Obama Plays Hardball with California

The Obama administration is threatening to take back the $3.3 billion high-speed rail grant to California if the state legislature fails to approve the state’s high-speed rail plan by the end of June. Legislators had planned to hold some hearings this summer so they could base their decisions on actual facts rather than politics. Ironically, when California Republicans in Congress proposed to rescind the money, they were told there was no legal way to do it.

The High-Speed Rail Authority’s latest plan cuts Anaheim and Orange County out of the picture, alienating another group of voters and officials. Despite these cuts, the agency still expects to spend $68 billion building from San Francisco to Los Angeles. This is far more than it told voters it would cost when it asked them to approve the plan in 2008, and even if the legislature allows the authority to sell bonds to match the federal grant, the agency has less than 10 percent in hand.

A reporter at the Los Angeles Times did a little arithmetic and calculated that, to complete the first 130-mile segment in the Central Valley by 2017 as planned, the authority will have to spend $3.5 million per day. With the possible exception of war time, this is probably more than any one entity has ever spent on one project before. The implication is that the authority, which hasn’t been able to adequately manage anything yet, doesn’t have the capability of effectively spending that much money.

A new study says that the authority as greatly underestimated the cost of operating the trains if it finally manages to build anything. Since the law approved by voters in 2008 requires that fares cover operating costs, accurate estimates of those costs seem pretty important.

Not to worry, the authority has hired a consultant to check the work done by its other consultants. The fact that the person it hired turns out to be a former employee of the consulting firm it is checking doesn’t bother the authority at all.

This is one giant pork fest, and whoever manages this project will probably be made Secretary of Transportation when it spectacularly fails.

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6 thoughts on “Obama Plays Hardball with California

  1. metrosucks

    Why not solve these problems the Portland way:

    Build a street car line instead!

    Thanks
    JK

    Jim, don’t give them any ideas! Given what it costs PDX to build them, a streetcar line of that magnitude would likely end up swallowing the entire state GDP! And that’s before cost overruns.

  2. MJ

    Not to worry, the authority has hired a consultant to check the work done by its other consultants. The fact that the person it hired turns out to be a former employee of the consulting firm it is checking doesn’t bother the authority at all.

    I wouldn’t be nearly as worried about Koppelman’s involvement with the project as I would about the HSR Authority’s other machinations. Koppelman is a serious academic, an experienced modeler, and has had only limited involvement with Cambridge Systematics, unlike the many other lifers there who have preyed on projects like this one. The quote by Ken Small at the end of the article is reassuring as well.

    The ridership forecasts sound like they are starting to near the bounds of reality. I’d be much more inclined to believe forecasts of 20-26 million riders per year (in 2040, no less) than I would the initial, ridiculous claims of over 100 million per year. I probably wouldn’t call them “conservative”, though. And the cost forecasts are still very much in question.

  3. pilotmkn

    Anybody who has played Railroad Tycoon can tell you how difficult and expensive a SF-LA railroad is to build.

    the highwayman Reply:

    LOL! Any ways the best thing to do would be just to lay tracks down the center of I-5 and Hwy99.

  4. Sandy Teal

    The “threat” to withdraw the $3.3 billion is just a tactic to put pressure on the State Legislature.

    This is what I hate about such matching grants — not just rail — is that the local government makes decisions on whether or not to pass up free money, not whether the project is worth it. It is like a “buy one, get two free” coupon for something you don’t want three of in the first place.

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