Four months after then-California High Speed Rail Authority Chief Executive Jeff Morales told authority board members he was moving on and two months after Morales made his decision public, the agency overseeing the state’s $64 billion bullet train project hasn’t settled on his successor.

In 2012, four months after Chief Executive Roelof van Ark abruptly left following two stormy years, Morales already had the job. This time around, the same speedy selection process seemed likely. The RT&S transportation industry website reported after Morales’ decision was announced in April that the board was likely to have his replacement approved before Morales’ final day of June 2.

But the CHSRA board met in closed session on the succession issue on May 10 and June 14 without reaching a decision. The rail agency’s number two job – deputy chief executive – has also been vacant since Dennis Trujillo left in December.

The empty slots atop the CHSRA power structure come at a critical time.

According to a federal report prepared under the Obama administration, the state’s high-speed rail project is already seven years behind schedule and on its way to having a 50 percent cost overrun on the $6.4 billion, 118-mile first segment now being built in the Central Valley.

The project also continues to face legal challenges which argue that it violates the terms of Proposition 1A, the 2008 ballot measure providing $9.95 billion in bond seed money for the project. The rail authority has won most recent judgments. But opponents remain confident they eventually will prevail because of a 2014 state appellate court ruling that held the project still was subject to a financial “straitjacket” that would require it to show short- and long-term financial viability without public subsidies before the project could significantly proceed. The project’s struggle to attract private investment shows that at least in the private sector, there are many doubts that the bullet train could operate successfully without such subsidies.

Obama administration rules could haunt project

But the election of Donald Trump as president in November also has led to a huge new headache for CHSRA. All 14 California House Republicans have urged Transportation Secretary Elaine Chao to reverse Obama administration actions that loosened federal rules to give California access to about $3 billion in federal dollars for the project.

Rep. Jeff Dunman, R-Turlock, and his colleagues have focused their harshest fire on a 2012 decision that gave the state the go-ahead to spend about $200 million in federal funds but not have matching state spending. The decision went against longstanding Washington precedent.

Withdrawing all federal funding could also be justified by citing the Obama administration’s 2009 regulations for projects that were to be paid for or partly paid for with money from the economic stimulus bill passed a month after President Obama took office. The Federal Railroad Administration rules said projects that didn’t demonstrate “reasonableness of financial estimates” and “quality of planning process” would get no funding.

That’s the same agency which recently concluded the project was seven years behind schedule and on course for a 50 percent cost overrun on its initial segment

The California High Speed Rail Authority board’s next meeting is July 18 in Sacramento.

“Assemblyman Travis Allen, R-Huntington Beach, filed paperwork last week seeking a 2018 ballot measure to overturn SB1, a 10-year, $52.4 billion transportation funding bill narrowly passed by the Legislature in April,” the San Gabriel Valley Tribune reported. “The bill, also known as the Road Repair and Accountability Act of 2017, raises the state’s gas tax by 12 cents a gallon, boosts taxes on diesel fuel and imposes new annual fees on vehicles to tackle a road repair backlog exceeding $130 billion.”

Passion and pacing

“Jerry Brown’s decision to push through the largest gas tax increase in California’s history without the approval of voters demonstrated a complete disregard for ordinary Californians,” said Allen, the Los Angeles Times noted. “This ballot initiative will correct Brown’s failure and allow the people of California to decide for themselves if they want to raise their taxes.”

Hoping for an enduring grassroots reaction against the package, the assemblyman turned to disaffected state voters for support. “Allen launched a website asking for contributions of $5 to help him gather the 365,880 signatures from registered voters to place the repeal before voters. Allen can begin to gather signatures once the state attorney general issues a title and summary for his repeal,” according to the Sacramento Bee. “Allen is proposing a diverse stream of possible funding sources, including tribal gambling revenue, to replace the tax.” In addition to Allen, the Howard Jarvis Taxpayers Association has considered moving forward with an initiative proposal, according to the Los Angeles Times. 

One potential limitation to Allen’s ambitions would be a relative inability to capitalize on the heat of the political moment. Because of the electoral calendar, the Bee observed, “the earliest the tax could be repealed is after the November 2018 election. Referendums, which allow the law in question to be halted until voters pass judgment on the repeal, cannot be used to repeal tax levies or measures that lawmakers passed with an urgency clause, such as the gas tax increase.”

The long game

Yet a series of retaliatory moves against lawmakers who voted for Brown’s infrastructure bill could keep the issue simmering as Allen forges ahead. “In Fullerton, three Southern California radio talk show hosts kicked off a campaign Thursday to recall state Sen. Josh Newman, a first-term Democratic legislator who barely edged out his Republican opponent in November, in retaliation for his vote,” the Washington Times noted. “The Los Angeles hosts, joined by Carl DeMaio of KOGO-AM in San Diego, drove home the point by launching their recall campaign at an Arco gas station.”

