Thursday, May 26, 2011

Stop high-speed rail before it starts

by MARK LANDSBAUM
Orange County Register

For only $43 billion, or maybe $66 billion, or maybe more, plus another billion a year for three decades, Californians might someday, although not real soon, be graced with what variously has been described as "the bullet train to bankruptcy"; "the train to nowhere"; "the train almost to Bakersfield," and assorted other epithets or, perhaps more appropriately, epitaphs. What a deal, eh? Not exactly.
The much-heralded, but much less-likely to locomote, 200-mph bullet train may never leave the station. Good riddance.

In 2008 Californians engaged in big-time impulse buying. By a 53-47 margin, voters decided they would like a real fast train to whisk along, on tracks that don't yet exist, between San Francisco and Los Angeles and points south. After all, the French do it.
Like most of what has gotten California into its fiscally calamitous condition, little regard was given to the project's cost-benefit ratio, even though $9.9 billion in bonds would have to be paid off at a cost of about $2 for every dollar borrowed.

"Put it on a credit card," was part of the contract authorized by the 6.6 million voters who said "Yes" to Proposition 1A. That computes to about one-sixth of all Californians committing all of us to an immense boondoggle to be enjoyed, at best, by about one-sixth of the number who voted for it.
As with all boondoggles, what promised to cost "only" $32 billion in 2008 now is estimated to cost $43 billion. Less-gullible estimates put the price tag at $66 billion.
Plus, Washington politicians now holding the purse strings give no indication they are willing to part with more money to help lay the tracks. And in Sacramento, even spend-a-holic Democrats are unlikely to find much more dough, if any, to throw at the train as long as they are staring at projected $10 billion budget deficits stretching at least four years into the future.
What's that mean for the bullet train? At the least, delay. What does delay mean? It will cost even more.
At least the federal government kicked in about $3 billion so far. The problem is that when the House of Representatives was captured last fall by Republicans, that money spigot began to run dry. What would it mean if federal funds flowed no more?
"Ongoing federal funding is necessary to give the private sector confidence to invest," a California High-Speed Rail Authority spokesman acknowledged. So far, with only a handful of billions from Washington, no private money has materialized. Imagine when none ever comes.
Will state government pick up the slack? Not likely. The state's independent Legislative Analyst recommends rejecting the rail authority's $185 million budget request and reducing it to a paltry $7 million while officials figure out what to do about the boondoggle. The Legislative Analyst's Office suggests the state take over the project because the train authority is unaccountable, inappropriate and ineffectual, on top of its funding being "highly uncertain."
What would it mean for the state to withhold that money?
"Delay, cost overruns, a loss of talent from our consultant team, a loss of private-sector confidence, less confidence from our federal funding partners," the agency spokesman told us.
Suddenly $66 billion may be too low. Incidentally, that's more than state government plans to spend this year on public schools, kindergarten through college.

What we find fascinating about this scam is that nearly everyone recognizes it to be a boondoggle, even the usual suspects you might expect to find in cahoots. State Treasurer Bill Lockyer, a Democrat, said last year that Wall Street bankers told him "almost universally, they're convinced that no one can finance the routes from L.A. to the Bay Area, that it just will never work economically, certainly in the foreseeable future."
In the state Senate, a Democrat has proposed firing the train's board of directors, and a Republican has proposed defunding the project. Even the large daily newspaper up the road from our offices, known to be several degrees ideologically to the left of yours truly, editorialized last week that, "it is a monument to the ways poor planning, mismanagement and political interference can screw up major public works."
Environmental groups, agricultural interests and NIMBYs through whose upscale townships the train proposes to rumble have raised objections because of the disturbance such a massive project and intrusive operation would create. Atherton, Menlo Park and Palo Alto have sued on environmental grounds.
Is there anyone left still aboard this train? It's not every day an idea is so bad it gets shot down from every quarter. We would expect Republicans, generally, to despise the proposal as crafted. Generally, they do.
The Republican chair of the House railroads subcommittee dubbed high-speed rail schemes "insanity," while the House Transportation Committee chair dubbed them a "Soviet-style train system." The California State Senate Republican Caucus more than a year ago asked whether high-speed rail is "simply a glossy work of fiction that will create a funding black hole, promising decades of public subsidy for big construction contractors and the companies tasked with building the trains and locomotives."
The GOP caucus seemed to answer its own rhetorical question by pointing out that during the 2008 bond campaign, train promoters promised ridership would be 117 million people per year by 2030 and that trips would cost only $55.

One year later, ridership estimates dropped 60 percent, and the estimated price of a ticket doubled. And that was more than a year ago. It's anyone's guess what ridership estimates are now. Why's that important? Prop. 1A requires the train pay its way. Taxpayer subsidies are prohibited for operating expenses.[See page 8 in the text of Assembly Bill 3034, at 2704.8(J)]
That's partly why the state's independent Legislative Analyst Mac Taylor reported to the Legislature this month that new estimates must be calculated for ridership---and costs.
If you're a bothered by this boondoggle, you not only have a lot of company, you should be. We asked what would happen after spending all these billions to build speedy trains, lay hundreds of miles of tracks, acquire countless acres of rights-of-way and construct depots, only to discover the train doesn't operate profitably. Will trains stop rolling?
"That will be for a private concessionaire to contend with, not the state," the Rail Authority's Jeffrey Barker told us.
Picture that. After spending $43 billion or $66 billion or whatever, the bulk of which will be siphoned from taxpayers' pockets, private train operators discover their gaudy toy can't operate profitably. Is it conceivable a private company would continue operating at a loss? Or walk away?
California may be buying an exorbitantly priced, 800-mile-long trinket.
"What are the contingency plans?" we wanted to know.
"Again, this risk would be transferred away from the state to a private concessionaire," we were told. Not very reassuring, is it?
We doubt things will get that far. "Without some participation by the federal government, we would not be contemplating constructing a high-speed rail system," Barker told us.
Considering Washington's climate, it's time to stop contemplating. Money from Washington so far came not only courtesy of the boondoggle-minded Obama administration, it came as pork with strings attached, dictating where it must be spent. That's why the first 130-miles of track are proposed from not quite Modesto to not quite downtown Bakersfield. The sparsely populated Central Valley may be the least-likely stretch of California to provide long-distance train riders. Train authorities concede that if only the Central Valley segment is built, it can't be profitable.
The Howard Jarvis Taxpayers Association's Jon Coupal pointed out two years ago: "[A] devastating study by the Reason Foundation...revealed that (high-speed rail) proponents representations regarding costs, fare price and profitability were pure fantasy."
Sooner or later, reality bites. People ought to come to their senses in time to cut off further taxpayer dollars to this high-speed, white elephant before it becomes just another California Fantasyland museum piece.
Thanks again to High-Speed Rail Talk for the link.

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