Tag Archives: high speed rail

Election 2010

Newsom gives lip service to public transit

 (Cross-posted at Living in the O.)

Last night, I went to Gavin Newsom’s town hall at the Rotunda in downtown Oakland. Overall, I wasn’t surprised by the event. He touched on many subjects – health care, education, improving the environment – and his overriding theme for the evening was that while many candidates talk about these issues, he has shown real progress on them. He did fail to mention though that many of the projects he took credit for last night (like universal health care) actually originated in the Board of Supervisors. But that’s pretty typical – he’s a politician and of course is going to take credit for everything he possibly can.

I really appreciated the fact that he took almost an hour of unfiltered questions from the audience. And I could not have been much more pleased when our new AC Transit Director, Joel Young, asked the first question. Joel explained that the state had defunded public transit and asked if Newsom, as governor, would restore public transit funding.

Newsom responded that public transit is so important for the environment and briefly answered, “Yes,” that he would restore the funding. But then instead of explaining why or how, he jumped into a long-winded speech about high speed rail. He started off by saying that he wanted to tell us about a project that he knew not all of us supported because it barely passed. This is a strange thing to say because 63% of Alameda County voters voted in favor of Prop 1A.

He then explained how high speed rail was going to change the state, creating jobs and changing how we thought about and used transportation. He talked about his vision for the “Grand Central Station of the West,” which is what some are calling the Transbay Terminal. Energetically, he explained how this would greatly improve the Bay Area region, making it easy to get from downtown to downtown (Oakland to SF).

And that was it. That was his answer to an AC Transit Director.

Now I’m very supportive of high speed rail (though I think it was a failure to choose the Pacheco alignment over the Altamont alignment), and I endorsed Prop 1A. But high speed rail won’t do us much good if our local transit agencies crumble. Getting from downtown to downtown might be made easier, but most of us don’t live downtown so if AC Transit cuts lines that would get us there, this “Grand Central Station” won’t be much help to us, will it?

As you might have read in the Chronicle yesterday, AC Transit will be voting tomorrow on fare increases, and soon after that will consider service cuts. And it’s not just AC Transit. More than 80 local transit agencies nationwide are facing fare increases and/or service cuts. At the same time, ridership is increasing, in the East Bay, the Bay Area, and beyond.

What I’m looking for in a candidate for governor is someone who not only understands and is committed to the big, sexy transit projects like high speed rail, but for someone who shares the same commitment to funding and improving our local transit agencies. I want to find a candidate who gets excited talking about buses and who understands the need to solve this problem (PDF, via A Better Oakland). Last night, Newsom failed to prove that he is that candidate so, for now, I’ll continue my search.

(If you’d like to read about the other topics Newsom covered, check out a diary at Daily Kos by a friend I sat with last night.)

Budget, Prisons

Yeah, We’re Still Well And Truly Screwed

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There’s a very pernicious habit in California of turning away from budget issues once a crisis is averted, in a show of relief that we will at least get a small reprieve from having to deal with the contentious battles for a period of time.  This false sense of security is bad enough in regular years, when the budget is cobbled together through borrowing against the future and no long-term solutions are implemented.  In this dynamic economic crisis, when rosy outlooks can darken in a matter of days, it’s downright foolhardy.

Greg Lucas at California’s Capitol has been one of the louder voices in insisting that the budget crisis is not at all over.  According to Controller John Chiang, revenue in February was $900 million dollars below estimates.  Now, if you extrapolate that out, we’ll be in a $10-$12 billion dollar budget hole by the end of the year just if things remain at the same level.  This is of course unlikely, as the February national job numbers showed.  So much of the tax increases passed in the February 19 budget solution are tied to employment – an increase in the income tax, and sales tax increases that of course rely on residents having purchasing power.  In addition, these lean economic times will push more people into needing state services, like unemployment and Medi-Cal.  Then there are the counter-cyclical increases and cuts that are working against what the economic recovery is attempting at the federal level.

In addition, many of the spending and taxation decisions made in the recent budget cancel out some of the benefits to California of the American Recovery and Reinvestment Act.

The federal package provides an estimated $13.1 billion in refundable income tax credits for middle to low-income Californians at the same time the state budget includes $12.2 billion in tax increases, only some of which are deductible. And only half of taxpayers deduct.

The federal bill includes a one-time $250 payment to the state’s aged, blind and disabled poor at the same time the state is reducing the maximum grant for an individual by $37 a month, $444 annually.

“California is roughly an eighth of the nation. The impact of this is sufficiently large that it could affect the prospects of recovery for the nation as a whole,” said Jean Ross, director of the California Budget Project, who has been examining how the state’s budget interacts with the federal stimulus package.