“They were backed by Jon Coupal, president of the Howard Jarvis Taxpayers Association, who announced the formation Thursday of Californians Against Car and Gas Tax Hikes in order to target Mr. Newman, whose Senate District 29 is based in Brea.”

Even a successful bid to remove Newman could be enough to upset the precarious balance around the tax law. “The loss of one Democratic senator would cost Democrats their two-thirds senate supermajority, making it much easier for Republicans to fight tax hikes,” as the Tribune noted. But it would also damage the legitimacy of the tax deal, which would have faced an even steeper hurdle to passage without Newman’s vote. 

“The California Legislature passed Senate Bill 1 on Thursday night, raising gas taxes and vehicle fees in hopes of generating tens of billions of dollars to fix the state’s roads,” the Desert Sun reported. “The tax increases will take effect November 1 and new vehicle registration fees will begin Jan. 1, 2018. Fees on zero-emission vehicles will take effect July 1, 2020, according to the text of the bill.”

“Gov. Jerry Brown, who stumped for the bill in Riverside this week, said its language had been in the works for years. It squeaked through the Senate and Assembly on Thursday night, barely earning the required two-thirds votes in both houses.”

Getting to yes

To get there, Brown resorted to an uncommon amount of bargaining in close negotiations. “It wasn’t the sort of vote any politician likes to cast. So the measure’s success on Thursday relied on a collection of eleventh-hour sweeteners offered by Gov. Jerry Brown and Democratic legislative leaders to reach the necessary two-thirds super-majority,” the Sacramento Bee observed. “Now that the dust has settled, it’s clear they doled out nearly $1 billion in district-specific transportation projects, with a popular commuter train system linking the valley and Bay Area headed to new locales. It also appears architects could get legal indemnity in construction lawsuits, and four Riverside County cities could see a budget boost. […] Rumors of other SB 1 vote-getting arrangements lingered in the Capitol this week.”

In risking criticism, Brown signaled a sharp judgment that last week’s deal was the best — perhaps the only — shot at getting a substantial tax-funded infrastructure package passed into law. “Similar proposals have languished for years, but Brown and legislative leaders set a quick-turn April 6 deadline for action, hoping to pressure a compromise before the Legislature’s spring break — ahead of big debates to come in 2017 on the state budget and hundreds of bills,” according to the San Francisco Examiner. “The side deals, which still require legislative approval, showed up in two changes to the budget bill language, with most of it made public at 4 a.m. on the day of the vote.”

Costly neglect

One reason for Brown’s sense of urgency was familiar to residents across the state: California has fallen woefully behind on infrastructure repairs and improvements. “Most of the money, about $33.7 billion, will pay for a backlog of infrastructure repair projects that has grown to $130 billion,” as The Hill reported on the deal. “The American Society of Civil Engineers estimates that half the state’s roads are in poor conditions.” And, in a familiar pattern, Sacramento’s choice to proceed with the gas tax fueled speculation that other states in similar straits could quickly follow suit. “As infrastructure maintenance costs pile up, several other states are debating whether to raise gas taxes to deal with local projects,” The Hill added. “Louisiana legislators will debate a proposal to raise gas taxes in a special session beginning next week. The Republican-led Montana state House voted to raise taxes by eight cents per gallon in March, and the state Senate will take up the proposal this month.”

The impending change leaves Republicans on the outs — and residents unhappy with the prospect of even higher taxes on one of life’s staples in California. “If voters don’t like the tax, he says they can start a petition to get a referendum on the ballot, but that would require a lot of money and more than 1 million signatures. But supporters say it’s not worth it, so long as the 10-year, $52 billion measure goes to California’s ruined roads,”,” CBS Sacramento noted. “Either side you’re on, energy analysts say the tax will leave California with the highest fuel tax in the nation.”

Gov. Jerry Brown and Democratic legislators are pitching a transportation-tax proposal they depict as the only means to fix California’s crumbling roads, freeways and bridges. One would be hard pressed to find any policy maker in California who doesn’t bemoan the state of the state’s infrastructure, but the question always revolves around how to pay for it, and Republicans complain there are other ways to fix the current mess.

The Democratic plan, which received its first committee approval on a party-line vote Monday, would raise $52.4 billion over 10 years through a variety of tax proposals. It would hike gasoline taxes by 12 cents a gallon and diesel taxes by 20 cents a gallon, plus it would increase the vehicle-license fee from $25 to $175 a year, depending on the value of the vehicle. The average fee boost would be $48 a year. Furthermore, the plan would impose a $100 a year fee on electric vehicles because their drivers don’t pay gas taxes.

