Friday, February 3, 2012

Staring the high-speed rail truth in the eye and not giving a damn

You may not have read the Oakland Tribune Editorial from this past Wednesday. It talks about the latest State Auditor's Report on the high-speed rail project in California and, needless to say, it's highly critical. 

The Oakland Trib. has been consistently negative about this project even before it was fashionable to do so. They have avoided the trap of seeing the project only in terms of local issues pertaining to where the bulk of their readership comes from.  That is to say, they have tried to maintain the "big picture" of the harm the project will impose on the entire state, including its finances. We concur with that perspective. 

This article is a good example of what we on this blog have been trying to communicate.  Articles like this constitute a major source of our learning about HSR and its "discontents." 

The bottom line here is that the problem is exactly that; i.e., the bottom line.  The construction cost of this project is astronomically above anything reasonable, sensible and even plausible.  There is no way that the United States, even if re-enters a period of economic stability, can sponsor a project the costs for which will surely reach $200 billion by time of completion.  And all invested in one state.

This is not a project that the national security of the US hangs on, nor even its economic well-being.  One could say, that upon reflection, this train is "much ado about nothing," or certainly a lot about very little.  

It is, after all, no more than a passenger train using a rail-line 800 miles in length, exclusively within California, connecting the two major population centers.  These are already served by both highways and commercial air routes.  

Furthermore, the intention is not merely to expand current passenger rail service, the costs for which would be tolerable, but bring a totally new dimension to such services with an almost totally new rail corridor; i.e., high-speed luxury, premium service, and with appropriate ticket costs to match.  Also, contradictorily, a meandering route the belies the promise of high-speed. Furthermore, there should be no doubt that permanent massive subsidies will be required for the train to operate.

Failure for us to see the project in this light becomes a gross misconception of its relative un-importance and its highly marketed and highly questionable benefits.

Make no mistake, like the reports from the Legislative Analysts' Office and the prior State Inspector General, this State Audit has no partisan bias.  There's no need for one, and if there were, being in the throes of a Democratic Legislature and Administration, any political leanings would be toward the Democratic point of view.  And there obviously aren't.  

Coupled with that are the professionally qualified members of the high-speed rail authority's Peer Review Group. These people ought to be very much on the side of the rail authority and their work.  Nonetheless, they have criticized the rail authority as severely as the other government agencies.

That the Governor choose to ignore all this flies in the face of logic and reason.  The citizens and voters of this state have an obligation to demand an explanation from the Governor for his contrarian position.  

Oakland Tribune editorial: State auditor is latest critic of high-speed rail, which is fiscally irresponsible.
Oakland Tribune editorial 
© Copyright 2011, Bay Area News Group
Posted:   02/01/2012 04:00:00 PM PST
Updated:   02/01/2012 04:21:36 PM PST

It is becoming increasingly clear that it would be a grave mistake to spend another dime on California's high-speed rail fantasy. The latest blow to the project comes from state Auditor Elaine Howle, who said that "the program's overall financial situation has become increasingly risky."

Her negative report comes on top of severe criticism from the Legislative Analyst's Office and the rail authority's own peer review group.

They all have accurately concluded that the rail project lacks anywhere near the state, federal and private financing required to build a $98 billion high-speed rail system from the Bay Area to Los Angeles.

Howle questions the rail authority's ridership projections, saying the group that reviewed those numbers was "hand-picked" by the authority's chief executive officer.

Ridership is the foundation to the fiscal viability of the rail system. Without an adequate number of riders, there will not be a sufficient revenue stream to pay for operational expenses and to attract private investors, both of which are requirements for the success of high-speed rail and to meet the mandates of the rail bond measure voters passed in 2008.

There is no way the high-speed rail can meet the latest forecast of 36.8 million rides a year on a San Francisco-to-Los Angeles system. Where will the riders come from? There are only about 3.2 million airline riders a year going to and from Los Angeles and San Francisco and another 1.7 million traveling between Los Angeles and Oakland and San Jose.

That's 4.9 million airline riders. Even if all of them quit flying and took the train, another 31.9 million riders would have to come from those who now drive. But why would huge numbers of motorists choose a 2.5-hour train ride when they have rejected a one-hour plane ride?

The auditor also found that:

-The cost estimates do not include phase one's operating and maintenance costs, yet based on data in the plan these costs could total about $96.8 billion from 2025 through 2060.
-There are no details about the current largest potential funding source, the federal government.
-There have been inappropriate contracting practices such as splitting Information Technology services totaling $3.1 million into 13 individual contracts with one vendor. The State Contracting Manual prohibits agencies from splitting contracts to avoid competitive bidding requirements.
-The authority is missing statements of economic interest for some of its contractors despite the conflict-of-interest code requirements; and the authority does not require any of its subcontractors to file statements of economic interest. As a result, the authority has no way to verify that subcontractors do not have real or perceived conflicts of interest.

It is time for Gov. Jerry Brown to face reality and kill the high-speed rail project as it is now configured. Committing billions of dollars of money that could be used for schools and other needed state services makes no sense at a time of large budget deficits and could undermine the governor's ballot initiative asking for tax increases.

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