Saturday, September 06, 2014

High speed rail: Checking the Fact Check

For its story on the Brown-Kashari debate, the Chronicle had a "fact check" sidebar of the candidates' statements. On high-speed rail:

Statement: Kashkari said that as a result of Brown spending $70 billion on the high-speed rail project, the state is spending only $2.7 billion on water storage and other important matters such as upgrading school facilities.

Fact check: The state can't dip into one pot of money for unrelated projects. California's $68 billion high-speed rail plan calls for using a combination of federal dollars, voter-approved state bonds and potentially cap-and-trade money. The state's water bond, which is on the November ballot, calls for $2.7 billion for surface storage.

True, if the water bond passes in November, the state can't take that money and spend it on schools. But Kashari's point was obvious: If the state is going to spend billions on the train to nowhere, it limits what it can spend on other issues.

True too that the state's high-speed rail plan is counting on money from the federal government to build the system. But it's been clear for several years that there will be no more money from the feds for this project. You have to get to page 53 of the high-speed rail authority's 2014 business plan to find a discussion of where it's going to get the money to build the system.

The cost to build only the initial operating segment from the Central Valley to the San Fernando Valley:

Appropriated Funds
State Bonds (Proposition 1A) $2,684
Federal Grants $3,316
Committed Funds
State Bonds (Proposition 1A) $4,240
Uncommitted Funds $20,934
TOTAL $31,174[billion]

More than $20 billion short! Governor Brown convinced the legislature to allow him to hijack $250 million in cap-and-trade money for the project, but that's not a serious amount of money for building even that first segment. And it's a one-time deal, since it's not at all clear that the legislature will allow that probably illegal appropriation---it's being litigated (see also page 14, 15 here)---in the future. See also Cap-and-Trade Auction Revenue Expenditure Plan by the state's Legislative Analyst.

And the annual interest payment on the $9 billion in state bonds California voters authorized in 2008 will come from the state's general fund:

If the bonds are sold at an average interest rate of 5 percent, and assuming a repayment period of 30 years, the General Fund cost would be about $19.4 billion to pay off both principal ($9.95 billion) and interest ($9.5 billion). The average repayment for principal and interest would be about $647 million per year. (emphasis added)

Thanks to TRANSDEF for some links.



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