“This is mostly about fixing what we already have,” the governor said at a Capitol press conference last week. “If for some reason people try to fight this, and God help us if they were successful, they won’t defeat this, they’ll just delay it and make the expenses go up.” But Republicans focused on the economic impact of the plan on middle-class Californians. They also complain that the state’s cap-and-trade system, designed to battle climate change, will soon drive fuel prices up even further.

“For many households, the total tax hike will easily surpass $300 each year,” said Sens. Pat Bates, R-Laguna Niguel, and Jim Nielsen, R-Tehama, in a statement on Monday. “When combined with the 20 cent diesel excise tax hike and the 4 percent increase on the sales tax on diesel, it is clear that this tax proposal will negatively impact the California economy.”

The crux of the GOP argument: California doesn’t spend its current gas-tax revenue effectively, and it should reform its spending habits before calling on Californians to pay more at the pump – and when they register their cars and trucks. In fact, Republican legislators have proposed a bill that would raise the money without raising taxes. Assembly Bill 496, by Assemblyman Vince Fong, R-Bakersfield, would re-prioritize billions of dollars in general-fund spending toward transportation projects without requiring any type of tax increase.

For instance, the bill would divert $3 billion in sales tax revenue that comes from the sale of vehicles toward infrastructure-maintenance projects, and would move funds collected from truck-weight fees toward transportation-bond payments. The measure has the support of the Howard Jarvis Taxpayers Association, which recently expressed “frustration” the governor and Legislature have proposed tax increases without first considering other solutions.

The group noted that polls show strong support for returning the $68 billion high-speed rail project to a vote, which would allow some of these funds to be used for bread-and-butter infrastructure projects. “AB496 answers a question that too few in the legislature even bother to ask: how should legislators prioritize a record $120 billion general fund budget? California has seen a $36 billion general fund increase over the last six years, with not one dime of this new revenue spent on transportation projects,” wrote the group’s legislative director, David Wolfe, in a March 27 letter of support to Assemblyman Fong.

The tax-hike proposal doesn’t need to go to the voters for approval, but does need a two-thirds majority vote in both houses of the Legislature because it involves a tax increase. Democrats have supermajorities in both houses, but the governor still needs to woo some moderate Democrats who might be on the fence about such a large increase.

Gov. Brown compared the matter to a leaky roof. There’s no doubt that problems will keep expanding if a homeowner neglects such a problem – and the state’s infrastructure backlog is estimated at $130 billion.

A group of business officials and labor unions applauded the effort: “We are fully committed to supporting the road repair plan and intend to get it and the companion constitutional protection through the Legislature by April 6,” said Michael Quigley, of the California Alliance for Jobs, in a statement. “We need new revenue coupled with accountability provisions to begin to make a dent in the multi-billion dollar backlog of needed repairs to state highways and local roads.”

But critics point to a 2014 analysis of the California Department of Transportation to bolster their view that the state misspends so much of its current transportation revenue. The nonpartisan Legislative Analyst’s Office “recommends that the Legislature reduce the budget and staffing levels of the program starting with the 2014-15 budget, improve its staffing projects and data quality, and provide the California Transportation Commission with specific oversight and project approval functions that have limited external oversight.”

The analyst pointed to overstaffing by about 3,500 full-time jobs at Caltrans, which amounts to an unnecessary cost of around $500 million a year. Critics also complain about the above-mentioned rail project and the state’s inordinately high administrative costs on transportation projects. These, they say, are examples of misspending. Why should the state’s taxpayers spend more money when there’s little effort to reform current spending?

Wolfe’s letter points to another Republican complaint: The state’s general-fund budget continues to grow each year and has soared to record levels. Yet new transportation projects are, essentially, held hostage to the budget process. Democratic leaders spend money on other priorities, then complain there’s not enough money to deal with the transportation backlog – unless, of course, they are able to raise gas, diesel and registration fees.

Indeed, the governor last year called a transportation special session to come up with new infrastructure revenues, but he has thus far been unable to secure the additional dollars. The tax-hike plan is more likely than ever given increased Democratic numbers in the Capitol. The debate is the same as usual – new taxes vs. reforming how the state spends its current dollars – but the outcome may be different this time around.

Steven Greenhut is Western region director for the R Street Institute. He is based in Sacramento. Write to him at sgreenhut@rstreet.org.

Gov. Jerry Brown and Democratic legislative leaders continued their push Friday for quick approval of higher vehicle taxes and fees to pay for a 10-year, $52 billion plan to upgrade California’s roads and highways with the release of legislative language for two bills that appear to answer concerns that new revenue might be diverted to the general fund or used for the state’s embattled bullet train project.

Senate Constitutional Amendment 2 and Assembly Constitutional Amendment 12 both say the new revenue generated by Brown’s plan can be used only for transportation and not be borrowed or diverted for any other uses. The measures do not appear to have the weaknesses seen in two previous constitutional amendments meant to guarantee fuel taxes were used only for road improvements.

