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?"