The biggest short-term issue is cash.  Lucas did an interview with John Chiang where he admitted that we will still need to borrow against the anticipation of future revenue as early as April, to the probable tune of $1.5 billion.  Because the budget deal was completed too late to include changes to the income tax code, those revenues will not come in until the following tax year.  The sales tax will go up April 1, but that will not be enough to cover expenses.

CC: Is February a big month for obligations?

JC: No. April is the real difficult month. If we don’t get that RAN, we’re $636 million in the red. But then the bigger issue is July. When we walk into the next fiscal year we will need a massive cash infusion.

CC: How come?

JC: We always borrow at the beginning of the year, 25 out of the last 26 anyway and then in April we make up the difference. But this year we walk in with weakness into the next fiscal year. There are less tools in the tool kit.  We’ll need a massive RAN or RAW (Revenue Anticipation Warrant).

Remember these last budgets borrow $16.5 billion from (state) special funds to backfill the general fund. So if we have any emergency in the state requiring aid from one of those special fund departments, the state is in trouble. Over 1,100 special funds in the state and we borrowed from over 650 of them. Part of this last budget solution gives us the ability to borrow another $2 billion more. The governor’s budget has us borrowing $11 billion from special funds over the next 18 months.

So we’re going to have to do some outside borrowing for the next fiscal year. Period.

And of course, there’s very little anticipation of the worsening economic picture in the budget, meaning that we’ll be in unquestionably worse shape by summer.  And the cash crisis, forcing short-term borrowing, really impacts selected projects that go out into the bond market, for example infrastructure like the high speed rail project, which will basically have to shut down if there isn’t a quick infusion of cash.  Keep in mind that California has the worst bond rating in the country and the credit markets are still not that friendly to the state.

Another pressing matter is the determination of how much money from the federal stimulus will be available to the state to fill budget holes.  There is a “trigger” in the state budget that would actually reduce some cuts – most of them the worst of the worst, particularly in health care for the needy – as well as reverse increases to the income tax, if at least $10 billion dollars in federal money hits the state budget.  It’s not just that money comes in, it’s that it has to go toward general fund relief in order to contribute to the trigger.  And Mike Genest, the Governor’s finance director, has a preliminary estimate up showing that the state will come up short.  This is insanity.  As the California Budget Project noted on a conference call today, there will be many billions above the trigger number available to the state, the legislature need only craft the receipt of that money in such a way to hit the trigger.  Otherwise, they are raising taxes and cutting services, and needlessly so.  One such bill would change Medi-Cal eligibility requirements to free up as much as $11.23 billion over 27 months.  That should happen ASAP.  Democrats are trying to write this as a special session bill and ensure that it requires only a majority vote.

The main point here is that we remain in crisis mode with the state budget, and will continue for years upon years until we stop putting off the fundamental, structural solutions the way we constantly do.  For example, the prison system remained virtually untouched during the budget crisis, despite being both crippling to the bottom line and unconstitutional in its overcrowding and inability to provide health care.  We desperately need structural changes with how the state budgets, and those will only be accomplished by demolishing the conservative veto over the process and repealing the 2/3 rule.

UPDATE: Here’s a link to the CBP study of the American Recovery and Reinvestment Act, identifying as much as $50 billion dollars available to the state in funding.  Surely the legislature can figure out how to capture 20% of that and set off the budget trigger.

Environment

Palo Alto Launches Attack on High Speed Rail

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Crossposted from the California High Speed Rail Blog

In Indiana Jones and the Last Crusade the hero must choose from a collection of drinking vessels to determine which is Holy Grail and which leads to certain death. When the Nazi-collaborating villainess picks the wrong cup the knight says “she chose…poorly.”

Unfortunately the Palo Alto City Council has chosen poorly as well, preferring to fuel a broad-based attack on the high speed rail project to a more reasonable set of suggestions about how to effectively build HSR in Palo Alto. They adopted the anti-HSR recommendations that this blog implored them to reject, turning an understandable debate over the visual and physical impact of a structure to a more fundamental attack on the concept of high speed rail itself. Palo Alto could have limited itself to asking for a tunnel. Instead they want to buck the will of the voters – including their own residents – and insist that the HSR project be imperiled because of a small handful of NIMBYs and HSR deniers.

As reported by the San Jose Mercury News:

The council responded [to NIMBY protests] by unanimously approving a formal letter to the high-speed rail authority calling for it to study the possibility of building a rail tunnel under the city. Despite Diridon’s comments, the letter will also call for the rail authority to reopen the possibility of running the trains through the East Bay or along the Highway 101 or Interstate 280 corridors rather than along the Caltrain tracks. Another suggestion is to stop them in San Jose, forcing riders to transfer to Caltrain to get to San Francisco.

