California Analyst Says No to Funding High-Speed Rail

California lawmakers should reject Governor Jerry Brown’s proposal to spend $2.6 billion of bond funds to jump-start construction of a high-speed rail system, a state analyst recommended.

The independent Legislative Analyst’s Office said future funding for the $68.4 billion bullet train is too uncertain for lawmakers to pass spending measures now. Brown’s budget earmarks $5.9 billion, including the bond money and $3.3 billion in federal aid, for the High-Speed Rail Authority in fiscal 2012.

“We find that HSRA has not provided sufficient detail and justification to the Legislature regarding its plan,” the analyst’s office said yesterday in a report. “Funding for the project remains highly speculative and important details have not been sorted out.”

California is the only U.S. state working to lay tracks for trains to run as fast as 220 miles (350 kilometers) an hour, after Congress cut off 2012 funds for such projects. In January, a state legislative review panel, questioning the long-term funding, recommended against selling debt to start the project.

The analyst’s report said California has only secured commitments for about 17 percent of the cost to build the network and additional federal money is uncertain.

Plan Changed

The authority on April 2 revised its plan for the project, shaving $30 billion off the estimated cost in part by improving existing commuter and freight lines in some areas.

Under the redrawn plan, California would route the main track down the backbone of the state from Merced, about 120 miles south of Sacramento, the capital, to the San Fernando Valley, north of Los Angeles. It would then connect to the population centers of Los Angeles and San Francisco by modifying existing commuter and freight lines to handle high-speed trains.

“It would be a mistake to delay this project and lose billions of dollars in critical federal funds,” Dan Richard, the authority chairman, said in a statement. The analyst’s “recommendations overlook the significant environmental and economic benefits of reducing freeway pollution, improving transportation and creating jobs.”

The revised plan also counts on cash from a new state program selling pollution credits as a backup to U.S. funding.

Under the law that created the program, money from the sales must be used to mitigate greenhouse-gas emissions in the state, according to the analyst’s report. It said the project wouldn’t help achieve that goal by 2020 and instead would increase greenhouse-gas emissions for at least 30 years as the system is built out.

Case Too Weak

“In view of the above concerns regarding the certainty of future funding and the recent significant changes proposed for the project, we find that the HSRA has not made a strong enough case for going forward,” the analyst said in the report.

The rail plan “meets both the letter and spirit of California’s pioneering global climate-change laws,” Mary D. Nichols, the chairman of the California Air Resources Board, said by e-mail.

“Not only does it take millions of tons of greenhouse gases out of the air, it also goes to the heart of the law itself, transforming California’s economy to clean energy and clean technology and breaking our century-long dependence on fossil fuels,” Nichols said.

Reports of possible conflicts of interest at the authority have come under investigation by the Oversight and Government Reform Committee in the U.S. House of Representatives, which said April 10 that it plans to probe the situations that may involve federal construction money. The panel has contacted current and former leaders of the authority for information on how U.S. funds have been spent on the project, Jeffrey Solsby, a spokesman for the panel, has said.

To contact the reporter on this story: Michael B. Marois in Sacramento at mmarois@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net

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