Proposition 42, passed in 2002, said sales taxes on fuel could not be used for anything but transportation purposes. But it allowed the money to be diverted on a two-thirds vote of both the Assembly and Senate.

After two diversions in subsequent years, voters in 2006 approved Proposition 1A, a constitutional amendment that said future diversions were OK in times of financial crisis, but would be treated as loans that had to be repaid.

In 2010, however, Gov. Arnold Schwarzenegger and the Legislature orchestrated a scheme to unencumber vehicle fuel sales tax funds that was based on a legal opinion that it was OK to adjust both sales taxes and excise taxes on vehicle fuel without overcoming the normal obstacles to tax hikes if the changes were revenue-neutral.

The scheme sharply cut fuel sales taxes and sharply increased fuel excise taxes, which were not subject to Proposition 1A protections. This allowed $1.8 billion in fuel excise taxes to be used to pay off previous transportation bonds instead of using general fund dollars.

SCA 2 and ACA 12 would forbid the use of new revenue for such bonds approved on or before Nov. 8, 2016. This provision would also prevent funds from being directed to the California High-Speed Rail Authority’s $64 billion project, original approved in 2008.

Zero-emission vehicles would face first fees

Here are the key details of Brown’s proposal, which targets an estimated $137 billion maintenance backlog on local and state roads and highways:

• It would raise gasoline excise taxes by 12 cents per gallon, a 43 percent increase, and index them to inflation.
• It would raise the diesel sales tax from 5.75 percent to 9.75 percent and increase the diesel excise tax from 16 cents to 36 cents per gallon.
• It would impose a first-ever road-use fee of $100 a year on owners of zero-emission vehicles who don’t buy gasoline and thus help pay for road and highway improvements.
• It would add a new annual fee on vehicles based on their value, with owners of vehicles worth less than $5,000 paying $25 ranging up to owners of vehicles worth $60,000 or more paying $175.

To become law, the two bills need two-thirds support from both the Assembly and Senate, meaning Brown, Assembly Speaker Anthony Rendon and Senate President Pro Tem Kevin de Leon either need some Republican votes or no Democratic defections. They hope to have finals votes taken by Friday, April 6.

Republicans rip plan — and some Democrats may as well

That looks to be a tall task. Assembly Republican Leader Chad Mayes of Yucca Valley appeared to speak for most or all GOP lawmakers when he ripped Brown’s plan, telling reporters, “The state government has mismanaged our transportation system now for decades and the only answer, the only response to that, is that the Democrats — the ruling party here in California — want to raise taxes.”

Meanwhile, in an era in which California Democrats’ hostility to fossil-fuel vehicles keeps building, the new fee on zero-emission vehicles and the divvying up of the $52 billion in new revenue is likely to rankle some. The package’s overwhelming focus is on road and highway improvements; $7 billion would go to mass transit and local public transit systems and $1 billion to new bicycle lands and pedestrian projects.

What happened in San Diego County in the Nov. 8 election could be telling. Measure A, an $18 billion program which would have used sales taxes to fund transportation improvements, was crafted by the San Diego Association of Governments with an eye toward winning over environmentalists. Transit and bicycling projects and improvements were to get $8.94 billion of funding, just under half.

But Measure A got 58 percent of the vote, less than the two-thirds needed, after being scorned by some liberals for spending too much on roads and by some conservatives for spending too much on transit.

That suggests some green California Democrats may not be happy with transit and bicycling only getting a 15 percent cut of Brown’s $52 billion package.

Still reeling from a wild weather season, California chalked up a fourth request for federal disaster aid, as Gov. Jerry Brown lodged the request en route to Washington earlier this month.

“Putting the price tag of California’s brutal winter storms at $569 million, Gov. Jerry Brown asked President Trump […] for a fourth federal disaster declaration to help speed up recovery and repairs across the state,” the Los Angeles Times noted. “The estimate of damages, a number calculated jointly by state and federal teams, was accompanied in Brown’s letter by a long list of storm damage that left Californians fleeing flood waters and a number of roadways damaged by slipping hillsides and erosion.”

Despite some friction between Brown and Trump over changes to federal law that could cut against the grain of state Democrats’ priorities, the president hasn’t hesitated to grant the governor’s wishes for relief. “Brown’s request for a federal disaster declaration follows three similar requests this winter amid widespread weather-related damage. The three earlier appeals were granted, expediting assistance for flooding, problems on roads and bridges and other issues,” the San Francisco Chronicle recalled. “The Governor’s Office of Emergency Services has also requested assistance from the U.S. Small Business Administration for individuals in Colusa, Lake, Lassen, Plumas, Santa Clara and Santa Cruz counties, where the flooding from February storms damaged more than 200 homes and businesses.”