“That’s not the end of the line,” Council Member Larry Klein said of the authority’s 2008 decision on how to route the trains. “Laws do get changed. That’s what our legislature is for, that’s what the initiative process is for, and that’s what the courts are for, in some cases.”

Larry Klein is basically trying to force adoption of the previously-rejected Altamont Pass routing, and cut out of the HSR project entirely the city of San José, the third largest city in California and the largest city in the San Francisco Bay Area. Failing that he wants to destroy the entire system by forcing it to terminate at San José Diridon and forcing intercity passengers to transfer to a commuter rail service to finish the journey to SF – something most passengers WILL NOT DO. This would weaken the system by reducing ridership below the number necessary for the system to be financially viable.

Klein seems willing to ignore the democratically expressed will of the people and risk the entire HSR project, which he presumably supported when Palo Alto’s City Council endorsed Prop 1A last year, because of a few ignorant people. As we have explained at the HSR blog they believe, in spite of the available evidence, that the tracks will form an unsightly “Berlin Wall” that will make their communities look ugly.

Because of that, they’re willing to destroy the entire project. Consider that for a second, and then read more over the flip:

Rod Diridon called out Klein and other members of the Palo Alto City Council for their hypocritical and reckless stance:

If Palo Alto didn’t want bullet trains racing through town, it should have spoken up earlier, California High Speed Rail Authority Board Member Rod Diridon told the city council Monday. The decision to run the 125-mph trains up the Peninsula via the Caltrain corridor was made in 2008 after years of debate, and revisiting it now could cripple the $40 billion Los Angeles-to-San Francisco project.

Instead, the city ought to focus on how to make the train work now that it has been approved by the state’s voters, Diridon said. The rail authority has heard the city’s desire to study running the line underground, and it will study that possibility, he added. No decisions about the specifics of the tracks’ design will be made until after an environmental review.

This is an eminently sensible approach – but it only works if you are working with people who want to be constructive and sensible. By endorsing these anti-HSR proposals, Larry Klein and the Palo Alto City Council have shown they do not want to be sensible, and instead prefer to try and destroy the HSR system.

Klein shows that he basically doesn’t care about the HSR system at all:

Klein rejected Diridon’s warning that any delay could cause project costs to skyrocket, noting that construction costs have actually declined in the past year. “If this goes forward, it is going to be in existence for 100 years, 200 years,” he said. “So if it gets delayed by a year or whatever, I don’t think that makes too much difference. It’s much more important this gets done absolutely right.”

What Klein willfully refuses to understand is that if Palo Alto is successful in fatally weakening the project, it will be difficult to fund the project. The delay will hurt our chances of getting federal and private sector funding. And Klein conveniently hasn’t said where he thinks money for a tunnel will come from.

Thanks to HSR deniers like Larry Klein, here is what the city of Palo Alto is now planning to oppose:

  • Reduce carbon dioxide emissions equivalent to removing 1.4 million cars from the road, and take the place of nearly 42 million annual city-to-city car trips
  • Reduce CO2 emissions by up to 17.6 billion pounds/year
  • Reduce California’s oil consumption by up to 22 million barrels/year
  • Finally move California away from dependence on fossil fuels and freeways for intercity travel

It is a tragedy to see Palo Alto join the realm of the HSR deniers, especially as they appear to have been swayed by lies, distortions, and ignorance. They have joined Bobby Jindal and Sean Hannity in attacking action to mitigate our climate crisis and now are de facto supporting pollution and sprawl, all because a tiny group of people can’t handle the fact that Palo Alto is going to have some changes and improvements to its community because of this.

The city of Palo Alto is not full of HSR deniers. Neither are Menlo Park or Atherton. But their city councils have chosen to enable those few voices in order to kill a project California voters approved. Palo Alto’s city council deludes itself if they think the rest of the state will go along with their hissy fit. We’re not going to reopen the Pacheco vs. Altamont argument for them. We’re not going to do something so obviously stupid as entertain a routing down freeways. And we absolutely will not terminate the route at San José.

California is going to build high speed rail. Palo Alto will not be allowed to block that. We believe they can and should try to work constructively to implement HSR in their community. But if they choose HSR denial, then we can and will push back against them.

