The California Legislative Analyst Report on the High-Speed Rail Project: It ain't good!

TUESDAY, MAY 10, 2011

Here's some news we have been waiting for.  The Legislative Analysts Office in Sacramento has previously commented about the shenanigans of the California High Speed Rail Authority.  The LAO is an independent government agency, somewhat like the Congressional Budget Office in Washington, charged with analyzing legislation and its implementation in the state government.  

It should be noted here that the LAO is not the only critical government agency that has repeatedly pointed to all the glaring shortcomings of the rail authority. There have been damning reports from the Inspector General, the State Auditor, and the Legislature, as well as the rail authority's own peer review committee.

Now we have this newest LAO statement and we have to ask, yet again, when is enough enough?

Roelof Van Ark's slippery and vacuous platitudes will not excuse the rail authority from it's endless litany of shortcomings.  Even the LAO want to cut their budget to the bone.  Time to pull the plug.

Here is the LAO Report itself.

You can also obtain the report from this link.

It's 28 pages long and we'll comment on it in the next several days.  Just to whet your appetite, here are the basic recommendations from the Analysts' Office:

*We recommend that the Legislature direct the High Speed Rail Authority (HSRA) to renegotiate the terms of the federal funding awarded to the state by the Federal Rail Administration. 

*We also recommend that the Legislature pass legislation this session that shifts the responsibility for the day-to-day and strategic development of the project from HSRA to the California Department of Transportation (Caltrans).

LAO Recommendations:

·Fund Only Needed Administrative Tasks for Now.

 ·Seek Flexibility on Use of Federal Funds.

·Reconsider Where Construction of the Line Should Start.

·Improve the Way Project Decisions Are Made.

These are Gary Patton's insightful overview comments on the report: 

1.   Terminate all but “subsistence spending” for the project in the near future.

2.   Eliminate or reconstitute the Authority, and remove its operational control over project implementation.

3.   Place responsibility for high-speed rail within the existing state departmental and agency structure (Caltrans, specifically).

4.   Seek flexibility in the use of federal funds (“the Legislature should proceed with the project only if this flexibility is obtained…”).

5.   Do not build the “Train to Nowhere” Central Valley route at this time.

The LAO does not specifically suggest (as the CC-HSR has) that the public-private partnership (PPP) aspect of the project should be realized by having the State involve an experienced company, or consortium of companies, in the actual design of the project at the front end, to maximize the possibility of its economic success. However, the recommendations of the LAO report, which does discuss the PPP aspect of the project at some length, are consistent with this recommendation made by the CC-HSR.

The LAO does emphasize something that the CC-HSR has mentioned but not stressed: a decision to proceed with the project will have “opportunity costs” which will disadvantage other state programs (like education) which are actually in competition with the very significant tax dollars that will be given irrevocably to high-speed rail, if the $9 billion in bonds are sold: “We estimate that, should the state sell all of the $9 billion in voter-approved high-speed rail bonds, the state’s total principal and interest costs for repaying the debt would be $18 billion to $20 billion. This would require annual debt service payments of roughly $1 billion for the next two decades.”

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Here is an excellent five minute YouTube overview of the report.

This blog post was written in response to this Sac Bee post.

Thanks to Rita Wespi, William Grindley, Lance Christiansen and Gary Patton, who directs the CC-HSR efforts, for providing all this good stuff.

For more, see also this blog: 

http://high-speedtraintalk.blogspot.com/