I recently covered an example of what passes as sensible budgeting in California: The High Speed Rail system.

You would be hard pressed to find a more epic example of a hideous blend of cost overruns, cronyism, and incompetence.

So when Governor Jerry Brown touts fantasies of disappearing budget deficits, the following example of California financing shows why many citizens remain skeptical of his claims, according to The San Diego Union-Tribune :

The California High-Speed Rail Authority has agreed to issue a $2 million “stipend” to all four of the losing bidders, an obscure practice used for some large-scale construction projects. Bullet-train officials say the incentive was designed to attract bidders and therefore spur better, more competitive proposals.

The California High-Speed Rail Authority’s chairman Dan Richard, said such a practice will generate lower bids, which doesn’t make logical sense.

Dean Riehm, a San Diego activist who has been following the “bullet train” fiasco, notes that there is an entirely different reason for the approach:

Allow us to translate what Dan Richards was attempting to communicate: “There is no way in hell we would be able to attract any serious bidders and ask them to design and build a high-speed railroad when we don’t yet own any of the land upon which to build this without that $2 million cushion. There is too great a risk for bidding firms for us not to pay them off afterwards.”

Additionally, bidding “stipends” are not a normal practice in the construction business, as noted in the San Diego U-T article :

Eric Christen, executive director of the Poway-based Coalition for Fair Employment in Construction and a project opponent, said in his 13 years in the business he has never seen a payout for losing bidders.

“If it was the only thing that these guys were doing like this, well, I might give them the benefit of the doubt,” Christen said. “But it’s one after another, after another, after another.”

As to the amount of the stipends, he said, “The numbers to me as a taxpayer and as a private citizen are shocking.”

But not shocking to those of us who watch how Sacramento does business.


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