This op-ed originally appeared in the Flashreport
The California High Speed Rail Authority and the Governor finally released the long-awaited business plan with quite a bit of fanfare, claiming 100,000 jobs would be created. I thought our tarnished golden state had hit bottom with Arnold Schwarzenegger who buried us with a legacy of debt and regulations. But Governor Brown, who claims to need more taxes to help solve the fiscal crisis and mountain of debt he inherited, seems determined to pound the nails in the coffin.
While I still hold out hope that the Governor will try to get the state back on track, I'm beginning to lose faith. Just this week, as the Governor announced a plan to reduce government pensions for future employees, he announced support for this huge government funded "jobs" program to create new pension beneficiaries. High Speed Rail now officially has Jerry's blessing at a cost of nearly $100 billion for Phase I construction, which could add another $6-7 billion to the state's annual debt service. The cost to operate could add still another $1-2 billion per year by state estimates. All for a project that promised the voters "no state subsidies."
The "experienced" 1970's Governor that allowed public employee unions to form bargaining units, shifted state spending from his father's legacy of higher-education, roadway and water infrastructure spending to social welfare programs, and ushered in the radical, no-growth movement, does not really seem to have mellowed with age. High speed rail could double our state's debt and further decrease funding for education, public safety and other much needed programs.
Claiming frugality and balance, he confiscated state cell phones and a few extra cars, while adding another 1,000 state employees to the payroll. He denied the farmworkers and daycare providers the easy union label, while punishing local governments that ban the union project labor agreements. He balanced the budget with $4 billion in phantom income and "trigger cuts" to education and public safety, while postponing a vote of the people on a ballot measure for a much needed spending cap.
The political manuevering might be expected if the stakes were not so high. With $3 billion in federal stimulus plus the voter approved $9.95 billion bond burning a hole in the high speed crew's pocket, where will we get the balance to build the $98.5 billion system? The business plan lays out a variety of options for funding that the Authority honestly admits are simply not available such as:
Federal Government Stimulus Grants: While California was the primary beneficiary from the last go round, due to other rational states turning down the government's largesse, the interest in funding the high speed debt train has waned in Congress.
Infrastructure Bank: Qualified Tax Credit Bonds from the federal government, would allow the state to leverage the $9 billion voter approved bond by more than three times what the state could borrow independently. Thank goodness, there are none available.
Private Investors: Could get involved after the state has "invested" billions to construct, and the operation is either profitable or the revenue stream is guaranteed by the taxpayers. No state subsidies, and no money to complete an operating segment, means unless they can find a way around the legalities of the voter approved bond, it simply won't happen. However, redefining "subsidy" to exclude construction dollars, as they are now asserting, helps.
Local Funding: The plan counts on generosity of "self-help" counties such as Orange and San Diego and others that tax themselves for local transportation needs. Would you support additional gasoline or sales tax to fund the system?
Ridership is the key to the public good being provided, as well as profitability and ticket price. In this area the report is less than honest, assuming ridership of roughly 36 million passengers a year, at 50 percent of current airfare. In 2010 Amtrak carried a total of 29 million passengers nationwide, or 4 percent of air travel. Assuming that the airlines like being in business, and that they will compete, the reality is that the plan assumes people will pay more to travel more slowly.
In summary, to paraphrase the report: We have $6 billion dollars to spend, no sure way of getting any more, we need to spend it fast, so we are starting with an initial segment in the Central Valley because the Feds want us to. We will take private property, destroy productive farmland and existing jobs because, to quote a familiar campaign, "we can't wait!"