Senate Committee Grills CA High-Speed Rail Authority on Its Funding Plan

The California High Speed Rail construction and phasing plan. Source: CAHSRA’s 2013 Report on the Contribution of the High-Speed Rail Program to Reducing California GHG Emissions Levels

Doubts about the High Speed Rail Authority’s ability to fund its estimated $68 billion program dominated last week’s Senate Transportation and Housing Committee hearing (see the background report in this PDF). Committee Chair Senator Mark DeSaulnier (D-Concord) said he was “somewhat skeptical” about the Authority’s 2014 Draft Business Plan and questioned CAHSRA CEO Jeff Morales on the authority’s reliance on uncertain funding sources.

“You couldn’t get a [small business loan] based on what we’re assuming here,” DeSaulnier told Morales, referring to the high cost estimates and funding prospects in the Business Plan.

DeSaulnier asked all the questions at the informational hearing, since he was the only Committee member who showed up for it. However, he came well prepared, so instead of  yet another presentation on how cap-and-trade works, there was a pointed exchange about the funding capabilities of high speed rail.

DeSaulnier warned Morales that the Authority may have a hard time getting the necessary votes in the state legislature to pass the governor’s cap-and-trade expenditure plan, which proposes giving $250 million to high-speed rail from the proceeds of the state’s greenhouse gas emissions law, A.B. 32.

“If the legislature does not approve the governor’s allocation of cap-and-trade funds, what do you foresee would be the impact on the high-speed rail program?” DeSaulnier asked Morales.

Morales responded, “The governor’s proposal allows us to move forward with certainty. If we can accelerate the program, it saves money.”

Mark DeSaulnier (D-Concord), chair of the Senate Committee on Transportation and Housing. Image: CA Senate TV

“If we don’t get it, we can’t do [all that we need to do],” he said.

That “certainty” was called into question by testimony from the Legislative Analyst’s Office, whose report says that there are currently no estimates of how much revenue the cap-and-trade system will bring to the state in the future. It’s also unclear if the cap-and-trade program will continue to bring in funds after 2020, the target set in A.B. 32 for California to lower its greenhouse gas emissions to 1990 levels. If the goal is met, a cap-and-trade system may no longer be legally required unless another bill is passed to extend it.

Even if the cap-and-trade funds are approved, CAHSRA will still have a shortfall of $13 to $21 billion. There is an additional risk that if the project is not completed, any federal funds already spent may have to be repaid by the state.

DeSaulnier also grilled Morales about the Business Plan’s reliance on the private sector to invest in high speed rail. “We’ve been told this over and over again,” he said. “Is there anything specific? Have you had meetings, is there public testimony, do you have letters? Any indication at all, other than the hope that someone will become interested?”

“There is a risk implicit in authorizing $250 million [from cap-and-trade] — funds that I believe could be much better targeted” to reduce GHG emissions, said DeSaulnier. “Where is that other money coming from?”

Failing to get a strong response from Morales, DeSaulnier requested that the Authority produce a “detailed spreadsheet, the sooner the better,” noting that “we have three months to approve the governor’s budget.”

Louis Thompson, chair of the High-Speed Rail Peer Review Group, said it is fair to assume that private investment will come. “There will be private funds available, but not until 2028, because only by then will there be enough experience with the system for private funders to believe the forecasts.” Meanwhile, he said, the funding gap will continue to grow.

DeSaulnier also questioned whether cap-and-trade funds, which must go towards reducing greenhouse gas emissions, are appropriate to spend on high-speed rail under A.B. 32.

Morales said it is, arguing that high-speed rail emits 1/9 the greenhouse gases of airplanes, and experience in other high-speed rail lines has shown that travelers do tend to switch from plane trips to rail once a system is in operation. In Europe, for example, aviation previously had 80 percent of the travel market. “That has flipped in many areas, with rail now achieving an 80 percent market share,” he said, also pointing out the high ridership on the Acela routes on the U.S. east coast. “That kind of mode shift has a major impact on greenhouse gas emission reductions.”

The Legislative Analyst’s Office argued that high-speed rail may not be the best way to maximize ghg reductions, since it won’t contribute to reductions from mode shifts until it after is operational, in 2022, then connecting San Francisco and Los Angeles in 2029.

Morales argued that emissions from the project’s construction before 2020 would be negated using “green” techniques (such as clean fuel vehicles, planting trees, and using recycled materials). But the LAO pointed out that “cap-and-trade revenue will be used to produce and then offset emissions, rather than reduce them,” as A.B. 32 requires.

Meanwhile, the Los Angeles Times’ report on the hearing zeroed in on the statement from Thompson, the CAHSR Peer Review Group chair, that the project would not provide trips between Los Angeles and San Francisco in the 2-hour-40-minute time frame as promised in Prop 1A, the high-speed rail bond fund passed by voters in 2008. “It’s not impossible to design it,” he said, “but it would take more money to make it work because of scheduling issues.”

