Fight escalates over federal funds for CA bullet train

The battle between California and the Trump administration over $3.4 billion in federal funding that was committed nearly a decade ago to the state’s bullet-train project escalated last week when a key state leader rejected federal criticisms of the project’s progress.

California High-Speed Rail Authority Chief Executive Brian Kelly sent two letters defending Gov. Gavin Newsom’s January remarks that he would focus on completing a 119-mile segment now being built in the Central Valley – backing away from a promise to state voters in 2008 and to the federal government in 2009 and 2010 to build a statewide bullet-train system. Kelly said the state was comporting with key federal regulations.

The limited segment linking Bakersfield and Merced is expected to cost up to $18 billion. Were it ever built, the costs of the originally envisioned statewide bullet-train system – ranging along the coast from San Francisco to Los Angeles to San Diego and inland to Sacramento – could have been 10 times as much or more. The cost of each end of the Los Angeles to San Francisco segment was so extreme that in 2012, the rail authority gave up on true high-speed rail in those links – opting for a “blended” system that relied on regular rail to cover the final 45 miles or so into each of the population centers.

The Trump administration has already canceled a $929 million grant issued to the project in 2010 by the Obama administration. It has indicated it hopes to recover $2.5 billion the federal government has already allocated to California as part of the 2009 economic stimulus package on the grounds that the project is far behind schedule and no longer meets promises of sound planning and financial viability made to secure the $2.5 billion.

But Kelly argued that the Federal Railroad Administration under the Obama administration and for the first two years of Trump’s administration concluded that the project was meeting minimum benchmarks to qualify for federal funding.

“Any clawback of federal funds already expended on this project would be disastrous policy,” Kelly wrote. “It is hard to imagine how your agency – or the taxpayers – might benefit from partially constructed assets sitting stranded in the Central Valley of California.”

LAO questioned project’s finances in 2010

Kelly’s letter hinted at but did not explicitly suggest the DOT’s attempts to recover the $2.5 billion were motivated by President Donald Trump’s two-year-plus war of words with California’s governors, which began under Jerry Brown and has continued with Gavin Newsom. In that span, state Attorney General Xavier Becerra has filed or joined in nearly 50 lawsuits against the Trump administration. Newsom has called the targeting of California’s project politically motivated.

Kelly’s argument that the “clawback” of that much in federal funds would be unprecedented appears correct. But the state’s arguments are weakened by the difficulty it will face in asserting it acquired the federal funds while acting in good faith. Despite telling the U.S. Department of Transportation repeatedly, beginning in 2009, that the bullet-train project was in good shape financially, rail authority officials couldn’t persuade state watchdogs that was the case in the same time frame.

In January 2010, the Legislative Analyst’s Office warned the authority didn’t have a legal business plan because it anticipated that revenue or ridership guarantees could be provided to attract private investors to help fund the project. Because such guarantees amounted to a promise of subsidies if forecasts weren’t met, they were illegal under Proposition 1A, the 2008 state ballot measure providing $9.95 billion in bond seed money for the then-$33 billion project.

The LAO and the California State Auditor’s Office have been uniformly critical of the project for a decade.

Rep. McCarthy: Move $ to other transportation projects

If the Trump administration takes steps to recover the $2.5 billion by withholding unrelated federal dollars bound for California, the dispute seems certain to end up in federal court.

Meanwhile, the California congressman whose district has arguably been most affected by early construction of the bullet train on Thursday introduced a bill that would “repurpose” all $3.4 billion in federal funds for the project to water infrastructure projects in California and other Western states. The measure by House Minority Leader Kevin McCarthy, R-Bakersfield, faces long odds in a chamber in which Democrats retook control in January.

16 comments

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  1. SDVeteran
    SDVeteran 11 March, 2019, 10:00

    “The limited segment linking Bakersfield and Merced is expected to cost up to $18 billion.” Quick question… I know the projects are completely unrelated and funds are not shared, but how much water resources infrastructure would $18 billion buy? Better question – how will $18B, plus ongoing maintenance and operating costs ever be recovered for a bullet train from Bakersfield to Merced. Stop the madness now and cancel the project.

    Reply this comment
  2. BigFire
    BigFire 11 March, 2019, 10:54

    The point of the project is not making anything. It’s sole purpose is to spend Federal matching funds.

