Grim LAT: Bullet train $25B short. Dim Sac Bee: What $25B? All soon to be well!

November 29, 2013 - By Chris Reed

train_wreck_num_2-203x300On Monday, a Sacramento judge dealt a devastating setback to the California bullet train. The most serious of several obstacles in two decisions released by Judge Michael Kenny was his ruling that the $68 billion project didn’t have a legal business plan and that the state couldn’t start construction until it did.

As a practical matter, that means the state needs to have $31 billion in solid funding for the project’s 300-mile initial operating segment. State law requires the segment to have firm financing in place before construction begins to make sure what’s built is operationally viable if future funding dries up.

Given what has been spent so far and the commitments the rail authority has already made with its $13 billion in state and federal funding for the project, the state has at most $6 billion on hand. Where is the other money coming from?

The state has no idea and no good options.

In the sequester era, federal funding for discretionary domestic spending is dwindling for far bigger priorities than a California-only pork project. Also, not just House Republicans but Senate Budget Chair Patty Murray, D-Wash., opposes more California-only rail funding.

No private investors are forthcoming either because state law forbids operating subsidies, which rules out the revenue guarantees that investors demand as a condition of investment. (If those guarantees aren’t met, investors want taxpayer subsidies.)

Ho-hum: This too shall pass; move along, nothing to see here

That this $25 billion shortfall is daunting isn’t just my conclusion. It was also cited in the L.A. Times’ coverage of the ruling.

“The state rail agency created a funding plan, but it was an estimated $25 billion short of the amount needed to complete a first working section of the line.

“Kenny ruled that the state must rescind the plan and create a new one, a difficult task because the state High-Speed Rail Authority hasn’t identified sources of additional revenue to allocate to the project.”

green-kool-aidSo how did the Sacramento Bee editorial page deal with this crucial aspect of Judge Kenny’s bombshell ruling? By never mentioning the size of the funding shortfall and by implying it won’t be difficult for the state to deal with the unspecified shortfall. The Bee editorial says Kenny’s decisions merely …

“…will delay the issuance of voter-approved Proposition 1A bonds by months.

“Work funded with the federal grants will continue on the first 29-mile stretch of construction from northeast Madera to the south edge of Fresno. Jeff Morales, chief executive officer of the California High-Speed Rail Authority, has made it clear the project will move forward.

“The judge ruled in one case that the CSHRA has to ‘rescind its approval’ of the 2011 funding plan. [Rail authority CEO Jeff] Morales expects to have a new draft in the next few weeks that will identify the funding sources for the high-speed rail backbone in the Central Valley, connecting with BNSF tracks at each end – not just the first 29 miles.”

But where is the $25 billion coming from, Sac Bee editorial board? Bueller? Bueller? Bueller?

A reminder of history that’s more like a reminder of doom

Hilariously enough, the Bee editorial also makes an observation that is supposed to be reassuring for supporters of the project but is actually another reminder of why it is doomed:

“We all need to remember that no mega-projects are funded all at once. Morales points out that the last big highway project in California – the 210 in the Los Angeles area – was planned in the 1940s, commissioned in the 1950s and built in the 1960s, 1970s and 1980s. The last segment opened in 2007.”

But this is not a normal “mega-project.” Under state law, the first 300 miles of the project must have solid funding established before construction can proceed. So it has to be essentially funded “all at once” — not piecemeal, like the 210. Does the Bee editorial page read the Bee front page?

Here’s still more evidence of the Bee’s obliviousness: Kenny first ruled the business plan was illegal on Aug. 16. The rail authority had nearly three months to come up with a legal business plan before the “remedies” hearing was held earlier this month. It couldn’t do so. Instead, the state was left to argue that it could still spend federal funds for now on moving the project forward.

But now the Bee would have us believe that the project will be back on track within “months” because suddenly Morales will be able to pinpoint the $25 billion he couldn’t from Aug. 16 to Nov. 8.

BuellerWhat in the world is that assumption based on? Does the Sac Bee editorial board have hallucinogens in its water cooler? The first time I read this editorial from start to finish, I was kind of stunned at its omissions. The second time I read it, I actually laughed out loud three times. Thanks for the good times, Bee board!

Now back to that $25 billion shortfall: Once again, Bee opiners, where is it coming from?

Bueller? Bueller? Bueller?

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  1. Jonathan Zachariou says:

    The Sacramento Bee might as well change it’s name to the Sacrament Dee. It is the propaganda page for the “Progresive” Democrat party! Their journalistic bias is now reminiscent of the Sac News and Review pushing pot on every page a few years ago because it was the major source of it’s ad revenue. The Bee is pushing their major donors, corrupt legislators, in hopes of making a fiscal profit and surviving their paper. Sad. Where has true community journalism gone? Keep up the good work Cal Watchdog!

  2. Queeg says:

    Come on…….we need media nudging residents to Utopia,

  3. Rex the Wonderdog! says:

    This scam is done……DOA

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Joseph Perkins
Joseph Perkins, now assistant editor of the Orange County Register Opinion Pages, started his career as an editorial writer for the Wall Street Journal. After serving on the White House Staff of former Vice President Dan Quayle he wrote for the San Diego Union-Tribune where he authored a nationally-syndicated column. Before writing for, Mr. Perkins was also Business Editor for San Diego Magazine.
Chris Reed
Chris Reed is a regular contributor to Cal Watchdog. Reed is an editorial writer for U-T San Diego. Before joining the U-T in July 2005, he was the opinion-page columns editor and wrote the featured weekly Unspin column for The Orange County Register. Reed was on the national board of the Association of Opinion Page Editors from 2003-2005. From 2000 to 2005, Reed made more than 100 appearances as a featured news analyst on Los Angeles-area National Public Radio affiliate KPCC-FM. From 1990 to 1998, Reed was an editor, metro columnist and film critic at the Inland Valley Daily Bulletin in Ontario. Reed has a political science degree from the University of Hawaii (Hilo campus), where he edited the student newspaper, the Vulcan News, his senior year. He is on Twitter: @chrisreed99.
Brian Calle
Brian Calle is Editor-in-Chief of and the Opinion Editor for the Orange County Register. His work has appeared in Bloomberg, Fox News, Forbes, Real Clear Politics, Human Events, Real Clear Markets and City Journal, among other websites and publications. Find him on Twitter: @briancalle
John Seiler
John Seiler has been writing about California for 25 years. That includes 22 years as an editorial writer for the Orange County Register and two years for, where he is managing editor. He attended the University of Michigan and graduated from Hillsdale College. He was a Russian linguist in U.S. Army military intelligence from 1978 to 1982. He was an editor and writer for Phillips Publishing Company from 1983 to 1986. He has written for Policy Review, Chronicles,, Flash Report and numerous other publications. His email:

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