The CA High Speed Rail Authority released a draft business plan for 2014, which forecasts slightly lower construction costs and higher operations costs and ridership. The new plan anticipates an increase in shorter trips, leading to lower fares and revenues. However, as previous plans have stated, the bullet train is expected to pay for its own operations costs, without the need of government subsidies. After a public hearing on the plan, the Authority is expected to approve the plan in April, with consideration by the state legislature starting in May.
The California Supreme Court granted Governor Jerry Brown’s request to expedite review by an appeals court of a lower-court decision to freeze access to bond money for the state high-speed rail project. However, the Supreme Court stopped short of taking the case themselves as desired by Brown. However, even with the accelerated timeframe, a decision may come well after April 1, when the state must spend its own money to start construction in order to receive matching federal funds. Despite the recent, short-term setbacks, it is important to keep an eye on the larger vision of intercity HSR. A pair of contributors argues as much, stating that HSR will be essential in reducing carbon emissions per state objectives in the coming decades.
While discussion on HSR continues, the National Association of Railroad Passengers reports that the California State Senate announced the formation of the Select Committee on Passenger Rail on January 27. The committee will meet this spring to discuss policies to improve passenger rail service in the state.
Meanwhile, lawmakers opposed to the project are crafting several bills that would bring the issue again to voters or at least hamper the project at the legislative level. One new initiative would prevent previously voter-approved bond money to be spent on HSR while Hyperloop technology is developed and would allow for the CPUC to acquire land for a demonstration. (Note that such initiatives entail signature-gathering and verification at a cost of millions.) While this may sound innovative, Kerry Cavanaugh of the LA Times warns that steel-on-steel rail technology is proven, while Hyperloop is not, and that Hyperloop may very well turn out to be unfeasible at the expense of needed intercity transportation. Colin Leach of NARP adds that, as envisioned, Hyperloop would not serve intermediate cities and in the end would lack the compatibility with conventional rail services that HSR systems worldwide enjoy.
Governor Jerry Brown asked the state Supreme Court to block two court rulings that hindered the flow of state cash to the high-speed rail project. The CAHSR Authority argued that the rulings are creating a domino effect that jeopardizes federal matching funds and needlessly adds uncertainty to the project. The high court has not decided whether to listen to the state’s case or not. Additionally, the governor is also seeking a $29 million loan to keep the project going in his proposed state budget. While that happens, Amtrak and the CAHSRA released a joint proposal that would provide next-generation trainsets for both the Northeast Corridor and the future state HSR line.
With $8 billion in bonds held back by a court ruling, skeptics of the state high-speed rail project question how legislators will come up with the $180 million needed to match equivalent federal funds for the project coming in April. While the budget proposed by Governor Jerry Brown includes $250 million for HSR, said budget will not be finalized until June. This very question was the subject of a Congressional hearing on the project, where lawmakers critical of the project questioned how the state will fund the project since no private investor has come forward. CAHSR Authority Chairperson Dan Richard, who testified at the hearing, responded that a new business plan would address some of the issues brought forth in the above court ruling, which in turn would free up bond money.
As the court ruling further drags the project schedule, people are growing restless. A collection of letters submitted to the Los Angeles Times expressed anger at the developments and condescension at the very concept of HSR, employing red herring arguments that ask HSR money to be spent on unrelated initiatives instead. Cartoonist Ted Rall speculates that Brown could choose three ways to get more money for the project. Meanwhile, Hyperloop supporters have started to mull a state ballot measure that could fund their concept.
Last week the Governor released his preliminary budget for 2014 that included a proposal to invest $850 in cap-and-trade auction proceeds in transportation, energy, and natural resource projects. While the proposal overall is a strong first effort to craft an investment strategy to reduce greenhouse gases and benefit Californians there is considerable work to be done. Overall $600 million of the total would go to transportation projects:
- $100 million in Sustainable Communities including public transit, bicycle and pedestrian projects, housing, and conservation
- $200 million in clean transportation including rebates and subsidies for the purchase of low and zero emissions cars, heavy-duty vehicles, and buses
- $250 million for high-speed rail
- $50 million for intercity rail modernization
Despite $600 million going for transportation only $100 million would go into the Sustainable Communities pot to invest in expanding transit, increasing walking and biking, and building affordable homes near transit. This is far less support than is needed to support regional efforts to achieve SB 375 goals and provide real transportation and housing choices for communities.
