As a deadline looms for California to begin building a high-speed railroad, the state's most influential auditor on Tuesday told lawmakers to hit the brakes -- warning that the cost of the state's biggest project has soared, funding sources have dried up and the agency overseeing the plan isn't equipped for the job.
The biting 28-page report from the nonpartisan Legislative Analyst's Office says the project, pegged at $43 billion in 2009, is more likely to cost $67 billion, based on recent estimates. The LAO further doubts the state will get the additional money it needs to complete the project -- it has about $12.5 billion on hand now. And it warned that bonds issued to pay for the rail line would leave California's bleeding general budget on the hook for about $1 billion a year -- plus more if the train service loses money -- leading to more cuts to depleted state programs.
While the LAO report is not the first harsh assessment of the state's biggest public works project, it comes at a critical time, as state leaders face a do-or-die decision for high-speed rail. The Legislature must decide within months how much in planning funds to set aside for the project for the budget year that begins July 1. The LAO recommends almost completely eliminating that funding unless critical changes are enacted.
That would significantly delay the project, if not kill it altogether. Project planners say they need $190 million from the Legislature this year to prepare for starting construction in the Central Valley next year -- or otherwise they will lose the federal stimulus grant that makes the initial $6 billion segment possible. But some critics said it would be foolish to rush.
"We need to slow this process down; we need to have more control by the Legislature," said state Sen. Alan Lowenthal, D-Long Beach, who sits on the committee that controls the project's funding, "There is a growing chorus of folks saying, 'Hey, let's slow this down because we've got to get it right.' We don't understand where the vision is; we don't see any vision or any real plan."
He added: "We're nervous, and rightfully so."
The LAO said the Legislature should fund the project only if:
Lawmakers delay construction, and planners conduct more detailed studies.
Construction begins in either the Bay Area -- along the Caltrain tracks from San Francisco to San Jose -- or in the Los Angeles area, because they are much more populated than the Central Valley.
Lawmakers pass a bill to eliminate the California High-Speed Rail Authority and place the project under the control of Caltrans. The analysts said authority members working under a quasi-independent agency are too focused on the project and are not concerned enough about the best interest of the state as a whole.
"This is about the most scathing report I have ever seen," said Tom Rubin, a transit consultant from Oakland. "The Legislature has to pay attention and take charge."
Assemblywoman Cathleen Galgiani, a Merced Democrat who has been one of the project's staunchest supporters, blasted the LAO for what she called a "ridiculous recommendation" to scrap the authority's funding. She advised the analysts to look at successful projects abroad.
"It seems as though there are some who want to slam the authority in the knees with a baseball bat and then tell them they're not running fast enough," Galgiani said. "As far as I'm concerned, the LAO (report) is an opinion issued without full knowledge or understanding of what it takes to plan and build a high-speed train system."
Rail authority leaders would not comment on specifics of the report Tuesday, saying they had just received it that afternoon, but issued a statement from CEO Roelof van Ark saying he thought "the project has been successful thus far." He vowed to "thoroughly review" the LAO's suggestions.
Where the plans stand
The state has vowed to secure enough money to start zipping bullet trains between San Francisco and Anaheim by 2020. Although voters in 2009 approved $9 billion in bonds to help fund the project, the Legislature and governor are responsible for approving the rail authority's annual budget and could choose not to issue the bonds.
The state would also have to negotiate with federal officials before reversing the decision to start building in the Central Valley, since Washington is helping to fund the tracks.
As for eliminating the rail authority, a bill is in the works this year to do just that, but it would require extra staffing at Caltrans to handle oversight of the project.
San Jose Mayor Chuck Reed said the "use it or lose it" policy stemming from the federal grant may lead the state to rush in the wrong direction.
"I think the Legislative Analyst's Office made some good recommendations on how things should change," Reed said. "We have to be extremely sensitive on cost issues because the costs are huge."
But Carl Guardino, head of the Silicon Valley Leadership Group, disagreed with the suggestion that the rail line be built in the Bay Area first.
"Let's be blunt," he said, citing opposition among many Peninsula cities. "We don't have our act together; we don't have broad support in our communities here. So why not begin laying tracks in the Central Valley, where it can prove its worth and where unemployment is as high as 30 percent?"
Contact Mike Rosenberg at email@example.com or at 408-920-5705.
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