by CalWatchdog Staff | May 1, 2012 10:00 am
May 1, 2012
By Katy Grimes
SACRAMENTO — A hearing at the Capitol Monday proved once again that high-speed rail officials live in a bubble and are far too comfortable in their roles spending billions of dollars of other people’s money.
The informational hearing in the Assembly Transportation Committee covered the multiple versions of the California High-Speed Rail Authority’s business plan, and the supposed adjustments officials have made. The plan has gone from bad, to just slightly bad, is still incomplete and even is inaccurate to some.
If they are sincere about making the high-speed rail system work, then the officials don’t seem to know what they are doing. They don’t even have a project management team in place. They are treating the largest public works project in the state’s history as if it’s a bathroom remodel, which can be designed as we go.
However, despite all of the brown-nosing and friendly bureaucratic talk at the hearing, High-Speed Rail Authority Chairman Dan Richard and board member Mike Rossi still came off as arrogant as ever, and were characteristically dismissive of the important lingering questions and challenges.
The plan is still going to cost taxpayers nearly $100 billion, and at least $1 billion every year thereafter to operate. Voters who approved the system through Proposition 1A in 2008 didn’t bargain for a $100 billion train system, or such high operating costs, and are asking where the money will come from.
Reminiscent of then House Speaker Nancy Pelosi’s comment during the Obamacare debates in 2010 when she said, “We have to pass the bill so you can find out what’s in it,” Rossi told committee members not to worry. Because once the project gets underway, everyone will see what the actual costs and real ridership numbers will be.
In an attempt to remove some of the sticker shock, high-speed rail authority officials had removed the entire Orange County segment of the line, thereby dropping the estimate to build down to $68 billion. But the latest plan added the segment back in without adjusting the cost. No one at the hearing asked about this slippery move.
The committee chairwoman, Assemblywoman Bonnie Lowenthal, D-Long Beach, asked Richard to answer whether or not the high-speed train system really makes sense for California.
That’s like asking a child to answer whether or not a piece of cake before dinner makes sense.
Richard told committee members that Rossi spent “hours and hours” with the flawed ridership plan, and researched the funding sources and found that “those funds are sound,” and there will be enough revenues.”
Using a tired old bureaucratic cliche, Richards also insisted that “the cost of doing nothing” is worse, and will result in only higher costs to other modes of transportation.
Richard also said that the Central Valley is the right place to start high-speed rail, because “we need to test trains, and there are no right-of-way issues.”
Richard and Rossi are looking less and less nimble, and more reactive, as the design-as-you-go plan is becoming more obvious.
Richard said that, with the latest version of the business plan, the high-speed rail system now complies with Prop. 1A. But that’s open for debate as well.
Prop. 1A, $9 billion in bonds for high-speed rail, included numerous mandates, none of which can be legally bypassed on the way to building the massive train system.
Top on the list is that the rail system must be high-speed. “Electric trains that are capable of sustained maximum revenue operating speeds of no less than 200 miles per hour,” the law stated. “However, much of the first segment between Fresno and Bakersfield is not high-speed; nor will high-speed be attainable in dense cities,” I recently wrote in “New High-Speed rail plan runs over Prop 1A mandates.”
Rail Authority Chairman Dan Richard recently said at a legislative hearing that the Rail Authority “never intended, our business plan does not contemplate, that we would operate a high-speed rail system only in the Central Valley.”
But Monday, Richard insisted that the latest plan is in total compliance with Prop. 1A, and they were building new, electrified track. Even when asked by Assemblywoman Joan Buchanan, D-Alamo, how the trains could be considered high-speed in the high-density areas, Richard just dismissed her questions.
Buchanan asked what speed the trains will be at the “bookends” in the Los Angeles basin and San Francisco Bay Area, and how in those dense areas, “high-speed” could be attained.
“As long as we can get from Union Station to Los Angeles in two hours and 40 minutes, it’s high-speed rail,” Richard said, ignoring the basis of Buchanan’s question.
Buchanan explained that her constituents located in the bay area don’t care about traveling from North to South on a bullet train. They are worried about their lengthy commutes to and from work. She said it takes her one and one-half hours to get across town during commute times. “I hear high-speed rail is nice,” Buchanan said.”But for the one to two times a year they may use it, they are sitting in traffic daily. We need to get them out of daily traffic. Most would like existing transportation helped.”
With Gov. Jerry Brown announcing his plan to use AB 32 cap and trade revenues to help fund high-speed rail, the legality of the issue is in question.
“The cap and trade program, authorized under AB 32, is a market-based mechanism to reduce the state’s greenhouse gas emissions,” the committee analysis said. “Billions of dollars are expected to be raised as a result of this program and the Administration has identified these funds as a potential source of funding for high-speed rail should federal funding not materialize.”
Even more worrisome is the scheme the Air Resources Board and High-Speed Rail Authority may come up with, under the auspices of a “study” they are currently working on. There is little doubt that the “study” will somehow prove that high-speed rail reduces greenhouse gas emissions, regardless of the massive electricity usage the system would drain from the state’s energy grid.
Tiffany Roberts, an environmental analyst at the Legislative Analyst’s office, took the wind out of the sails over cap-and-trade funding as a legal revenue source. Roberts said that the legal opinions they have received from Legislative Counsel indicate that the plan most likely will not be legal. Because of the way AB 32 was written, requiring a clear nexus between the cap-and-trade tax and the reduction of greenhouse gas emissions, using AB 32 cap-and-trade revenues for high-speed rail would not meet that requirement.
And with no cap-and-trade funds to count on, “the project will lose its only identified, realistic source for long-term funding,” she said.
AB 32, the Global Warming Solutions Act of 2006, required greenhouse gas emissions to be reduced to 1990 levels by 2020.
Not only was AB 32 never intended to create revenue for the high-speed train system, Roberts said that, because the first segment of high-speed rail system won’t even be online until 2020, there is a big timing problem with cap-and-trade funds.
While the High-Speed Rail Peer Review Group has not minced words in the past over objections to much of the business plan, Will Kempton, the group’s chairman, seemed somewhat more pleased with the new plan, but said that the group still has some concerns.
The High-Speed Rail Peer Review Group sent a letter in January to the Legislature, recommending that the project be put on hold for numerous reasons, but of particular concern was funding.
Kempton said funding was an issue the group could not ignore, and the lack of project management was a red flag. Even after having approval for two years from the Legislature to fill the project management positions, High-Speed Rail Authority officials have not hired any of the project management team needed to tackle the actual rail-related issues.
Instead, they’ve hired hundreds of consultants and public relations experts.
Elaine Howle, the California State Auditor, who wasn’t even on the agenda, expressed her ongoing concerns as well.
In January, Howle issued her audit report of the High-Speed Rail Authority, having discovered that the business plan left out $97 billion in operating and maintenance costs from 2025 to 2060.
The HSR business plan stated that revenues would cover all costs starting 2022, the year trains are projected begin operating, a theme confirmed again by Richard at the hearing.
And, no operating losses are figured into the plan.
“I still have concerns,” said Assemblyman Kevin Jeffries, R-Lake Elsinore. “I’ve gone from luke warm to luke cold. High-speed rail will not fix traffic problems, it will only help guys like me.”
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