  • gb52

    We need to get beyond this 2 hour and 40 min window. even at 3 hours, people would take it! And more importantly maybe we dont get 3 hours on day one, but if we have a system that can you from point A to point B and work towards that goal then it is well worth it. Realistically if all we wanted to do was mirror the SF-LA short line flights, we would just go down the I-5 corridor instead. Maybe we run one hourly train from SF-LA in 2:40, and others from SJ or other cities, maybe other trains take a bit longer. [OR here’s a crazy idea… build SF-LA via I-5 and develop the central valley corridor later after the initial operating segment is built… and maybe build it to a 125 or 175mph standard instead of 220mph… There are so many options, but getting this going is the hardest part]

  • DMalcolmCarson

    I think the 2:40 is important because it was promised in the bond measure. There might be a case that the bond funds can’t be spent on a project that doesn’t promise to deliver that.

  • David D.

    The intent is to provide high-speed rail to the state, not just to compete with short-haul flights between SF and LA. People live in the Central Valley, believe it or not, and cities like Fresno and Bakersfield somehow have hundreds of thousands of residents. Building HSR down I-5 is akin to building HSR through the Bay Area but having it stop at a station in Brentwood or Rio Vista. Yes, they’re both in the Bay Area technically, but the stops are effectively useless.

    P.S. If you may recall, the operating plan already calls for express and local trains. The bond measure that was passed by California voters requires a high-speed rail connection between SF and LA, and local trains can provide service to intermediate stops.

  • Gezellig

    Yes, the segment between Merced and Fresno alone serves millions of residents (just the Fresno metropolitan area itself has over 1.1mil), a CSU and a UC. In one of the most underserved areas in the state.

    Fresno is actually the largest city in the entire US not served by an interstate highway–some segments of 99 through the Valley are to this day still not even to basic freeway standards (i.e. they are not controlled-access or separated grade).

    As for rail, despite being a city very much to the southeast of the Bay Area, the trip from Fresno to SF currently requires a lumbering trip through the Valley up way north to the Delta and then west to enter the Bay Area at its northeasternmost point followed by an eventual transfer (via BART or bus) to SF. I can personally verify it takes over 4 hours under the absolute best of circumstances–and driving isn’t usually much better.

    San Joaquín Valley cities have a lot of potential but remain surprisingly isolated due to infrastructure neglect.

  • Sean

    High Speed Rail would be half the time of driving to Fresno from SF.

    Driving time from SF to Fresno: 2h55m
    With current traffic: 3h22m
    Distance from SF to Fresno: 187mi
    Distance from SF to LA through Fresno: 406mi
    Ratio of distances: 187/406
    Total HSR time: 3h
    SF to Fresno: 187mi * 3h / 406mi = 1h23m

    Additionally, a flight from SF to Fresno costs $365 + fees, and takes 1 hr + security checkins + time spent ordering tickets. With a train ticket from SF to LA estimated at around $100, the cost to take the train from SF to Fresno with be a quarter of the cost of flying for about the same amount of time.

  • andrelot

    160 minutes was the threshold approved on the ballot initiative. Unless another ballot passes, planners must stick to what was approved.

  • Kevin M

    I believe that the High speed rail project is a grate asset to the Central Valley it brings world wide attention to this area, It will create job opportunities that we certainly need here in the Valley. I understand that we need to protect our Agriculture as well but with out water you can only do so much that’s a different issue. We need to think outside of the box here and remember that this is a blessing to this area. They could have started this rail project any where in the state but they have decided to pour Billions into the central Valley. Yes this will destroy acres of valuable agricultural farm land but i am sure that they are going to do there best to conserve the Valley’s foot print. This area has been neglected and is finally getting the attention it deserves, for decades this area has fed the entire world and now that we have something good happening that’s when everyone gets upset. We need to think out of the box we need to look out into the future, what is this area going to look like in twenty years? What type of Jobs are there going to be for our Children? This is no Silicon Valley by no means. But we need to start thinking like them and start developing this prized and valuable land.
    Thank you and GO Speed rail!!

  • Jack

    Kill the congestion first, thats what kills jobs (through cost of living), warms the planet, balloons our debts and sucks dead dinosaurs. Where is congested? In our metro areas, not between and all over the goddamn state. We need to simply upgrade/isolate (for safety)/straighten (for speed) urban commuter rail tracks to developed country standards to support multiple levels of express services and stopping patterns, including max speeds over 120 mph. If you have 80 stops on a single line, you can have a service stopping patterns at 80, 30, 10, and 3 of the stops. Focus on the 3 regions: Bay Area-Sac, LA-SD, Fresno-Bakersfield. Once that is done lets chat about HSR, by then current technology will be outdated anyway.

  • TGV Freak

    “It’s not impossible to design it,” he said, “but it would take more money to make it work because of scheduling issues.”

    What “scheduling issues?” I’m looking through the peer review material and it’s showing a 2:31 travel time is possible and that the 2:40 time requirement is totally feasible with existing technology. In fact, you can look at TGV schedules: trains have been running for decades between cities, with the same route mile distance as the CaHSR LA/SF project, in 2 hours and 40 minutes. The LA Times is writing nonsense.

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