    Reply this comment
  3. Rob Anderson
    Rob Anderson 11 March, 2019, 12:09

    Brian Kelly is simply singing for his supper. Of course he wants the money. The Trump administration may be despicable in general, but it’s surely right about this dumb project that long ago morphed into something other than what voters approved in 2008. Newsom looks weak by continuing to support the project by using Trump as an excuse to obscure what’s really going on.

    Reply this comment
  4. Glen
    Glen 11 March, 2019, 12:23

    This is a product of Gov. Brown’s INCOMPETENCE!!! A CLEAR WASTE OF MONEY!!! 18 BILLION from Merced to Bakersfield…..LAUGHABLE!!!

    REALISTICALLY, HOW MANY RIDERS WILL IT TAKE TO MAKE THAT MONEY BACK!!!

    CANCEL this STUPID project!!!

    Reply this comment
  5. Common sense
    Common sense 11 March, 2019, 13:33

    Stop everything involved with this doomed unneeded project! Pay back money to Federal government. Reroute resources to other infrastructure projects.

    Reply this comment
  6. afrequentreader
    afrequentreader 11 March, 2019, 13:53

    California – A state where insanity is priority over sensibility.

    Oh, and none of AG Becerra’s lawsuits are politically motivated? pfff…

    Reply this comment
  7. patandemma
    patandemma 11 March, 2019, 15:51

    what would do more for one of the most poverty-stricken areas in America (San Joaquin Valley) ?: $18B for water infrastructure to revive the devastated ag industry there or $18B for a Bakersfield to Merced bullet train that only the affluent could afford to take

    Reply this comment
  8. Queeg
    Queeg 11 March, 2019, 16:18

    Comrades. Settle. Chill.

    You lost influence years ago backing Peteee Wilson.

    You’re stale, polyester-esqe old news.

    Ciao

    Reply this comment
    • me
      me 16 March, 2019, 22:03

      Pete Wilson was one of the decent ones ! before frickin Nazi Arnold Schwarzenegger bought his way in as Governor

      Reply this comment
  9. ricky65
    ricky65 12 March, 2019, 11:49

    What I cannot see in this article, or anywhere else for that matter is how much money has already been spent on the Brown Streak train? How much has the state spent on the current segment near Fresno? …and how much more is needed to complete the current 118 mile segment?
    We need to know where we stand on our ‘investment’.
    Whatever that is you can expect cost overruns (change orders) in the range of 30% to add to that figure based on HSR’s previous track record. And you can add the $3.5 billion fed ‘clawback’ to the taxpayer bill.
    Once we get a real accounting of what’s at stake I think the state taxpayers will be shocked.

    At that point, I think the ‘Theory of Holes’ will be applied: Whenever you find yourself deeper and deeper in the hole, the first thing to do is stop digging.

    Reply this comment
  10. LJ
    LJ 14 March, 2019, 10:47

    Over the years, I’ve traveled on both Europe’s high speed and standard trains. Seldom crowded, high speed trains were used mostly by professionals and business people. Tickets are quite expensive. The great majority of folks used standard trains. Standard trains were full of working class, families, locals, and everyone else. Tickets on them are quite affordable. If a traveler wanted to upgrade, they could always buy a first class ticket on a regular train. Why can’t California start with a good regular train system that everyone, no matter their economic level, can use?

    Reply this comment
    • RCC
      RCC 19 March, 2019, 22:01

      cause that would make senses and california likes to complicate matters, so they can tax more to generate a fictional problem and look smart.

      Reply this comment
  11. Queeg
    Queeg 14 March, 2019, 17:23

    Comrade LJ

    Lib Privledge/union benefits/Less than truck load shippers possible chronism all in mix.

    If you’re a typical uneducated/naive Gen X’er bloke you must live, sweat and work at obsecure bullet stops out of sight and mind.

    Reply this comment
  12. Ted Steele
    Ted Steele 17 March, 2019, 20:07

    The Ted System will not even comment on this thread— too lame. Attn doomers——step up your posts

    Reply this comment
    • ricky65
      ricky65 21 March, 2019, 20:54

      Yes. Keep it simple folks.
      It is impossible for old Teddy to understand complex subjects anymore as the Alzheimer’s is really kickin’ in these days.
      Third grade level or lower please.

      Reply this comment
  13. afrequentreader
    afrequentreader 8 April, 2019, 13:30

    where’s the “like” button when you need it! 😉

    Reply this comment

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Chris Reed

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.

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