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Fiscal derailment result of CA bullet train ruling

Fiscal derailment result of CA bullet train ruling

We have been chronicling the journey of California’s vaunted “high speed train” construction project, which has been anything but speedy.

When we last checked, Sacramento judge Michael Kenney had wisely ruled that state officials cannot pursue a plan to tap billions of dollars in voter-approved bond funding for construction—a decision that could cause indefinite delays in the massive $68 billion project.

It looked like the project was poised to be derailed.

In July of this year, however, the Third Appellate District Court ruled that the “voters clearly intended to place the Authority in a financial straitjacket by establishing a mandatory multistep process to ensure the financial viability of the project.” But then the panel decided to allow the plan to move forward.

The Wall Street Journal editorial board took exception to this seemingly questionable ruling:

The court could require the authority to redo its plan, but the judges say that would be unnecessary since the Director of Finance must still approve a rigorous final plan before the authority can spend the bond revenue. In other words, the law’s procedural requirements don’t matter.

Yet the bond referendum had ordered a preliminary plan for legislative review precisely so lawmakers could force the rail authority to address their concerns before appropriating the bonds. This added a modicum of political accountability.

So here we have the spectacle of legislators ignoring the very taxpayer protections that they had used to gull voters into approving a ballot measure that might never have passed without those protections. The lesson is that politicians will grab any new power or spending authority voters give them. They’ll blow through the caveats and dare voters to sue to stop them.

True. However, Cal Watchdog pundit Chris Reed says that the Third District’s decision is not the big victory for Governor Jerry Brown and his legacy that the WSJ fears (hat-tip, So Cal Tax Revolt Coalition’s Dawn Wildman).

The appeals court that vacated Sacramento Superior Court Judge Michael Kenny’s ruling to block the project did not say that Kenny’s conclusion that the HSRA violated Proposition 1A was wrong. Instead, the decision held that a trial judge had no authority to block construction until the legislature and the High Speed Rail Authority approved a final business plan. “The scope of our decision is quite narrow,” the judges wrote in the first paragraph. The decision went on to reinforce two key protections contained in Proposition 1A—both meant to ensure that the state didn’t spend billions on initial construction only to run out of money before a financially viable train system could be built. Judge Kenny ruled that the state had to identify “sources of funds that were more than theoretically possible” in explaining how it would pay for the project’s $31 billion, 300-mile initial operating segment. He also said that the HSRA had to complete environmental reviews for the entire segment before construction could begin. The appeals court contradicted him on neither point.

The appellate court underscored that the law requires the state to establish “financial viability” for the bullet train’s first segment by adhering to a voter-approved “financial straitjacket.” It said that bond funds could only be spent after a funding plan gained approvals from the state finance department, the Joint Legislative Budget Committee, and an independent financial analyst who certified the plan’s soundness—specifically that if built as planned, the bullet train could operate without a taxpayer subsidy. The appeals court judges also agreed with Judge Kenny that the rail authority had to obtain “all the requisite environmental clearances before construction begins.”

These are shortcomings that Brown … cannot easily finesse. The state has less than $10 billion left from Proposition 1A and from federal stimulus funding. The prospect of obtaining additional federal funding from House majority leader Kevin McCarthy, a Bakersfield Republican and ferocious critic of the project, is virtually nil. And the HSRA reportedly has 10 percent of the necessary environmental clearances in hand—and a long list of lawyers lined up to fight future reviews.

Bullet train cheerleaders may be excited now, but Proposition 1A’s financial safeguards (and California’s budget problems) remain formidable obstacles.

Dean Riehm is the San Diego area blogger most versed in the bullet train saga. He says, “In essence, Brown is not getting anymore state bond money, so he is effectively working with a budget of about $10 Billion (for a deeply flawed overall projected $68 billion project)… which is what the original bond measure authorized back in 2008. The private sources of funding he promised would materialize never have and never will. This is a pyhrric victory. Private backing will be scared off even more now that Brown has embraced a go-it-alone mentality.”

All this ruling means is that the train project is going to derail a little bit farther down the road than initially anticipated.


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Where can LI readers send donations to get this darn thing up and running?

    The bullet train would be a disaster for California. They pretend it’s only $68 billion but in light of the cost overruns of the Big Dig and the SF Bay Bridge retrofit it’s likely to cost $680 billion. Then there is the fact that it has no significant advantages over airliners and we will likely have to pay hundreds of dollars in subsidies for everyone of the few passengers who do ride it.