Uncategorized

Issa Schooled For HSR Lies

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Darrell Issa has had an interesting position in the 111th Congress as one of the chief yarn-spinners on the Republican side.  I guess it’s because he’s immune to any charge of hypocrisy.  First he demanded White House compliance with necessary Presidential Records Act laws regarding email, after playing down the Bush Administration’s major failings in this regard.  Yesterday, he appeared on MSNBC with David Shuster to parrot the latest RNC talking point, that the stimulus earmarked construction of an LA-to-Las Vegas high speed rail train.  Now, I’m not sure what’s so horrible about this – LA to Vegas is a busy corridor, especially on the weekends, and the route essentially goes through desert so construction will be disruptive to almost no communities.  But the fact is that it’s completely untrue – LA to Vegas is not on the current DOT high speed rail lists and no money expressly goes toward construction of that corridor.  A fact that David Shuster inconveniently pointed out.  I particularly enjoy the smile after he knows he’s been caught.

This zombie lie isn’t going away, but at least some reporters aren’t taking the bait.

Bay Area, Environment

The Gas Tax and Transit “Armageddon”

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Crossposted from the California High Speed Rail Blog

One of my lingering concerns about the Obama Administration has been that they might be tempted to claim victory with the $8 billion in HSR funding added to the stimulus and not follow up on that money, which as we know merely pays for some initial costs. But Secretary of Transportation Ray LaHood made clear last week that in fact, the $8 billion in HSR stimulus really is intended as a signal to America that Obama is truly serious about building HSR:

LaHood said that for Obama building high-speed rail networks is, “if not his No. 1 priority, certainly at the top of his list. What the president is saying with the $8 billion is this is the start to help begin high-speed rail projects.” He added that the administration “is committed to finding the dollars to not only get them started but to finishing them in at least five parts of the country,” although he declined to elaborate on where these projects might ultimately be built.

And don’t worry about the right-wing freakout over the Vegas HSR project – California is in better position than any other HSR project in America to use that stimulus funding. We can begin construction in late 2010 or early 2011; no other project is anywhere close to that point.

This couldn’t be better news for us in California, where we have long known that at least $15 billion in federal aid, spread out over 10 years, will be needed to build the SF-LA line. Unfortunately the news is tempered by the fact that the Obama Administration’s support for HSR did not extend to mass transit as a whole. Here in California the state has decided to zero out the State Transit Assistance account, costing local agencies over $500 million in funding. The federal stimulus isn’t nearly enough to make up the difference. And as the San Jose Mercury News reports, that’s setting up a situation where HSR may be pit against local transit agencies:

The MTC meeting Wednesday in Oakland could turn contentious, as the current plan calls for allocating $75 million to help build the Transbay Terminal in San Francisco, which would serve as the final stopping point for a high-speed rail line and Caltrain (UPDATE: the MTC now plans to seek train box funds from the $8 billion HSR stimulus, not the general transit stimulus funds – see Transbay Blog for more info) and $70 million to build a BART spur to Oakland International Airport. Those two projects alone would take 43 percent of the $340 million headed to the area in stimulus funds for local transit.

Some want money for those new two projects scrapped or reduced – and redirected to cover the cost of paying for day-to-day transit needs.

But MTC officials counter that building the Transbay Terminal now will save millions of dollars in later costs, and combined with the $8 billion in stimulus funds set aside for high-speed rail could accelerate that program.

I support using that money for the Transbay Terminal, although I’m less certain about whether BART to OAK is all that necessary; the AirBART buses work pretty well (I used them on numerous occasions when I was an undergrad at UC Berkeley, although that was 10 years ago).

But I really hate it when HSR pitted against other forms of transit. I have said it before and I will say it again – HSR and other mass transit need each other to be successful. It should not and must not be an either/or choice. I don’t blame the MTC for being stuck in this position – that blame lies in Sacramento and Washington DC. But we transit advocates need to not fall out along modal lines.

I’d like to propose a solution, one that I don’t even know is possible under state law but makes a ton of sense to me. The nine-county SF Bay Area region should implement its own gas tax, which will solely be used to fund public transit. I haven’t penciled out the numbers so I don’t know exactly what the tax amount should be, but it should be indexed to the price of gas, and not a fixed cent number.

This money would initially be used to backfill the loss of STA funds, and allow the federal stimulus money to go to new transit infrastructure such as Transbay Terminal or BART to OAK. Ultimately the STA funds must be restored by a statewide gas tax increase, but it is much more politically possible to implement a gas tax in the Bay Area first than to try and get the Central Valley and the Southern California exurbs to buy into this (they can be brought on board later, once the 2/3 rule is eliminated).

It’s very difficult for folks living in the nine counties to evade the tax, with the possible exception of Gilroy residents who might drive to Hollister to fill up. Most folks will simply pay the increase rather than drive far out of their way to get a cheaper gallon of gas.

I’m not sure if this option has been explored by the MTC and the member counties, but it ought to be. It’s a sensible solution that would not only help spare transit agencies from “Armageddon” but would itself be a long overdue policy shift that would give a real boost to transit efforts in the SF Bay Area.