This amount can be increased by repaying the remaining $400 million in cap-and-trade auction proceeds that was loaned to the General Fund last year or dedicating any additional proceeds from this year’s cap-and-trade auctions that are in excess of the $850 million included in the budget proposal.
Nevertheless, Brown continues to receive consternation regarding his decision to set aside $250 million for HSR. The $68-billion project is encountering opposition from environmental groups that say the benefits of the train would not come until much, much later. Environmentalists would prefer for these monies to go toward projects with more immediate benefits. The money would provide short-term funding, but does not address financing in the longer term. While not lost on this particular challenge, the Los Angeles Times believes that Brown must continue to strengthen the project’s viability, of which setting aside part of the cap-and-trade revenues is just a step in the right direction.
The Brown budget also provides a major fiduciary boost to map out earthquake faults across the state, an initiative that has languished over the past two decades. The lack of accurate maps is partly responsible for what has transpired over two transit-oriented developments in Hollywood, where city officials questioned whether or not there are active faults near or even below these projects. LA Mayor Eric Garcetti is also calling for new initiatives that would strengthen private buildings and infrastructure against large earthquakes.
Proponents of an alternative form of transport known as Hyperloop hope that the negative news on statewide HSR can bring good tidings to their nascent efforts. The brain child of entrepreneur Elon Musk, the Hyperloop would consist of vacuum tubes that suction pods of passengers over the I-5 right-of-way to their destinations. To determine the concept’s viability, Musk united architectural, engineering and physics scholars to design a prototype. A discussion on the Hyperloop concept will be held at UCLA on Wednesday, January 15, with more details available in Upcoming Events.
Governor Jerry Brown will release a proposed budget on Friday that will prominently feature revenues from the cap-and-trade auction held last year. Part of the budget calls for spending $250 million this year on high-speed rail, irking some environmentalists and pundits. This is despite the fact that the $250 million represents only 17% of the cap-and-trade funds. The rest will be spent on initiatives that would combat climate change such as forest management and home improvements.
The new year will prove pivotal for the HSR project, as Brown will most likely run again for office amidst a wave of support from prospective voters. Whoever challenges Brown to the governorship is bound to use his support of the controversial project as an expression of his perceived lack of fiscal control. Opponents will cite declining support among voters as a means to undermine his potential campaign. Additionally, the authority in charge of overseeing construction has yet to make a definitive decision as to when the project will break ground, frustrating project observers.
To summarize recent events, the proposed statewide HSR project has only about 50% of funds necessary for the initial phase of the project. This figure, however, could be optimistic as estimated costs may actually be higher. With such a huge gap in funding, Governor Jerry Brown has proposed the use of cap-and-trade tax revenue to close the gap. However, this option could be opposed by many voters and violate high-speed rail bond covenants as it may not be a legitimate source of capital. In any case, supporters of Caltrain electrification assert that their particular project, which is funded by a portion of Proposition 1A funds, is still on track.
The California High Speed Rail Authority received another setback when the federal Surface Transportation Board rejected the Authority’s request to approve 114 miles of new track between Fresno and Bakersfield. The Authority requested the approval because its contract with the consortium headed by Tutor Perini included work to be performed on 5 of the 114 miles in the Fresno-Bakersfield segment. This comes on top of two court rulings that hamstring the project’s finances. Columnist George Skelton believes Governor Jerry Brown should be more upfront about where the money will come from, citing how Authority CEO Dan Richard was more candid about the situation when Skelton interviewed him.
Not surprisingly, HSR critics are interpreting this collection of news as some kind of death knell for the project, even though design and construction was allowed to move forward. Others expressed more demeaning opinions in light of the new challenges. However, the Midwest High Speed Rail Association believes that the real culprit is the lack of a meaningful federal partner that can provide funds and vision for this and other HSR projects. To that effect, the MHSRA organization is asking advocates to write to their Congressmembers, who are currently debating both the annual budget and the long-term authorization for railroads, and ask them to include more funds for railroad infrastructure in their plans.