CA: Uncertainty is Part of Transportation Funding, California High-speed Rail Chief Says

April 19--California High-Speed Rail Authority Chairman Dan Richard defended his $68 billion program Wednesday by noting that major transportation projects often face the financial uncertainty for which the rail program faces criticism.

In two Capitol hearings, Richard urged lawmakers to approve $2.6 billion in state bond funds along with $3.3 billion in federal money to start construction in the Central Valley this year. He said initial work on the project, which includes a 130-mile Central Valley rail line and improvements to existing systems in the Bay Area and Los Angeles, is valuable enough to stand on its own.

California voters narrowly approved nearly $10 billion in high-speed rail bonds in 2008. The plan relies heavily on federal funds for much of the remaining costs. Lawmakers did not take action but used hearings Wednesday to begin considering whether to authorize about $7 billion in state and federal bond funds for high-speed rail and related projects in the 2012-13 budget.

The nonpartisan Legislative Analyst's Office recommended that lawmakers block initial funding because the project faces huge fiscal question marks down the road. Chief among them is whether a federal government in austerity mode will ever provide the remaining $39 billion the state is counting on from Washington.

In a contentious Senate hearing, Sen. Alan Lowenthal, D-Long Beach, said of the funding uncertainty, "Don't you think this is kind of a high-risk strategy?"

Richard, who once served as a Bay Area Rapid Transit board member, earlier told Assembly members that BART and other transportation programs commonly pursue construction without knowing where every dollar comes from.

"I spent 12 years on the BART board in the transit world, we never knew where all of the money was coming from," he said. "Our colleagues in Southern California just adopted a $540 billion regional transportation plan for the Southland, for the next 20 years, same time period we're talking about here. They don't know where all of the money is coming from.

"It is just part and parcel of the transportation world that people don't know these things now. The key then is, as you build, knowing you don't know what you'll be able to build next, can you build something of value?"

LAO analyst Brian Weatherford said the primary difference between high-speed rail and other transportation projects, such as freeways, is that other projects have ongoing revenue streams that don't exist in this case.

Richard said even if the project ended due to funding problems after the initial phase, the state would benefit by creating a new Central Valley line and improving connections and operations in existing Bay Area and Southern California transit systems.

The Legislative Analyst's Office assailed contentions by the authority and Gov. Jerry Brown that if federal funding falls through, the high-speed rail project could rely on billions of dollars from a new charge on businesses for greenhouse gas emissions. The emissions program stems from a 2006 law signed by then-Gov. Arnold Schwarzenegger to reduce greenhouse gases 25 percent by 2020 by imposing new carbon costs and using those funds on mitigation.

The LAO said that the state would face significant legal risks if it were to use such funds for high-speed rail.

Richard disputed those findings, saying that Brown administration lawyers believe the state is on firm ground in using greenhouse gas money for high-speed rail. He also said early investments in regional rail, such as Caltrain on the Peninsula making the transition from diesel-electric locomotives to full electric service, would reduce greenhouse gas emissions before 2020.

 

Call Kevin Yamamura, Bee Capitol Bureau, (916) 326-5548. Follow him on Twitter @kyamamura.

Copyright 2012 - The Sacramento Bee, Calif.

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