Wednesday, June 01, 2011

Andrew Ross, the Bottom Line, and high-speed rail

It's a little disconcerting that the Chronicle's Andrew Ross, who writes The Bottom Line column in the business section, supports the California high-speed rail, a project that doesn't really have a bottom line, not to mention a plausible business plan. This week he gets all romantic about Spain's high-speed rail system and how Spanish officials are supposedly "interested" in "offering the benefit of their experience" to California's floundering project, with the implication that Spain is interested in bankrolling the construction of the system. Of course Spain is only interested in selling our state their expertise---and probably some rail cars, too. That is, the state's taxpayers as a source of revenue is what Spain is really interested in. Unfortunately, California is virtually bankrupt, and the $17-19 billion in federal money to build the system is becoming less likely---"impossible" is a more accurate term---as the Great Recession continues to ripple through the country's economy.

Ross also claims that Spain's HSR system operates "profitably," but that's only true if the cost to Spanish taxpayers to build the system isn't included in its "bottom line." From the NY Times:

Such benefits, however, come with a huge price tag. By 2020, Spain plans to spend close to 100 billion euros on infrastructure and billions more on trains. That figure could give pause to places like California, a potential high-speed corridor whose area and population are about four-fifths the size of Spain’s. “High-speed rail is good for society and it’s good for the environment, but it’s not a profitable business,” said Mr. Barrón of the International Union of Railways. He reckons that only two routes in the world---between Tokyo and Osaka, and between Paris and Lyon, France---have broken even.

Ross takes a shot at the recent Legislative Analyst's critical report on CHSR with an item on how Assemblywoman Galgiani is questioning the timing of the report, as if the LAO had an ulterior motive in issuing the report now. But the report itself explains that the legislature is being asked to appropriate $192 million this year for the project and that doing so puts the project on a path that the legislature will have difficulty controlling in the future:

Because these huge appropriations are not needed now, they are not formally before the Legislature as part of the 2011-12 budget plan for HSRA. On the other hand, unless directed otherwise, HSRA will proceed during the interim with extensive development activities based on its decisions about the project, such as its choice of the initial Central Valley segment for construction. If the Legislature has concerns about the path the high-speed rail project is on, it will diminish its opportunity to have meaningful input over such issues as the location of the first construction segment if it waits until 2012-13 to do so (page 13).

A detailed look at the bottom line on California's high-speed rail project.