The most recent grant came mid-month, in the midst of Brown’s latest request. “President Donald J. Trump declared a major disaster exists in the state of California and ordered federal assistance to supplement state, tribal and local recovery efforts in the areas affected by severe winter storms, flooding and mudslides from January 18 to January 23, 2017,” the White House announced.

Careful politics

Visiting FEMA acting administrator Bob Fenton in D.C., Brown struck a conciliatory tone, but limited it sharply. “Brown, who put the storm damage at well over $500 million, said he came away from the meeting feeling positive after being told that Trump is ‘very concerned’ about disaster relief for California,” according to the Sacramento Bee. “But Brown also stood by his recent denouncement of the Trump administration’s decision to review federal greenhouse gas standards, a move the governor recently characterized as “an unconscionable gift to polluters.”

Brown’s posture chimed closely with public sentiment in the Golden State. “Fifty-three percent of California voters say state leaders should try to work with Trump on areas of disagreement, even if it requires compromises, while 47 percent of voters say California leaders should oppose the president even if it risks losing federal funding to the state,” according to a poll conducted by the Institute of Governmental Studies at UC Berkeley and reported by Politico. “The preference for compromise comes despite Trump’s deep unpopularity in California,” the site added. “Yet in two major areas — the economy and jobs and improving roads and infrastructure — more Californians say Trump administration policies will have a positive than negative effect.”

A cracked mirror

Previously, the administration joined a broader effort in Washington to reckon with the consequences of California’s sometimes crumbling infrastructure. “Trump declared a presidential emergency during last month’s crisis at Oroville Dam,” the Sacramento bee noted. Meanwhile, on Capitol Hill, lawmakers broadened their view of similar challenges nationwide. “The recent events at the Oroville dam in California, together with ice jam flooding on other major waterways and other flooding events, has forced the Environment and Public Works Committee to take up the status of U.S. dam, levee and other flood control infrastructure,” the Washington Examiner reported. “The new chairman of the committee, Sen. John Barrasso, R-Wyoming, has made infrastructure development a top issue for the panel this Congress, in light of President Trump’s focus on infrastructure and job development.”

The new administration in Washington, D.C., has added another hurdle to California’s already difficult road to high-speed rail.

Drawing fire from Democrats and cheers from Republicans, the Department of Transportation “has deferred a decision on a $647-million grant that would help Caltrain electrify a section of track between San Jose and San Francisco, a project crucial to California’s struggling high-speed rail project,” as the Los Angeles Times noted. “The decision not to approve the grant by a key Friday deadline may be an early sign of the Trump administration’s view of the bullet train project. The line is already under construction and will need significant federal funding moving forward.” 

That funding has been coveted because of the additional grants it triggers if approved. “The federal grant, if it is ultimately awarded, would be matched by another $1.3 billion in local, state and regional investment, including funds from the high-speed rail agency,” the Fresno Bee reported. 

An ongoing struggle

Although the rail effort has been hamstrung by ballooning costs and time projections and repeated downward revisions of its original ambitions, Gov. Jerry Brown and his allies have labored to portray opposition as anti-innovation. With Democrats and Republicans at the federal level both making overtures to infrastructure reform, the governor swiftly sought to criticize the Transportation Department move accordingly. “If you’re not for that, you’re really not for infrastructure,” Brown told Dan Morain of the Sacramento Bee. “The only thing you can say for that is it’s scoring political points by politicians that know better.” 

“The move follows directly on the heels of a letter from 14 California Republicans, who pleaded with Transportation Secretary Elaine Chao to block the federal grants and argued that the money would be wasted,” the site added. “The letter was spearheaded by Rep. Jeff Denham, R-Calif., who chairs the House Transportation and Infrastructure subcommittee that oversees railroads.”

Staunch opposition

State and Congressional GOP have held a firm line against the bullet train, one of a relative few of big-ticket policies pushed by ruling Democrats that hasn’t tapped a very deep reservoir of public support. “Killing the project entirely before larger amounts of money are poured into it is probably the best taxpayers could hope for,” wrote Baruch Feigenbaum of the Reason Foundation, summing up the standpoint of Golden State conservatives and libertarians.

“But that’s not likely to happen on Gov. Jerry Brown’s watch. Brown has been committed to creatively diverting money to the rail system and will continue to do so. So California should take a cue from President Trump, who has called for increased private-sector investment in infrastructure projects, and explore whether or not there are standalone sections of a high-speed rail system that make financial sense for private companies.”

