As we approach State budget approval time, it is appropriate to review the lack of funding for the HSR project. The March 27th hearing in Senator Mark DeSaulnier’s committee, produced much information. The committee produced a summary report of the hearing which can in full be viewed at here:
From this report we read:
Despite the recognized progress in the Draft 2014 Business Plan, the chair and subsequent witnesses identified a central, overriding risk to the success of high-speed rail: the lack of a specific plan to address a large shortfall in funding for the initial operating segment. Testimony by Mr. Fraysse estimated this shortfall as $21 billion. Mr. Thompson further estimated that, even under the most favorable projections of stable funding from a healthy cap and trade auction revenue program proposed by the governor, this $21 billion shortfall would only be reduced to approximately $15 billion. Moreover, the chair emphasized that these cost estimates do not include cost overruns, particularly likely to occur on high-speed rail projects that can exceed four times the initial estimates. Professor Ibbs emphasized the tendency of megaprojects to incur cost overruns, both on capital expenditures and also on operations and maintenance.
The chair asked how the HSRA plans to address the funding shortfall. Mr. Morales pointed to private financing that can leverage state funding, but Mr. Morales provided no specific plans or proposals. The chair noted the short period of time – about three months – before the legislature must vote on the administrations proposed budget, and urged Mr. Morales to provide the committee with a detailed spreadsheet, the sooner the better, of specific funding plans or proposals to address the shortfall. Similarly, Mr. Thompson remarked on the need for the HSRA to move from possibilities to proposals for funding the high-speed rail project and overall program.
Thus we see that even with the Gov’s most optimistic use of Cap and Trade funds, funding for the IOS is at least $15 billion short. (actually with the new released EIR for the segment of Fresno to Bakersfield, which came after this hearing, there is already a $1 billion estimated cost inflation, so really now they are $16 billion short).
One would think and certainly hope that the Legislature would finally pull back on this project, but recent events wherein Senator Steinberg is using HSR as a bargaining chip in his quest for other projects, shutting off funding for the project is anything but certain.