State Auditor Misses Point on HSR

Apr 29th, 2010 | Posted by

The California State Auditor is out with a report criticizing the California High Speed Rail Authority and their planning of the project. The criticisms are generally sensible, and stem from the fact that the Authority is still staffing up to meet the challenge of planning and implementing the project, and the Auditor lays out some specific areas where the Authority needs to step up its oversight.

These recommendations are helpful and welcome, and the Authority provided its own response detailing how it is addressing those operational points on page 41 of the report, including a criticism that the title of the report – “High-Speed Rail Authority:
It Risks Delays or an Incomplete System Because of Inadequate Planning, Weak Oversight, and Lax Contract Management” – is “inflammatory” and “overly aggressive” and that it doesn’t accurately reflect the findings in the report. I fully agree with the Authority’s criticism here, and the State Auditor should have chosen more neutral language to use.

What’s not helpful – and what’s in fact a bit bizarre – is the Auditor’s decision to hold the Authority responsible for the failure of Congress to provide a long-term federal funding source. The Auditor’s report indicates a fundamental lack of understanding of the federal funding situation:

The Authority’s assumptions regarding federal funding are optimistic. According to the business plan, the estimate of federal participation in the program is based on the federal government’s historically high participation in large transportation infrastructure programs such as highway, transit, and aviation projects. However, the Highway Trust Fund is a dedicated source for highway and transit programs and has its own revenue source—the federal tax on motor fuels. The U.S. Government Accountability Office, in a 2009 report on the future development of high-speed rail, noted that no such dedicated federal revenue source exists for projects for this mode of transportation, so high-speed rail projects must compete with other non-transportation demands on federal funds.

However, last summer, a House subcommittee voted to appropriate $50 billion for HSR in the transportation bill reauthorization. Earlier this month over 100 members of the House of Representatives wrote to President Obama asking for his leadership to get that $50 billion, which would be more than enough for California. Additionally, $2.5 billion for HSR was approved in the FY 2010 budget and another $4 billion is proposed by advocates for the FY 2011 budget. Federal funding for HSR is on its way, and though it isn’t nailed down yet, it’s not as pie-in-the-sky as the State Auditor makes it sound.

They also misunderstand California’s competitiveness for federal funding:

Further, the Federal Railroad Administration (Railroad Administration) received more than $57 billion in applications for the $8 billion of available Recovery Act grants. This suggests that competition for any additional federal dollars will be strong and that California can expect to receive only a fraction of the total. However, the Authority’s plan for financing the program depends heavily on federal funding, as Figure 7 illustrates.

The Auditor is simply wrong here. California received more money than any other state in the distribution of the $8 billion in stimulus funds. Federal officials, including Transportation Secretary Ray LaHood, have repeatedly praised the California HSR project and indicated we will continue to receive the lion’s share of federal funds. As one of only two true bullet train projects in the country – and with the other one, Florida, facing growing questions about its route choices and short intro line. We’re much further along than most other states, and can turn around federal money relatively quickly after we receive it. If $50 billion over 6 years is indeed approved, I do not foresee any problem whatsoever with California getting $17-$19 billion of that, and nor should anyone who has been watching the federal government’s HSR actions the last two years. California’s powerful Congressional delegation, including Speaker Nancy Pelosi, also count in our favor.

But let’s say the Auditor is right, and we don’t get federal funding. What then?

Basically, we’re screwed. Without federal funding the HSR project doesn’t happen. There is no Plan B.

However, the $2.25 billion in funding already delivered doesn’t go to waste. “Independent utility” requirements mean funds have to be used for projects that can be used even if the whole HSR system isn’t built.

For some HSR critics and skeptics, the uncertainty around federal funding is a reason to either not build the project, or to not build it in their backyard. The proper response, however, is not to be a passive actor, but to instead actively work to secure federal funding for HSR. For example, it’s my hope that everyone in Palo Alto who wants a tunnel has gone to the FourBillion.com site and told their Congressional representatives they want $4 billion in the FY 2011 budget, and that they’ll stand with us when we begin advocacy for the $50 billion in the transportation bill reauthorization.

For now, it’s out of the Authority’s hands. Federal funding is up to us, not up to the CHSRA. It would be nice if the Auditor had understood that rather important point.

UPDATE: More from the CHSRA here.

  1. Spokker
    Apr 29th, 2010 at 13:46
    #1

    I wasn’t expecting them to get $19 billion all at once.

  2. Peninsula Rail 2010
    Apr 29th, 2010 at 14:56
    #2

    The State Auditor stands by its “inflammatory” title as accurate and representative of the report’s contents:

    “We disagree(with CHSRA). The title accurately characterizes the risks the
    Authority faces, given our findings. In fact, in responding to
    our recommendation to develop alternate funding scenarios,
    the Authority states that such scenarios would be presented as
    lengthened timelines, which in turn would mean an increased
    project cost. Such language suggests the potential for delays in
    the high-speed rail program. Further, we discuss the risk of an
    incomplete system on pages 19 through 21 of the report.”