JimMtnViewCaUSA | September 16, 2014 at 11:49 am

Dean Riehm’s blog is worth checking out too, thanks for posting a link!

so only 10bn wasted instead of a 100bn (the 60+ was fake number) wasted.
yay…I guess.

Wow. This is shockingly similar to the joint Oregon-Washington-federal “Columbia River Crossing” (CRC) bridge project.

Ultra-quick sum-up: CRC is a jointly-funded bridge project from Portland, OR, to Vancouver, WA. Oregon’s governor insisted on including light rail and building a station in Vancouver – dramatically increasing the cost – which Washington rejected and refused to fund. The feds refused to fund if Washington didn’t pitch in, and eventually time ran out for federal grants. Oregon’s governor decided to “go it alone” (how it’s been reported here, verbatim) and fund the entire project from Oregon’s coffers, which may not sufficient for the project.

So the project is at an indefinite stand-still.

What is it about leftist, “Progressive” executive-branch politicians and a “go-it-alone” mentality?

    TrooperJohnSmith in reply to Archer. | September 16, 2014 at 2:03 pm

    This “go it alone” mentality is rooted firmly in the proven historical Progressive disdain for We The People.

    Progressives are elitists and narcissists of the highest order. That extends to their belief in eugenics and in collectivism, where they of course, are the “collectors”.

    Pol Pot, Lenin, Stalin, Hitler, Mao were all narcissists. The latest world-stage narcissist, the self-proclaimed “The One we’ve all been waiting for,” is only constrained by what’s left of the Founders’ original limits on runaway executive power.

      I’m not even sure “The One” is restrained by that. It’s Congress’ job to crack the Constitutional whip to keep the executive branch in line, and they are woefully lacking in intestinal fortitude for that task. There’s too many sympathizers, sycophants, and supporters – on BOTH sides of the aisle.

In Pelosiland you are just going to have to build it to see where it goes.

JackRussellTerrierist | September 16, 2014 at 2:27 pm

This “thing” was always on-track to be a trillion dollar trolley to transport pols and elitists back and forth between L.A. and SF cocktail parties and to conduct on-board meetings in luxury accommodations so they’d have more play time at the end of the line, nothing more. All “progressive” morons, including the deluded parasites in California’s academic Disneylands and their student acolyte occupier-types who wouldn’t be able to afford a ticket in the first place, immediately jumped on board because then “we’d be like Europe where they really “do” public transportation well!!”

The burned-out hippies thought it was, you know, like a cool, Euro thing, man, the poor thought they beez gettin’ a free ticket to go visit cousin Shaniqua, and the environazis assured us it was “the green thing to do”. These sucked-in morons have never clued in that it has always been about a free party ride for pols and elitists being built on yet another California middle class tax burden and that there will be no room for them. They will drive and buy as much gas as always. Fares would cost as much or more than a plane ticket except for pols with per diems and transportation reimbursement from the taxpayers who can’t afford to ride on it and probably wouldn’t need to because it was only going to serve L.A. and SF anyway.

Fools, idiots, morons. The gullible never learn.

I hope the thing goes down in flames fast.

Insufficiently Sensitive | September 16, 2014 at 5:36 pm

It’s Congress’ job to crack the Constitutional whip to keep the executive branch in line, and they are woefully lacking in intestinal fortitude for that task.

There’s a reason for that. It’s called the Mainstream Media, which is prepared to unleash a nuclear holocaust of negative mendacity against members of Congress who resist dazzling greater-government schemes. The average member of the ‘journalist’ profession is a card-carrying member of a Cargo Cult, and feels that free stuff at taxpayer expense (that nobody pays for, right?) is an entitlement of all citizens, and that opposition to free stuff by any lawmaker is a form of treason.

Not sure exactly why leftists are so besotted with mass transit. It isn’t just that they hate the personal liberty that the automobile affords: they really do seem to love trains, or the idea of trains. But it is all going to end for good with the next serious outbreak of communicable pestilence, be it Ebola or SARS or MRSA or just that ancient scourge the bedbug. Even going to the grocery store will become a thing of the past as people have their shopping delivered instead, with no need to swap germs with the delivery man. The idea of gratuitously cramming into enclosed spaces with lots of unscreened strangers will become an object of horror.

This train will have to operate just like a plane, but there is no way to protect the tracks from sabotage. Imagine what running into a ibeam or 6×6 at 200+ MPH would do!

Thanks for writing this article. I want to see what you thought about the WSJ article.