Although the Department of Transportation did not put a timeline on how long its deferral of a decision on the train would last, it may also have to first decide whether to grant Republicans’ wish for tighter oversight over the project altogether. “Members of California’s GOP delegation had asked the Transportation Department to block approval of the grant to electrify a Caltrain line between San Jose and San Francisco until an audit of the bullet train’s finances is completed,” as the Bee reported. “They said that providing additional funding to help the $64 billion high-speed rail project would be an irresponsible use of taxpayer dollars.”

Dams aren’t the only part of California infrastructure on the hot seat. Following a big-ticket Sacramento request for federal building funds, a new report has concluded that the number of state bridges in dangerously inadequate condition reaches into the thousands. 

“Of the 55,000 bridges across the U.S. that were deemed structurally deficient in a report published by the American Road and Transportation Builders Association, more than 1,300 California bridges fall under that category,” KCRA and the Associated Press reported. “That means that of the 25,431 bridges in the state, 5 percent have one or more key bridge elements – deck, superstructure or substructure – that are considered to be in ‘poor’ or worse condition, the analysis found.”

Although the bridges haven’t been labeled near collapse, the numbers threw the sheer scale of California’s infrastructure woes – amid heavy costs on marquee projects like high-speed rail – into stark relief. “The state has already identified 4,075 bridges that need repair, which comes with a price tag of $12 billion,” the channel continued. “Across the country, ARBTA noted that deficient bridges are crossed about 185 million times a day. The top 14 most-traveled deficient bridges are in California.”

Hat in hand

A near-catastrophe surrounding the potential failure of the state’s Oroville Dam has thrown additional light onto what California gets for its spending and doesn’t. “Shock over the emergency evacuation downriver from the Oroville Dam has given way to serious questions about how California is coping with its aging infrastructure – which the American Society of Civil Engineers says would cost the state a staggering $65 billion per year to fix and maintain after years of neglect,” the San Jose Mercury News observed.

Residents and officials are divided over where that kind of money should come from. “Gov. Jerry Brown has proposed investing $43 billion in infrastructure over the next five years, with the vast majority of the money going to transportation,” the paper added. “California voters approved a $7.5 billion water bond in 2014 for a range of needs from flood control to water storage, but that falls far short of needs for flood control and increasing the water supply.”

Wishes and hopes

In fact, the state has drafted up a bid for $100 billion of federal infrastructure funding on over 50 projects, itemized in a letter from Gov. Brown to the National Governors Association. “Brown’s administration has pledged $4.3 billion of the state’s budget to go toward the repairs on the list, and has given legislative leaders a deadline of April 6 to submit candidates for any transportation funding,” the San Francisco Business Times reported. “Other projects on the state’s list for federal funds include levees, reservoirs, bridges, ports, recycling centers, public transit upgrades and more veterans services operations.”

Oroville Dam wasn’t mentioned on the list; California’s stop-and-start high speed rail project, projected to run well over the budget authorized by voters, was. “The state said Saturday that repairs to the primary spillway at Oroville Dam — the nation’s tallest earthen dam — could run as much as $200 million but that was before critical damage to the emergency spillway,” CNBC noted. “Repairs to both spillways are likely to run much higher than the rough estimate provided by the California Department of Water Resources.”

Although California’s once-cozy relationship with the White House, forged between leading state Democrats and Barack Obama’s administration, may be history, officials have made reassurances that their focus on infrastructure — a priority shared with president Trump — will not be in vain. “State Transportation Agency Secretary Brian Kelly told reporters he plans to meet soon with new federal Transportation Secretary Elaine Chao to discuss the wish list,” the Los Angeles Times reported. Chao, wife of Senate Majority Leader Mitch McConnell, won confirmation to the position as one of the most experienced and established members of Trump’s cabinet. 

The prime means the state uses to pay for such capital investments is through the bond process. State bonds don’t directly raise taxes, but the bond payments come out of the general fund. So increases in bond spending nudge out other types of spending, and lead to pressure to increase taxes to make the payments. By contrast, local bonds directly impose new tax commitments on property owners.

While supporters of individual bond measures argue over the specific merits of each proposed measure, both sides often ignore this crucial question: How efficiently do current bonds achieve the goals promised in the measures? California voters approve an overwhelming majority of the bond initiatives placed before them on the ballot, but too often there’s little attention paid to how the authorized funds actually are spent.

The state’s independent watchdog agency, the Little Hoover Commission, last week released a report that reinforces that point. In the past decade, voters have approved $70 billion in state bonds and more than $138 billion in local school-facilities bonds – numbers that have increased after the state lowered the voter threshold for approval, it explained.

“Spreading the costs of major infrastructure projects across generations makes sense,” the commission’s chairman Pedro Nava added. “But as Californians have put more and more on the tab, a day of reckoning will arrive.” The commission cautions that these payments on the debt service will remain after the next recession hits and called for a re-evaluation of “whether current oversight mechanisms are enough to ensure both state and local bond proceeds are spent as efficiently as possible and as voters intended.”