    Brian Stanke Reply:

    So if the project isn’t funded adequately it will be delayed and cost more? And this is NEW insight how? Is that ANY different that ANY construction project ever in in last 99 years? (Before 1911 I believe we had deflation in America.)

    As I pointed out at the hearing with Simitian and Lowenthal in Palo Alto, the voters of California approved Prop 1A in Nov. 2009 when there was $0 committed Federal funds and an active lawsuit against the project. The fact that $2.25 is committed now and another $2.5 is already appropriated for HSR across the country is a BETTER situation than when the voters approved Prop 1A. All participants in this process would be well served to remember where we were when the votes said yes in Nov. 2008. The economy has stabilized and Federal funds increased a lot since then.

    Peninsula Rail 2010 Reply:

    The Auditor’s report makes it clear that CHSRA does not have its house in order and the private contractors are running amok. The current CHSRA can’t be trusted with $billions more and is due for an overhaul. Go ahead and attempt to lobby for more $billions for the current CHSRA and its sweetheart contracting deals, but if you aren’t getting paid, you’re a sucker in their game. PB will thank you for lining their pockets, but they’ll keep the money for themselves.

  3. political_incorrectness
    Apr 29th, 2010 at 16:03
    #3

    http://www.mercurynews.com/breaking-news/ci_14985030 Mercury News adding more negativity as per usual

    YesonHSR Reply:

    his story headline on HSR always has a “house on fire” sound to it..shocked he had a quote from robert

  4. Peter
    Apr 29th, 2010 at 16:32
    #4

    http://www.mercurynews.com/california-high-speed-rail/ci_14961397?source=autofeed#

    What’s this “shallow tunnel alternative” that they mention here. Has anyone ever heard of it?

    rafael Reply:

    Best guess: a deep covered trench aka subway tunnel (cp. BART in Colma and San Bruno).

    Second best guess: covered cut-and-fill with side berms and low overpasses for the cross roads.

    Peter Reply:

    But where and how …

    I have no clue how that would be even remotely possible. They’re just giving these people false hopes…

    Peter Reply:

    All that I can imagine is that the portal would be just before Willow St north of Tamien, then use TBM to go under Gardner and under 280, then cut-and-cover along Josepha St, somehow dig under Los Gatos Creek and BART, mine out a station at Diridon somehow, and then continue up the Caltrain ROW north of Tamien until you reach the next portal…

  5. Spokker
    Apr 29th, 2010 at 16:47
    #5

    Bashing the California high speed rail project for not having gotten all the money to build it yet is like bashing the Wilshire Subway planners for not finding the billions needed to build that thing yet. Both projects are still under environmental review and people are working hard to secure funding.

    It’s a cheap shot that has no basis in reality.

    political_incorrectness Reply:

    No kidding, I think some need to write letters to the editor about these nonsense attacks by the media just because of an audit. It is as if every state agency is perfect even though a good chunk of them are probably not up to snuff like BART. Then when a critical project meets criticism from the state auditor, it is another piece of yellow dog journalsim just to sell papers and help stir the pot more. I think we’re still in for an uphill battle

  6. RubberToe
    Apr 29th, 2010 at 18:22
    #6

    You would think the state auditor would be pretty busy looking at the overall state budget, that doesn’t appear to be a much rosier picture than the HSR money :-?

  7. Spokker
    Apr 29th, 2010 at 20:24
    #7

    Went to the HSR meeting in Fullerton tonight.

    -The open house poster boards they had up still only showed the dedicated alternative. However, the literature they passed out updates people on the shared track vs. dedicated situation and illustrates the comparison between the two.

    For shared track, they are showing people two HSR/Amtrak/Metrolink tracks and three freight tracks with a crash wall between them (expanded shared track alternative from the alternatives analysis). They are showing that the existing ROW is 100 feet and that a shared track alternative would require a little more ROW acquisition, but not as much as the dedicated alternative.

    -They explained why they need a trench at Fullerton airport.

    -They showed the Fullerton HSR station study area. It would be west of the current station across the street. A lot of eminent domain here.

    -One woman was angry because the train would use dirty electricity or something.

    -One woman was angry because the route would result in her garage being taken away. She said that she and her neighbors can’t live without their garages.

    -One man was angry because several businesses and homes would lose street access.

    -The usual concerns over budgets and finance.

    -An OCTA representative was there and explained the OCTA’s stance against the dedicated alternative and the letter they jointly sent to the CHSRA asking for the shared alternative to be studied.

    -I asked some representatives for specifics on the shared track alternative, like how 91 line trains and the Southwest Chief would interface with the shared LOSSAN Corridor and how they tend to integrate HSR onto the corridor but they really didn’t have any answers. The standard reply was that it’s too early or that it’s being studied. I also asked what the impact of the draft EIR being delayed is and they said it really shouldn’t impact anything.