Uncategorized

Friday After XMas Open Thread

Everybody at the post-Christmas sales today?  Yeah, you and nobody else.  Here are a few links to give to you and yours.

• This is really a terrible tragedy in Covina, where a man dressed in a Santa outfit opened fire on a Christmas party at his ex-wife’s family’s house, eventually pouring lighter fluid on it and burning it down.  Nine bodies have so far been recovered at the site, and the assailant, who had $17,000 and a plane ticket to Canada on him, instead drove to his brother’s house in Sylmar and took his own life.  Stunning and horrible.

• On a markedly more hopeful note, here’s an LA Daily News story (which made the front page) about state Obama 2.0 organizers who joined together to engage in community service projects throughout the past week.  If nothing else, Obama has inspired a generation of activists who will pay deeper attention to their local communities, and I think it’s just the beginning.  A national Day of service is planned for January 19, the day before the inauguration.

• Another in a series of less-than-meets-the-eye reports about the California housing market shows home sales way up but the median price way down.  Close to half of the sales were on foreclosed properties, accounting for the price decrease.  This also makes it extremely difficult to sell a non-distressed home, because the competition on price is so great.

• The latest apportionment study by Election Data Services projects that California may not lose a Congressional seat as previously feared.  The state has seen an increase in growth relative to the other states lately.  I would add that growth by region is probably different than projected models, given the shock to the housing markets.  Most of the areas growing the fastest in the state, like the Central Valley and the Inland Empire, are among the worst housing spots in the nation, and their populations relative to the coasts may suffer as a result.

• High-speed rail officials are optimistic about their chances to secure federal funding to finish the projected cost of voter-approved Prop. 1A.

Uncategorized

Field Poll Shows Narrow Lead for Prop 1A

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Crossposted from the California High Speed Rail Blog

The Field Poll finally got around to polling Prop 1A and the results are about what I’d expected after six weeks of the Reason Foundation and the Howard Jarvis Association flooding the state’s media with lies. We have a 47-42 lead with 11% undecided. The common rule of thumb in California politics is that a proposition under 50% before election day is in serious trouble, but I’m not convinced that conventional wisdom will hold true this year. There are a number of propositions – such as 4 and 8 – that are also very closely split, and voters are showing a better understanding of the issues, with a reduced inclination to vote no as a knee-jerk reaction.

Still, the poll shows that we have a LOT of work to do between now and Tuesday. Especially when you look at the crosstabs.

Prop 1A will be decided on election day. Those who have already voted oppose it 39-51. That is very close to the number of McCain voters opposing Prop 1A, 35-56. Here in California absentee voters have traditionally leaned Republican and conservative. Those groups oppose Prop 1A – Republicans by a margin of 35-58 and conservatives by a margin of 30-64. Voters over age 65, those most likely to cast an absentee ballot, oppose it 38-53.

However, if California gets an Obama surge on election day, the outcome may be much different (preferences are listed in order of yes, no, and undecided):

Democrats: 53-30-17

Independents: 54-40-6

Moderates: 49-40-11

Liberals: 61-25-14

Obama: 56-33-11

Age 18-34: 50-38-12

If young voters in particular hit the polls in large numbers than we can win this on election day.

The Field Poll also breaks the numbers down by region, showing us where we need to focus our energies over the next three days:

LA County: 55-37-8

Other SoCal: 32-54-14

Central Valley: 49-46-5

Bay Area: 59-28-13

Other NorCal: 46-46-8

Looking at this I would write off “Other SoCal” and pour as many resources as possible into the Central Valley. Fresno, Bakersfield, and Sacramento among others ought to be pro-HSR given how much they will benefit from the system. Over the next few days local political leaders and respected state leaders – I’m looking at you, Dianne Feinstein and Arnold Schwarzenegger – need to get into the Central Valley, get themselves on local news, and promote the hell out of Prop 1A.

There is a large number of undecided voters in the Bay Area as well. They can and should be brought over to our side, likely with a strong push from environmental and transit groups. I don’t know if the Sierra Club has any money to put an ad up, or can do something to attract earned media, but that would be very helpful.

I know this site gets a lot of readers from around the pro-HSR community. So here is what I suggest our plans be for the next crucial three days:

Link Obama to HSR. Run some ads or print up some flyers or just plain talk about how Obama and Biden are strong HSR advocates. The purpose here is to ensure that Democrats and Obama voters are going to cast their ballots for Prop 1A as well.

