Bullet Train Dodges Legislative Bullet But Takes a Hit on Its Business Plan

On the same day a GOP lawmaker failed to advance legislation to allow voters to rescind $9.95 billion in bonds approved to construct a high-speed rail project in California, legislative budget writers said the project hasn’t provided “sufficient detail and justification” for seeking $5.9 billion to begin construction this year.

The report by the Legislative Analyst preceded scheduled votes on the project by budget subcommittees in both houses of the Legislature April 18.

Saying funding for the project remains “highly speculative,” the analyst recommends lawmakers reject Gov. Jerry Brown’s request to move forward using $2.6 billion in state bond funds, approved by voters in November 2008, and $3.3 billion in federal funds awarded to the project.

The subcommittees are expected to postpone a vote on the Democratic governor’s proposal until later in the budget process.

Dubbed “the train to nowhere” by critics, the 800-mile high-speed rail project would link the state’s major northern and southern population centers.

Critics, like Sen. Doug La Malfa, a Butte Republican, told the Senate Transportation Committee at an April 17 hearing that “voters have been deceived, they’ve been misled” as project costs ballooned to nearly $100 million.

The High-Speed Rail Authority, which was created to oversee the project, recently released a new business plan that claims to lower costs to under $69 for construction of 520 miles of the system by 2028.

Additional costs to extend the main route from San Francisco to Los Angeles to Sacramento, San Diego and Orange County are unknown, according to the authority.

La Malfa was unable to convince the committee to approve his measure, SB 985, which would require a referendum be placed on the November 2012 ballot to prohibit the sale of any additional high-speed rail bonds.

After a more than one-hour presentation, La Malfa sought postponement of a final vote until a later committee hearing.

Among the analyst’s criticism of the authority’s new business plan is:

“The funding approach outlined in the 2012 revised business plan is no more certain than what was proposed in previous plans. The recent plan assumes nearly $42 billion, or 62 percent of the total expected cost, will be funded by the federal government.

“However, about $39 billion of this amount has not been secured from the federal government. The absence of an identified funding source at the federal level makes the state’s receipt of additional funding unlikely, particularly in the near term.”

The analyst notes that despite being created 15 years ago, the authority assembled a new business plan that substantially changes the configuration of the project within the last few months.

In short, “(the authority) has not made a strong enough case for going forward with the project at this time,” the analyst concludes.

If, however, lawmakers do want the project to proceed they should only approve those contracts slated for award in the fiscal year ending June 30, 2013.

The first contract – between $1.5 billion and $2 billion – is expected to be awarded in December.

The remaining four contracts in the project as proposed would not be let until after June 30, 2013.

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