    Nothing too exciting.

    Robert Cruickshank Reply:

    Thanks for the report! I wonder if two HSR/Amtrak/Metrolink tracks will ultimately be enough, especially given expected increases in passenger rail ridership on the corridor. Definitely worth exploring, of course, but I’d hate to have to come back and redo the corridor in the ’20s or ’30s to allow for expanded service.

    HSRforCali Reply:

    Why 3 freight tracks? To me, it should be 2 freight tracks and 3 HSR/Amtrak/Metrolink tracks.

    Spokker Reply:

    It’s the BNSF transcon corridor, brother. The freight trains have shorter headways than the passenger trains!

    Spokker Reply:

    6 to 10 trains per hour is never happening unless an earthquake actually does knock Southern California into the ocean and we become Japan Two.

    I predict four trains per hour by 2050!!!

  8. Elizabeth
    Apr 29th, 2010 at 22:04
    #8

    OT

    We put up our ridership comments on the EIR. Pls note: these are only the comments that relate to Altamont vs Pacheco, which is topic of EIR.

    http://www.calhsr.com/wp-content/uploads/2010/02/CARRD-Ridership-comments-for-Program-Level-EIR.pdf

    Fire away.

  9. HSRforCali
    Apr 29th, 2010 at 22:23
    #9
  10. morris brown
    Apr 30th, 2010 at 05:23
    #10

    No, Robert, the Auditors report does not miss the point on HSR. It hits the point right dead on.

    Dan Walters writes at:

    http://www.modbee.com/2010/04/30/1148002/dan-walters-high-speed-train-given.html

    ——–
    “The auditor’s report, coming just weeks after the legislative analyst’s report and a critique by the Senate Transportation Committee staff, indicates that specific route planning, now under way throughout the state, should be placed on hold until the financial kinks are worked out – if, indeed, they can be.

    The danger – and perhaps the hope of bullet train advocates – is that the authority will make so many commitments that the state will be politically compelled to pony up more money for construction and operation, regardless of financial viability.

    Big public projects often become financial sinkholes via that process. ”

    Exactly!

    Start digging everywhere, without any sight of where money will come from to complete.

    When the Feds fail to pony up more and the private sector equity participation is nowhere to be found you end up with nothing. This won’t be a Bay bridge like rescue operation because the funds shortage will be so massive, the State simply doesn’t have the resources to make up this kind of shortfall.

    I also note the following:
    as reported at:

    http://www.smdailyjournal.com/article_preview.php?id=130319&title=Auditor%20lists%20high-speed%20rail%E2%80%99s%20pitfalls

    ——–
    The report was released just as legislation authored by state Sen. Mark DeSaulnier, D-Concord, to increase oversight of how public money is spent on high-speed rail passed the Senate by a bipartisan vote of 26-8.

    Joey Reply:

    When the Feds fail to pony up more

    *ahem*

    synonymouse Reply:

    The CHSRA definitely needs a plan B, C, D, etc. The current scheme has lost its majority support. The politicians are gradually becoming aware of this.

    The present national administration is also losing ground and will likely face congressional gridlock after November. Don’t expect hordes of cash from DC.

    The best way to salvage the hsr concept is to build a smart starter using the I-5 alignment that the Divison of Highways has so nicely provided. If it is possible to avoid any appreciable moditication of the overpasses a very considerable amount of money could be saved.

    The starter would be LA to Sacramento via I-5 with branches to Livermore and Fresno, avoiding inner Bay Area routing controversy for the time being.

    Tolmach is right, not because he is some kind of transport genius but because he is articulating the obvious, an alternative that the majority of voters can immediately understand as the logical approach. Who is his right mind would drive from the Bay Area(or Sac) to LA via Fresno?

    I fail to comprehend the opposition on this site to a detailed costing out of the I-5 alternative. We all know that Bechtel had given it short shrift for political reasons.

  11. jimsf
    Apr 30th, 2010 at 08:15
    #11

    Geez did these auditors miss the part about how the administration has clearly stated its support of high spped rail investment and the part where hsr operators from several countries want to invest in ca including china which wants to finance it with their sofa change?

    And then to hear it reported on KGO during each news broadcast, with no follow up information. Un believable.

    Robert Cruickshank Reply:

    The Auditor’s report headline is misleading. The Authority pointed that out, but the Auditor refused to change it before publication – and now that’s all the media is reporting.

    Between the LAO and the Auditor, I am beginning to wonder if anyone in the Sacramento analyst offices actually knows anything about HSR.

    jimsf Reply:

    I think the authority should be dissolved and the project be put under caltrans. Sacramento seems to understand caltrans.

    synonymouse Reply:

    I agree – that could be the way to go.

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