California

State Auditor’s Flawed Attack on the High Speed Rail Project

Note: Crossposted from the California High Speed Rail Blog

The California State Auditor is out with a report criticizing the California High Speed Rail Authority and their planning of the project. Some of criticisms are sensible, and stem from the fact that the Authority is still staffing up to meet the challenge of planning and implementing the project, and the Auditor lays out some specific areas where the Authority needs to step up its oversight.

Unfortunately, the title of the report – “High-Speed Rail Authority: It Risks Delays or an Incomplete System Because of Inadequate Planning, Weak Oversight, and Lax Contract Management” – is “inflammatory” and “overly aggressive” (in the words of CHSRA Chairman Curt Pringle) doesn’t accurately reflect the findings in the report. I fully agree with the Authority’s criticism here, and the State Auditor should have chosen more neutral language to use.

What’s not helpful – and what’s in fact a bit bizarre – is the Auditor’s decision to hold the Authority responsible for the failure of Congress to provide a long-term federal funding source. The Auditor’s report indicates a fundamental lack of understanding of the federal funding situation:

The Authority’s assumptions regarding federal funding are optimistic. According to the business plan, the estimate of federal participation in the program is based on the federal government’s historically high participation in large transportation infrastructure programs such as highway, transit, and aviation projects. However, the Highway Trust Fund is a dedicated source for highway and transit programs and has its own revenue source-the federal tax on motor fuels. The U.S. Government Accountability Office, in a 2009 report on the future development of high-speed rail, noted that no such dedicated federal revenue source exists for projects for this mode of transportation, so high-speed rail projects must compete with other non-transportation demands on federal funds.

However, last summer, a House subcommittee voted to appropriate $50 billion for HSR in the transportation bill reauthorization. Earlier this month over 100 members of the House of Representatives wrote to President Obama asking for his leadership to get that $50 billion, which would be more than enough for California. Additionally, $2.5 billion for HSR was approved in the FY 2010 budget and another $4 billion is proposed by advocates for the FY 2011 budget. Federal funding for HSR is on its way, and though it isn’t nailed down yet, it’s not as pie-in-the-sky as the State Auditor makes it sound.

They also misunderstand California’s competitiveness for federal funding:

Further, the Federal Railroad Administration (Railroad Administration) received more than $57 billion in applications for the $8 billion of available Recovery Act grants. This suggests that competition for any additional federal dollars will be strong and that California can expect to receive only a fraction of the total. However, the Authority’s plan for financing the program depends heavily on federal funding, as Figure 7 illustrates.

The Auditor is simply wrong here. California received more money than any other state in the distribution of the $8 billion in stimulus funds. Federal officials, including Transportation Secretary Ray LaHood, have repeatedly praised the California HSR project and indicated we will continue to receive the lion’s share of federal funds. As one of only two true bullet train projects in the country – and with the other one, Florida, facing growing questions about its route choices and short intro line. We’re much further along than most other states, and can turn around federal money relatively quickly after we receive it. If $50 billion over 6 years is indeed approved, I do not foresee any problem whatsoever with California getting $17-$19 billion of that, and nor should anyone who has been watching the federal government’s HSR actions the last two years. California’s powerful Congressional delegation, including Speaker Nancy Pelosi, also count in our favor.

The Auditor also suggested that the desired private funding is similarly nonexistent. Here again they are totally wrong. The Auditor doesn’t seem to have known that China is actively seeking to bring the private funding the Authority seeks, as are several other countries.

California’s voters approved $10 billion in HSR funding in 2008 with Prop 1A – before a dime in federal funding had even been proposed. It is the Authority’s job to plan that system that the voters mandated, with the assumption – backed by the evidence – that federal and private funding would materialize as planned. The Auditor doesn’t seem to understand that either, and in their zeal to attack the HSR project, has created a sense of crisis where none exists.

But let’s say the Auditor is right, and we don’t get federal funding. What then?

Without federal funding the HSR project doesn’t happen. There is no Plan B. But we all know that. That’s why advocacy organizations like Californians For High Speed Rail are working so hard to secure that funding.

However, the $2.25 billion in funding already delivered doesn’t go to waste. “Independent utility” requirements mean funds have to be used for projects that can be used even if the whole HSR system isn’t built.

For some HSR critics and skeptics, the uncertainty around federal funding is a reason to either not build the project, or to not build it in their backyard. The proper response, however, is not to be a passive actor, but to instead actively work to secure federal funding for HSR. You can go to the FourBillion.com site and told their Congressional representatives they want $4 billion in the FY 2011 budget, as a first step toward advocacy for the $50 billion in the transportation bill reauthorization.

For now, it’s out of the Authority’s hands. Federal funding is up to us, not up to the CHSRA. It would be nice if the Auditor had understood that rather important point. Instead they delivered an uninformed cheap shot on the HSR project. The Auditor needs to get its act together, refrain from the misleading and inflammatory headlines, and deliver a better understanding of the state’s HSR project.