The Central Valley is where we will win or lose. Get thee to Fresno (or Bakersfield or Sacramento) and explain to voters why this will be a godsend for the Valley. It will bring jobs and cheaper, more reliable transportation. Fresno will be under two hours from SF and LA. And it will reverse a long history of California neglecting the Valley’s infrastructure needs.

Emphasize the economic stimulus benefits of HSR. This message would play well in the Central Valley, the Bay Area, and perhaps even LA County and some other parts of SoCal. Prop 1A is a smart investment in jobs and growth. Leading economists like Paul Krugman are calling for deficit spending on infrastructure to rescue our economy. That message needs to get through.

Continue targeting young voters. CALPIRG has done excellent work here over the last few weeks but they need to be joined by other groups – Young Democrats and other groups. At San Diego State an environmentally-minded group of fraternities and sororities has been promoting Prop 1A.

Speak more about the environmental benefits in the Bay Area. Voters there are the most likely to be motivated by the considerable environmental and global warming-fighting benefits of HSR. If the Sierra Club has any last-minute resources to deploy, that would be very useful.

We can win this thing if we drive a big Obama turnout on Tuesday, ensure that people vote their entire ballot (or at least as far as the first proposition!) and that they vote YES on Prop 1A. The internals of the Field Poll look good for us, IF we can accomplish the turnout task. Let’s get to it!

Uncategorized

They Broke The Budget – Now They Want To Break Our Future

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Crossposted from the California High Speed Rail Blog

The latest canard that high speed rail opponents are trying to use to defeat Prop 1A is that the Authority failed to deliver a legislatively-mandated, updated business plan. Dan Walters made this the centerpiece of his HSR denial column today.

On the surface it sounds bad. But as the facts demonstrate this is a case where Republicans – and Democratic Senator Alan Lowenthal, who oughta know better – have set up high speed rail and Prop 1A to fail.

On August 26th AB 3034, after a weeks-long delay, was finally signed by Arnold Schwarzenegger. That bill directed the California High Speed Rail Authority to create a new business plan…by September 1. Giving the Authority merely five days to come up with the new plan.

Why the delay? The bill was passed out of the Assembly on May 29. From there it languished in the State Senate. Alan Lowenthal put out a nonsense study trying to cast doubt on the plan, but it was Sen. Roy Ashburn who played the central role in delaying AB 3034 into early August. By the time the Senate passed AB 3034, however, Arnold Schwarzenegger had started in on his temper tantrum, refusing to sign any new bills until we got a new budget. Arnold relented on AB 3034 – but had the bill bent sent to Arnold sooner, it would not have been subject to Arnold’s tantrum, and there would have been time to produce it.

But it gets worse. As you know, the state budget delay this year was the worst on record – three months long. The state Constitution mandates that a budget be approved by June 15 and implemented on July 1 – the beginning of the new fiscal year.

The Authority’s staff consists of 6.5 employees. Not a huge amount of staff to put together a business plan, actually, especially when you give them five days and then withhold a budget from them.

HSR deniers have now tried to use the delayed business plan to claim that Prop 1A and HSR are flawed. Today the State Senate held a hearing about the business plan, likely designed and timed to hurt Prop 1A’s chances. You can see the complete video here and the YouTube of the key exchange above. At the hearing Quentin Kopp explained that the plan will be ready around November 8, after proper work goes into its production and review by Goldman Sachs.

Roy Ashburn tried to attack Kopp over the delay, asking “You and your Authority are in violation of California law as we sit here today. If you were in my chair, what would you say?”

Kopp’s reply:

If I were sitting in your chair I would use temperate language. Did you ever read the state Constitution? Did you ever read Article 4, Section 12? Do you know what it says? It says…the Legislature shall pass the budget bill by midnight on June 15 of each year. You’re in violation of the law. Consider the outcome should a taxpayer bring a suit to recover the money that you eventually drew between June 15 and September 23 of this year. Consider the fact that people don’t work without being paid. Consider the fact that my executive director hasn’t been paid since January of this year. Consider the fact that when you finally appropriated the money the contractors who expect to be paid can finally begin work on the business plan. I’ll tell you why people should believe me. Because I have an impeccable reputation for honesty, integrity, and independence.

Ashburn could not reply to that point. He avoided it and tried to repeat his same points. But the smackdown was delivered, and Ashburn is exposed as a fraud. The state legislature, led by Republicans like Ashburn who held this state hostage for three months, refusing to do their Constitutional duty to pass a budget because they were demanding unspecified cuts, have absolutely NO place to be criticizing ANYONE else in the state government for not following the law. Ashburn is full of it and kudos to Kopp for calling him out on it.

Kopp drank Roy Ashburn’s milkshake. I think we’re done with this whole “business plan” nonsense, aren’t we?

