feel like we're getting jammed by the threat of losing the federal funds."

As he points out, the state should not "make a $100 billion mistake to save $3 billion" from Washington.

The ballot measure that voters approved promised 220-mph trains from Sacramento and San Francisco to San Diego that would cost $45 billion. Most of the money was to come from private investment, but the ballot measure authorized $9 billion in state bonds.

Fortunately, the ballot measure included safety valves. The Legislature must approve the bonds. That's why wavering support of the three key senators is so significant. The measure also required the rail authority, a collection of gubernatorial and legislative appointees charged with building the system, to submit a funding plan before each phase and for financial and high-speed train experts to review it.

By the authority's estimates, the cost has ballooned to $98.5 billion to $118 billion for a system linking just San Francisco and Anaheim. Only $3 billion of outside money, mostly from one-time federal stimulus funds, has been secured. The authority's plan calls for starting by using that money and $2.6 billion from state bonds on the Central Valley link from near Fresno to near Bakersfield.

The peer-review panel's latest report notes that the plan would not even provide electrification and train-control systems necessary for high-speed operations, making the track useful only as an alternate route for existing Amtrak service.

Beyond that, the panel concluded, there is no feasible business plan, identifiable funding source, verifiable demand projection or realistic cost estimate.

It's against that backdrop that backers plan to seek legislative approval this year for bond money, repayment of which will add to the state's annual budget shortfalls. It's amazing that Brown could ask voters for a tax increase this fall to salvage the state budget while calling for additional annual bond payments for this boondoggle -- especially when the latest Field Poll shows voters today would reject the high-speed rail plan by a 2-1 ratio.

Now Brown has another obstacle: Three senators of his own party who remain unconvinced despite intense pressure from organized labor.

"I'm not going to just drink the Kool-Aid," Lowenthal said. "They have to address these questions."

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