PERSPECTIVE-Would a sensible person start construction on a new home not knowing if there would be enough funds to finish the framing?
Let’s take that question to another level.
Would a sensible government spend billions on the first (and very short) leg of a bullet train without knowing if there is a reliable and predictable source of funding to complete the full length of the system? Not to mention, have it capable of operating at a virtually unimpeded high speed of 220 miles per hour?
Sensible is the operative term.
Existing federal grants and bond revenues are at least 50% to 60% short of supporting the construction of the initial phase connecting the San Fernando Valley and Merced. The shortage will be far greater if the estimated costs are as understated as critics contend. Don’t forget – we are talking many billions of dollars; not a sum the state can plug by tweaking a tax here and there.
With the federal government facing the prospects of wildly unpredictable costs of the ACA, don’t look to Congress to play the role of a rich uncle. Any attempt by the feds to bail out California’s boondoggle will be assailed by other states who have pressing needs of their own.
There is talk that Governor Brown may push to use cap-and-trade tax revenue to close the funding gap. Not only would that be opposed by many voters, it could be in violation of the high-speed rail bond covenants as a legitimate source of capital. Such a move was not contemplated by the architects of the rail bond measure approved by the voters.
According to an article in the San Jose Mercury News:
Santa Clara County Supervisor Joe Simitian had been a staunch proponent of the high-speed rail project while serving in the Legislature. Looming, unanswered questions about how the state would pay for the train, however, ultimately led Simitian to vote against the train.
“High-speed rail is a vision I shared,” he said, “but I was not asked to vote on a concept. I was asked to vote on a plan that I believe is flawed.”
That statement says it all.
(Paul Hatfield is a CPA and serves as Treasurer for the Neighborhood Council Valley Village. He blogs at Village to Village, contributes to CityWatch and can be reached at: [email protected]) –cw
CityWatch
Vol 11 Issue 101
Pub: Dec 17, 2013