LAO sharply critical of high-speed rail program

The Legislature’s nonpartisan fiscal adviser says California’s voter-approved high-speed rail program faces management and money problems, and its strategic and day-to-day operations ought to be shifted to Caltrans.

The Legislative Analyst’s Office questioned the ability of the California High-Speed Rail Authority (HSRA) to obtain funding, noting the uncertainties of federal dollars, and said decision-making authority should be removed from the HSRA board to “ensure that the state’s overall interests, including state fiscal concerns, are fully taken into account as the project is developed.”

The LAO’s critical report also urged lawmakers to dramatically scale back the high-speed program’s request for $185 million for “consultants to perform project management, public outreach, and other work “ and approve instead only “the $7 million in funding requested for state administration of the project by HSRA.”

The LAO said the terms of funding with the federal government should be renegotiated because under the current system there are restrictions on the money. “We believe the state must obtain relief from the current federal restrictions on the project if it is to be developed successfully, and therefore that the Legislature should proceed with the project only if this flexibility is obtained from the federal government.”

Switching the high-speed rail program to a new and separate division of Caltrans makes sense, the LAO said, because the latter is experienced in managing and directing huge transportation projects.

The most contentious issues at the HSRA involve the timing of the construction and the routing of segments of the line, and the construction priority should be established by lawmakers, the LAO recommended. The construction sequence should be “based on criteria determined by the Legislature, such as potential statewide benefits from building a particular segment and whether a selected segment could generate the ridership and revenues to be financially viable on its own.”

The high-speed rail network, approved by voters in 2008 as Proposition 1A, is intended to link the state’s major population centers, including Sacramento, the San Francisco Bay Area, the Central Valley, Los Angeles, the Inland Empire, Orange County, and San Diego.

The LAO noted that the most recent cost estimate for completion of the first phase of the project is roughly $43 billion.

In November 2008, voters approved Proposition 1A, which allows the state to sell $9 billion in general obligation bonds to partially fund the development and construction of the high–speed rail system.

The state also has received roughly $3 billion from the federal government for its construction. The HSRA recently approved plans to begin construction in fall 2012 on a portion of the system costing roughly $5.5 billion through the Central Valley that spans from north of Fresno to north of Bakersfield.

The Legislature will likely be asked to appropriate much of the funding for this initial segment in 2012–13.