Tuesday, June 17, 2014

California appropriates $250 million for HSR

Written by  William C. Vantuono, Editor-in-Chief
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California Gov. Jerry Brown California Gov. Jerry Brown
California’s beleaguered high speed rail program, which since its inception has faced numerous political and financial challenges, has just received a boost of sorts from the California General Assembly, which reached a budget deal with Gov. Jerry Brown that will include a $250 million appropriation for HSR in the state’s next fiscal year, which begins July 1.

“Gov. Brown scored a big win for California’s $68 billion high speed rail project by persuading fellow Democrats to dedicate a steady future funding source for it in the state budget,” wrote the Los Angeles Times on June 16, 2014. “The $108 billion 2014-15 general fund budget approved Sunday includes $250 million this year from the state’s cap-and-trade greenhouse gas emissions fund. . . . To high speed rail officials and the governor, it signals the state’s investment in the beleaguered project, which has been saddled by delays and court challenges that have left it with little operating cash and uncertain political support. Rail officials believe the ongoing revenue will be enough to leverage bond borrowing and start work on new parts of the project, such as a segment connecting northern Los Angeles County to Burbank. Building that section of the rail line could help generate goodwill from the politically critical Los Angeles area and blunt criticism over the decision to start construction in the less-populated Central Valley.”

In coming years, the HSR system could receive 25% of the revenue from the cap-and-trade program.
 This could eventually total $3 billion to $5 billion a year.

California High Speed Rail Authority CEO Jeff Morales said a dedicated funding source would allow simultaneous work on several sections of the planned San Francisco-Los Angeles system, “which delivers benefits sooner to travelers statewide, yields costs saving, and creates an opportunity for potential private sector investment earlier.”

HSR advocates in other areas of the U.S. are taking California’s small step forward as a positive sign. “California high speed rail is the vanguard,” commented Midwest High Speed Rail Association Executive Director Richard Harnish. “They’re creating the model for how we can construct fast and convenient high speed rail to connect local economies and communities all across the country—especially here in the Midwest. California did the right thing by creating this revenue stream for high speed rail. Now, it’s time for Congress to follow suit and invest seriously in passenger rail at the federal level by passing the GROW America Act, which sets aside $19 billion in dedicated federal funding for rail programs.”

Others are less optimistic.

“The money is a fraction of the state’s overall spending plan,” wrote the LA Times. “The renewed attention to high speed rail funding also is a reminder of its most pressing problem: Where will the rest of the money come from? A Sacramento County Superior Court ruling last year, which is on appeal, has essentially blocked the state from selling $8.6 billion in voter-approved bonds that are supposed to be the primary source of construction funds for the first 130-mile segment from Merced to Bakersfield. The state also owes the federal government a $180 million matching payment due July 1 as part of the $3.5 billion in federal grants awarded to California.”

Political opposition remains a serious obstacle. U.S. Rep. Kevin McCarthy, a Bakersfield Republican who could become House Majority Leader, vowed in a statement to “do whatever I can to ensure that not one dollar of federal funds is directed to this project.” And four congressional California Democrats have joined Republicans to block federal funds for the project as part of an amendment to the federal transportation bill by Republican Rep. Jeff Denham. The vote, commented the LA Times, “was mostly symbolic because no federal money was proposed this year, and it will likely be reversed in the Democratic-controlled U.S. Senate.”