Uncategorized

Fighting Back Against the New Hoovers

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Crossposted from the California High Speed Rail Blog

Not content with denying to Californians the numerous tangible benefits of high speed rail, Prop 1A opponents have retreated into a revival of Herbert Hoover’s economic policy in order to try and defeat the most important project Californians have considered in nearly 50 years. Their argument is that in an economic crisis, we should turn to austerity instead of following the tried and true path of deficit spending on infrastructure that provides short-term job relief and long-term economic value.

Today we have numerous articles and media outlets starting to push back against the New Hoovers. From newspaper editorial pages to leading economists there is a growing consensus that we must use deficit spending – in our case, bonds – to spur economic growth through infrastructure projects.

Speaker Karen Bass is calling for infrastructure projects to be part of a California economic stimulus that she hopes to offer later this year to deal with the worsening economic crisis.

Even conservative observers and federal deficit hawks are seeing the need for deficit spending, as the conservative Washington Times reports:

Conservative Financial Times columnist Samuel Brittan said the fears that short-term stimulus spending by governments will raise deficits miss the point. Even the $700 billion Wall Street rescue plan approved by the U.S. government – part of a more than $2 trillion international bailout of banks by governments around the world – does not change the equation.

“Maxims about debt that might be prudent for families can be the height of folly for government,” he wrote.

British economist John Maynard Keynes is credited with the basic insight, arguing that the Great Depression was prolonged because Western governments insisted on balancing budgets, raising taxes and cutting spending at a time when private economic activity had ground to a halt.

Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a nonpartisan research group, said both candidates must put together a credible long-term plan to deal with the exploding deficit, but that the government should be priming the pump in the short term.

These conservatives are joined by Nobel laureate Paul Krugman, who writes in today’s column:

And to provide that help, we’re going to have to put some prejudices aside. It’s politically fashionable to rant against government spending and demand fiscal responsibility. But right now, increased government spending is just what the doctor ordered, and concerns about the budget deficit should be put on hold….

All signs point to an economic slump that will be nasty, brutish – and long….

And this is also a good time to engage in some serious infrastructure spending, which the country badly needs in any case. The usual argument against public works as economic stimulus is that they take too long: by the time you get around to repairing that bridge and upgrading that rail line, the slump is over and the stimulus isn’t needed. Well, that argument has no force now, since the chances that this slump will be over anytime soon are virtually nil. So let’s get those projects rolling.

The growing unanimity of opinion on the need for deficit spending for infrastructure projects is striking. Krugman, MacGuineas and Brittan join leading economic figures like Nouriel Roubini and Lawrence Summers in calling for bold action to mitigate the deepening economic crisis.

They are joined today by the Fresno Bee editorial in favor of Prop 1A which clearly understands the need for infrastructure stimulus, and directly refutes some of the fiscal arguments against HSR:

Sadly, much opposition has come from people who say they like the idea of 220-mph trains zipping up and down the state, but don’t think we can afford it right now, in a time of budget disaster and economic crisis.

That sounds prudent, even reasonable, but it ignores an important fact of American history: Many of our most important public works projects have come in times of deep economic distress — and they have been crucial elements in our recovery in those times.

Recall the Great Depression, when voters in the Bay Area passed bonds to build the Golden Gate and Bay bridges — projects that lightened the impact of the Depression on that region and were critical to the postwar economic boom. Shasta Dam was built during the Depression, and remains a linchpin of the state’s water system.

The closing paragraph of the editorial is a powerful, stirring statement that deserves to be quoted in full:

The high-speed rail project is immense, and that can be daunting. The current economic situation is likely to get worse before it gets better. In the past, Californians have risen to such challenges with vision and determination. Voting “yes” on Proposition 1A is a declaration that we still possess those qualities, and have not surrendered them to a timid faith in a status quo that is no longer sustainable.

I’ve never seen it put so well. The Fresno Bee clearly understands that our state’s very future is at stake and that Californians should be able to meet that challenge just as we have done in the past.

And what about the arguments that the financial crisis makes this a bad time to float bonds? The Sacramento Bee reports “unprecedented demand” for California’s short-term bonds:

California has secured commitments for nearly $4 billion in short-term loans thanks to unprecedented demand from individual investors Wednesday, averting a need for federal assistance and allaying fears of a cash shortage….

California secured orders for $3.92 billion in short-term bonds from individual investors Tuesday and Wednesday, 98 percent of its original $4 billion goal, according to state Treasurer Bill Lockyer….

This week’s bond sale reassured state officials that traditional lending markets would suffice.

Translation: capital markets WANT state bonds. If we float Prop 1A bonds they will be quickly gobbled up by a hungry market desperate for a safe investment.

