An editorial from the Press-Enterprise in Riverside, California. Riverside is inland from Los Angeles, and part of the greater LA region. Upon reading it, I couldn't have said it any better.
The article hits major issues such as high-speed rail failing to address the real transportation problems in the state. And it stresses the convoluted financing which would make any economist laugh out loud, and makes us in California cry.
Pehaps the most important point here, however, is the scam that the Governor has now injected himself into. That is, he proposes to fund the project with cap-and-trade penalities.
Most likely that is not legal and if this is a method of extracting funds from corporate interests, it smells of corruption. The cap-and-trade issue bears watching and the Governor "owns" the problem.
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STATE: Rail boondoggle
THE PRESS-ENTERPRISE
Published: 03 April 2012 04:51 PM
“Cheaper” does not mean “more realistic.” A fiscally slimmed-down plan for the state’s bullet train still relies on risky, implausible financing for a project that serves no pressing need. Legislators should instead halt this train, before it becomes a high-speed boondoggle.
The California High-Speed Rail Authority this week released a revised and updated business plan for the state’s proposed bullet train. The latest plan lowers the total cost of a Bay Area to Southern California rail system from $98.5 billion to $68.4 billion — mainly by “blending” the new train with transit rail systems in urban areas by upgrading existing tracks instead of building entirely new infrastructure. The first segment, connecting the San Fernando Valley and Merced, would be complete by 2021. The plan calls for finishing the full Los Angeles to San Francisco route by 2028, instead of the 2033 date proposed last year.
However, the lower cost does not erase the fact that the rail agency still does not have the money for the line. The main result of shaving $30 billion off the price tag is that the rail agency is now short only about $56 billion for the project instead of $86 billion. But the bullet train is no closer to a reliable plan for bridging even the smaller funding gap.
The rail authority has about $3.5 billion in federal money and $9 billion from a 2008 state rail bond measure. The plan counts on an additional $20.2 billion in federal aid over the next decade to complete the first stretch from the San Fernando Valley to Merced. Finishing the entire Los Angeles-to-San Francisco line would require more than $38 billion in additional federal money — from a federal government that needs to curtail $1 trillion-plus annual deficits and faces enormous long-term fiscal challenges. And Congress shows little interest in throwing more federal money behind high-speed trains.
The rail line also relies on about $13 billion in private investment. But that money will only come if the system is ever operating and prosperous. Profitability depends, however, on riders providing sufficient revenue. And the authority’s passenger projections have faced repeated questions about validity. The state auditor and a voter-created review panel both say the ridership forecasts need an independent, outside review to ensure accuracy.
The rail agency notes that revenue from the state’s new cap-and-trade greenhouse gas program could provide a backup source of funding. But banking on unknown amounts from an as-yet untested program is hardly a reassuring fallback plan.
Even apart from the daunting financial questions, Californians should avoid pouring billions of taxpayer dollars into a project that does not address any of the state’s big transportation needs. Faster rail travel between Northern and Southern California would not reduce the daily traffic tie-ups in the state’s heavily populated areas. Nor would a high-speed passenger train ease the congestion caused by cargo flowing to and from the state’s busy ports.
The legislative analyst in January called the rail project’s financing “highly speculative,” and the new plan does nothing to alter that judgment. The state has trouble funding real public needs, and should not waste money on a risky, needless luxury.
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