Where Now For HSR Funding?
The recent news out of Congress has been, well, depressing. Right-wing anti-HSR extremism won a round when President Barack Obama caved and agreed to eliminate all HSR funding for FY 2011, meaning that it’s unlikely more annual HSR funding appropriations will come while Republicans control the House.
So what are the options – if any – for more HSR funding in the next year or two?
1. Congress passes a Transportation Bill. This didn’t seem to be entirely out of the realm of possibility at the beginning of the year, when Florida Republican John Mica, chair of the House Transportation Committee, spoke of his desire to get a new Transportation Bill done and his interest in including some HSR funding in it. This could still happen – but it seems less likely now than it did in January. Teabagger Republicans have flexed their muscles in the House and the impact of oil company and Koch Brothers money has caused a lot of Congressional Republicans to follow their puppetmasters and attack HSR. Mica lost the battle over HSR to his fellow Florida Republican Rick Scott, who took office as governor at the beginning of the year and promptly killed the state’s fully-funded HSR project. While it’s possible that a new Transportation Bill could happen in the next 2 years, it’s not likely to have much HSR funding at all given the way the House Republican caucus is behaving. With Obama having caved to their anti-HSR demands once this year, it’s hard to see how HSR funding will somehow get out of this House.
Clearly, the Democratic Congress of 2009-10 and the Obama Administration made a big mistake in not getting a Transportation Bill done, although the primary blame appears to lie with the US Senate. The alternative here is to wait out the Republicans, hope Democrats win back the House in 2012 while keeping the Senate and the White House, and that they’ll have learned their lesson from 2009-10 and not dither in acting on a new Transportation Bill.
2. California goes it alone. This has always been a possibility, and it has grown stronger with the events in Congress this week. If the federal government won’t help, then California could simply do what New York State did nearly 200 years ago with the Erie Canal and build it themselves.
How exactly that would happen is, of course, an open question. California could always raise taxes to pay for the construction cost. It’s not out of the realm of possibility – voters in Los Angeles and Santa Clara counties, two of the state’s largest, voted to tax themselves to build train systems in 2008. Rising gas prices could give statewide voters enough willingness to pay directly for HSR, perhaps as part of a bigger mass transit funding package. In the late 1940s, Governor Earl Warren helped implement a plan to raise gas taxes to pay for the state’s freeway construction program, which served as a model for the Interstate Highway System.
That’s not a particularly likely scenario, at least while the state budget remains in deficit. Governor Jerry Brown is focused on increasing taxes to close the budget gap, and only once that’s done would he and Sacramento Democrats be willing to even consider a funding package for HSR. Maybe in a few years, but not anytime soon.
Other possibilities exist. The voter-approved Prop 1A bonds, approving $10 billion in funding for HSR, are general obligation bonds, meaning they’re repaid out of the general fund. California could also issue revenue bonds to help pay the costs of the system’s construction. The California Aqueduct was funded by revenue bonds. The problem here is that we should not insist that the HSR project pay for both its operations AND its construction out of farebox revenues. That’s a recipe for either fares that are too high or for cost-cutting decisions that undermine system effectiveness. But it may be something to explore.
3. Increased private funding. California could simply ask the private sector to pay the rest of the cost. That could take the form of funding from an overseas government like China or Japan. It could also take the form of funding from private sector investors.
That latter model has been used for HSR before, and it’s very risky. Taiwan relied on a lot of private sector funding – about 80% of the total construction cost. Even though Taiwan HSR generated huge ridership, the cost of repaying the construction loans was simply too high. The private investors had to be bailed out by the government of Taiwan. The system soon began covering its own operating costs, but the cost of the bailout won’t be repaid for some time.
What might work is some combination of #2 and #3. If California taxpayers threw in another $10 billion, and a foreign government or private investor threw in the rest, then it might be more workable, especially if the federal government came back in later in the decade once the teabaggers were removed from power.
Those other options may seem less likely today. But things can change pretty quickly, especially as rising gas prices remind Californians of the need for alternatives and help burst the anti-HSR bubble. No matter what happens, California does need to explore ways to fund an expansion of mass transit, and a higher gas tax seems a sensible way to do that. And the stalled federal funding situation will force California HSR planners to explore some other ways to get the system funded. That’s a worthwhile exercise, and one we should embrace without fear. Californians know that HSR is a good idea and know that it’s worth building. Let’s see what the other options are to get it funded and see what we can do to keep this project going while both parties get their act together in DC.