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January 04, 2012

California High Speed Rail Threatened by Peer Review Report

Posted in: Uncategorized

California’s ambitious high speed rail program hit a snag yesterday when a peer review group recommended a halt to continued bond funding of the project until a long-term funding source can be secured.

Let’s back up a bit. In 2008, California voters passed a proposition enabling bond financing of a high speed rail network stretching from San Diego to Sacramento. It would make the trip from key hubs in Southern California to Northern California in under 3 hours, and would increase productivity in the state, reduce greenhouse gas emissions and bring 21st-century infrastructure to America. The Obama Administration latched on to high speed rail early, and doled out grants to several states, including California, to build out their HSR networks. In fact, as other states dropped out of HSR, California got a funding boost from the Transportation Department.

But long-term funding is not yet secure. Congress in its last budget wiped out all Administration funding to the states for high speed rail. The project in California has also been beset by a NIMBY-based campaign to discredit it. The cost projections have risen, in no small part because locals in Central California demanded expensive changes to the route. But the major problem that the peer review group cited is the lack of a long-term funding solution, either through the federal government or private capital, to keep the project going.

“The fact that the Funding Plan fails to identify any long term funding commitments is a fundamental flaw in the program,” the California High-Speed Rail Peer Review Group said in a letter to legislative leaders. “Without committed funds, a mega-project of this nature could be forced to halt construction for many years before additional funding could be obtained.”

The peer review group, chaired by former Caltrans director Will Kempton, said many of the California High-Speed Rail Authority’s projections remain optimistic.

The group said in its report that “we cannot overemphasize the fact that moving ahead on the HSR project without credible sources of adequate funding, without a definitive business model, without a strategy to maximize the independent utility and value to the State, and without the appropriate management resources, represents an immense financial risk on the part of the state of California.”

With a release of bond funding, the HSR project could actually start breaking ground in the Central Valley this year. Governor Jerry Brown supports the project, and remains behind it even after the report. But this peer review report could make it difficult to get the bond approval out of the Legislature. The high speed rail authority blasted the report, but some lawmakers have been waiting for a fig leaf to kill the project – and that includes parochial members of both parties.

Robert Cruickshank assesses the state of play at the California HSR blog:

As I’ve been arguing, California’s high speed rail project is getting screwed not by any internal flaws or by public rejection, but by the decision of the far-right extremists in the House of Representatives to oppose high speed rail funding. By calling into question future federal support for HSR, the House has made it easier to attack the California project. As we all know, the $10 billion in voter-approved bond funding and $4 billion in federal stimulus is not enough to complete the project or to build an initial operating segment that can generate its own revenue. That enables further attacks on the project, using the argument that no guarantee of future funding means no funding at all and therefore we shouldn’t even begin any construction whatsoever.

There’s no doubt that the lack of secured, full funding is a problem. The question is how does one resolve it? Do you assume that the federal government will never spend another dime on high speed rail again and call it a day? Or do you press onward and build what you can, working to change Congress’ mind while also hoping that the initial construction can itself act as a spur to win more funding?

The other part of this is that, if the peer group’s recommendations are taken, California would probably forfeit billions in already secured federal funding for HSR, not to mention the cost of developing the airports and roadways that would be needed in the absence of HSR.

It’s good news that Brown wants to forge ahead, forcing a future Congress to make a decision on future funding. Presumably the current Tea Party Congress will not be around to deny HSR funding forever, possibly even by next year. But the knives have been out for HSR in California for some time. It’s a shortsighted response, to deny 21st-century infrastructure and the productivity it provides because of short-term deficit concerns. Let’s hope California keeps moving forward.


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