The commission had produced a similar report in 2009, where it called for greater oversight and transparency specifically for natural-resources bonds. It noted that 23 departments in the state Natural Resources Agency administer 16,000 projects, so it’s a Herculean task to try to oversee and track the billions of dollars in spending.

Regarding statewide bond measures, it called for the creation of bond-oversight committees in both houses of the Legislature, independent audits funded from the bond proceeds, and a greatly improved web-based system for tracking expenditures and outcomes based on uniform reporting standards. It also called for the establishment by state officials of some fundamental bond criteria that could then be used to create a “report card” that grades each bond proposal.

After the last report, some efforts were taken to improve accountability, but the commission was not satisfied with the level of changes. The Schwarzenegger administration had proposed a detailed accountability plan, but it has not led to a consistent approach. There is no report card, as proposed. Furthermore, the new report takes aim at the state’s website, although it is encouraged by new legislation that would advance that goal. It points to overall progress, but of an inconsistent nature.

The commission offered two recommendations this year. The first should get heads nodding, although it is lacking in detail: “The governor and the Legislature should adopt a consistent system to improve transparency and oversight of all statewide bonds, particularly the 2008 high-speed rail and the 2016 school facility construction bonds, which currently lack such requirements, as well as all future statewide bond measures.”

The second is more specific and calls for adequate financial support for Senate Bill 1029, a new law which requires the Treasurer’s Office to track and report on all local and state debt spending until the debts are paid off or redeemed.

Although the report doesn’t discuss this, the high-speed rail example offers a reminder of how difficult it will be for the public to get a handle on how its bond proceeds are being spent. Voters approved Proposition 1A in 2008 by a nearly 57 percent to 43 percent margin. The initiative authorized the California High-Speed Rail Authority to issue $9.95 billion in general-obligation bonds to fund the start of a bullet-train project linking Los Angeles with the Bay Area. The project now is estimated to cost $68 billion.

The rail line’s backers included a number of specific promises to voters to help secure their support for such a large bond measure. For instance, supporters touted a 2-hour and 40-minute travel time from L.A. to San Francisco, but the latest plan – using shared lines with commuter trains in both major metropolitan areas – puts the time well over 3 hours. Other promises regarding cost, completion times and subsidies seem unlikely to come to fruition.

“Substantial legal questions loom in the trial court as to whether the high-speed rail project the … authority seeks to build is the project approved by voters in 2008,” explained a state appellate court in 2014, yet the court gave the project the go ahead. Other legal challenges remain, but even one of the rail system’s original proponents has come out against the current iteration of the plan by arguing that it doesn’t resemble the project approved by voters.

In other words, the problem with this major bond issuance isn’t necessarily oversight given that the details of the authority’s spending are fairly well known by now. The problem, critics say, is the courts allow the spending to continue even after it’s known that the tightly written promises within the bond measure aren’t always being followed.

Regarding local bonds, the commission in 2009 recommended the creation of local oversight committees. It modeled its suggestion on the largely unheeded testimony from the California League of Bond Oversight Committees. “Unfortunately, but understandably, many locally-elected government officials who must make multimillion- and multibillion-dollar decisions on bond issuances lack experience in municipal finance,” according to the report. This situation, it wrote, is like “playing with financial matches.”

The commission’s new report points to a 2012 scandal at the Sweetwater Union High School District in San Diego County. The new leadership has since created an oversight committee that the commission sees as a statewide model.

“Bond oversight committees in many communities act simply as cheerleaders for the district, often because members simply do not understand their roles or know what actions they can take,” the report explains. The key to their success, it added, “is adequately training members so that they understand their role and the tools they have at their disposal to ensure they are effective.” The key is independent oversight and “performance audits tailored to results.”

The report also calls for a variety of measures ranging from better online tracking of spending to the ability to impose sanctions on districts that fail to live up to constitutional and statutory spending restrictions, as detailed in Proposition 39. That’s the 2000 statewide ballot measure that reduced the supermajority vote requirement to 55 percent for the passage of local school bonds. It included a variety of spending safeguards in exchange for making it easier for districts to pass these spending measures.

It’s unclear whether the state will embrace the commission’s suggestions and how successful any of the specific recommendations might be. But there’s little question that state officials need to pay more attention not only to how much money the state has to repair and improve its infrastructure – but how those dollars are being spent.

Steven Greenhut is Western region director for the R Street Institute. Write to him at sgreenhut@rstreet.org.

SACRAMENTO – A Sacramento Bee story published Monday succinctly described the disaster unfolding at the nation’s tallest dam, where flaws in the Oroville Dam’s concrete spillway are forcing water onto the earthen emergency spillway. Threats of a spillway collapse led to mandatory evacuations throughout Butte, Yuba and Sutter counties Sunday.