All the HSR deniers have left is what was at the core of their belief all along – opposition to passenger rail:

“This is like losing your job and then using your credit card to put in a new swimming pool to help provide work for others,” said [Kris] Vosburgh [of the Howard Jarvis Association] of the jobs argument.

Have fun with that ridiculous “swimming pool” analogy in the comments…

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Sacrificing the Future to the Failure of the Present

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Or, why the Sac Bee and Modesto Bee are wrong to oppose Prop 1A.

California is staring into the abyss. 30 years of conservative economic policy, including tax cuts, have brought the national and the state economy to the worst economic crisis we have faced since 1933. The state budget is in perennial deficit – caused by those same conservative policies. Since Prop 13 in 1978 the state’s revenue levels have been set artificially and deliberately too low to maintain our core services. The purpose was to force crises like this and tell Californians “either we raise your taxes or we destroy government.”

The budget deficit is a difficult problem. But it can be closed fairly easily by returning to the income tax levels on the wealthy that Ronald Reagan supported, that were in place from 1991 to 1998.  It is a question of political will – our budget deficit is not a force of nature but a deliberate creation of man. What we make, we can unmake.

More importantly, how exactly are we going to close that budget deficit, provide short-term relief and long-term economic growth without infrastructure projects? Many economists argue that government spending on infrastructure must be part of not just an economic stimulus right now but also of any financial rescue plan. These economists understand what we at this blog have understood – that we need stimulus to revive our economy.

Banks aren’t lending just because of the bad assets on their books – they’re not lending because the economy is sliding into recession. To stop that we need government spending on new stimulus. That was conventional wisdom during the Depression and it eventually brought us out of the depths – while also setting up the prosperity of the postwar era.

Unfortunately California newspaper editorial boards remain trapped in the failed conventional wisdom that brought us to this point of crisis. Instead of returning to tried-and-true economic principles of infrastructure stimulus, they argue we should sacrifice the future to the failure of the present. That because we are in crisis now, we cannot act to rescue ourselves from that crisis, and cannot act to provide a more stable future.

Such is the position of the Modesto Bee in its editorial against Prop 1A and of the Sac Bee. They both claim it is “too costly for the state.” In doing so they merely demonstrate their lack of knowledge about high speed rail and their unwillingness to act to reverse the slide into severe recession.

Details over the flip.

From the Modesto Bee:

The annual cost to operate the high-speed rail network would exceed $1 billion. Backers believe they can operate in the black. We’re skeptical. Passenger rail systems throughout the United States require subsidies.

The Modesto Bee should NOT be skeptical. Every single HSR system around the world functions without operational subsidies. In France HSR is so profitable it subsidizes the other systems! Even Taiwan HSR has achieved profitability after just 18 months in operation. Of course we should remind the Modesto Bee that every other form of transportation in America is subsidized – but HSR stands on its merits. Ongoing subsidies are just not likely. The Modesto Bee misleads its readers in not mentioning that.

That aside, our main concern is the price. A review by the independent legislative analyst’s office says that if the bonds are sold at an average interest rate of 5 percent and paid off over 30 years, the cost to the state general fund would be about $19.4 billion. That works out to about $647 million per year.

State legislators struggle to produce a budget year after year, and the current budget, just signed, is expected to be nearly $5 billion in the red unless drastic action is taken. As we noted in opposing Proposition 3, California can ill afford to encumber the general fund with more debt, especially the staggering cost for high-speed rail.

The Modesto Bee and the Sac Bee, which used almost the same argument, would do well to read Pete Stahl’s “semi-biennial lecture on bonds”. Pete reminds us that bonds are a fixed cost over time that become much easier to pay off as general fund revenues increase. Further, HSR construction will actually BOOST the general fund by providing increased income tax and sales tax revenue. Combined with the green dividend from HSR it is likely that it will pay for itself – the benefits to the general fund will equal or outweigh the ongoing bond service costs.

Newspapers like the Modesto and Sacramento Bee are suggesting that we were wrong to build Shasta Dam and the Golden Gate Bridge during the Great Depression. Both required public bond financing to be constructed. Modesto and Sacramento STILL benefits from Shasta Dam water. Instead, according to papers like the Sac and Modesto Bee, we should have waited until the 1950s. Of course that would come at the cost of not only higher unemployment during the Depression – which is the last thing you need – but it would have limited our ability to have postwar growth.

The equation is very simple, people. Prop 1A = jobs now + long-term economic growth. California would be engaging in an act of extreme recklessness if it sacrificed the future because of the failures of the present. The best way to ensure that we continue to have unemployment and a budget deficit is to reject Prop 1A.