“Oroville Dam contains a flaw, some critics assert, one that could damage the structure during a major flood and threaten downstream communities,” according to the Bee. “That flaw is the dam’s emergency spillway, which empties onto a bare dirt hillside adjacent to the earthen-fill dam.” The torrent of water could erode the unprotected hillside, undermine the emergency spillway’s foundation and lead to a catastrophic failure.

The amazing thing is that the news report was first published Nov. 27, 2005. The Bee’s Monday publication was a reprint, given the relevance of the report nearly a dozen years later. It provides necessary context after another news organization revealed that three environmental groups at the time had urged state and federal officials to line the emergency spillway with concrete to avoid the kind of problems on display this week.

A dozen years ago, the dam was going through a 50-year relicensing process with the Federal Energy Regulatory Commission. The Friends of the River, the Sierra Club and the South Yuba Citizens League argued in their filings that the 1960s-era dam “did not meet modern safety standards because in the event of extreme rain and flooding, fast-rising water would overwhelm the main concrete spillway” and threaten flooding in communities down river, according to the Mercury News, which broke the story this week.

State and federal officials brushed off the suggestion at the time, arguing that the likelihood of such an event was slim and that it would be too costly to complete those improvements. The dam received its relicensing and the matter faded away. State water officials have been consumed more by drought issues than flood possibilities in the ensuing dozen years. But given the accuracy of the environmental groups’ predictions, it’s worth taking a deeper look at what happened.

At a news conference near Lake Oroville Monday, “the state’s top water officials brushed aside questions” about that old report and didn’t address assurances from a top state water official in 2005 that “(o)ur facilities, including the spillway, are safe during any conceivable flood event,” according to the latest Bee report.

The news story revealed another troubling piece of the puzzle: Congress had authorized the construction of a smaller dam on the Yuba River near Marysville, which is down river from Oroville. The Oroville Dam’s operating plan was predicated, in part, on the construction of this other dam, which would take pressure off the larger facility. But it was never built. In the view of critics, this serves as a touchstone for much that is wrong with California’s water policy.

Former Assemblyman Tim Donnelly, a Republican from San Bernardino County, criticized Gov. Jerry Brown for spending so much time defying the new Trump administration “that it forgot to do the things government is supposed to do, like maintain infrastructure.” The seven years of drought that preceded this rainy season, he added, would have been an ideal time to fix decrepit levees and dams but the Brown administration was more focused on building a $68-billion high-speed rail line, dealing with immigration issues and boosting public-employee compensation.

That’s a harsh assessment, but there’s much evidence to support the theory of ongoing state neglect. There are available water-bond funds, yet the state government has been lackadaisical at best about spending them. Many of its priorities are about environmental restoration rather than dam protection and there’s been little appetite in the Capitol to build new storage facilities.

Indeed, the governor has been more focused on removing dams on the Klamath River near the Oregon border than on shoring up the linchpin of the State Water Project – the system of levees and dams that directs water from the Sacramento Valley southward.

The Brown administration, which had vowed to fight against Donald Trump on his climate, immigration and other policies, nevertheless asked the president Friday to declare parts of California a disaster area, thus opening up a floodgate of federal aid. But there are other federal policies that the Trump administration could consider that would help protect residents living within the shadow of Oroville and other California dams.

For instance, current mortgage rules regarding flood insurance discourage people who live in the shadow of large dams from purchasing flood insurance policies. Federal lending rules require such insurance for owners of property in flood plains, but flood-protection systems such as dams and levees usually remove the floodplain designation from those areas. Without pressure from mortgage companies, owners typically avoid the insurance, figuring there’s little chance of a dam failure.

“Properties that would be designated as located within a flood plain but for a flood protection system like dams and levees – residual risk areas – should be subject to the mandatory purchase requirement,” argues the SmarterSafer Coalition, which includes the R Street Institute, in a recent study analyzing the federal flood insurance program. Those areas would, of course, have rates that “clearly reflect the decreased risk the properties face as a result of the dam or levee.”

Such an insurance system wouldn’t ensure that state and federal authorities repair their dams and levees in a timely manner, but it would offer a level of economic protection for people who are now sitting in motel rooms, watching the news and wondering whether they’ll have anything left if the Oroville Dam spillway gives way. Furthermore, it would protect taxpayers, who typically pay for the aid after a natural disaster strikes.

For now, watching and waiting is all that most Northern California residents can do. Once the crisis passes, there will be intense pressure on the state government to make repairs to Oroville Dam and others across the state. But news reports make clear that state officials were warned about the very problems now unfolding. 

Steven Greenhut is Western region director for the R Street Institute. Write to him at sgreenhut@rstreet.org.