A lot of news on funding – or stopping funding – for the bullet train last week.
First the U.S. Congress voted to stop funding the California high-speed rail. The idea that the money will be stopped was brushed aside because the Senate and the president would not go along. At least, the senate won’t agree unless it changes partisan hands in the coming election.
However, there was significance to the vote when four California Democrats (Ami Bera, Julia Brownley, Raul Ruiz, and Scott Peters) in tight congressional elections voted against spending the federal money on the train — a clear indication that they believe a majority of their constituents are concerned about high-speed rail.
Then California’s governor and legislature came up with a source of money on their own. Completing budget negotiations, they agreed to take 25% of the cap-and-trade funds, designated to offset carbon emissions, and dedicate them to the high-speed rail on an ongoing basis.
The 25% percent figure was less than the governor wanted but it will do for the project backers because the revenue stream will be available year after year under the plan.
Still, the question about federal money became more uncertain when after the cap-and-trade agreement was announced, Kevin McCarthy, soon to become the new Majority Leader, stated: “Time and again, the high-speed rail boondoggle has proven to be an unfeasible project that will put undue and damaging pressure on our state budget, ultimately hurting taxpayers. … As long as I am in Congress, I will do whatever I can to ensure that not one dollar of federal funds is directed to this project.”
A powerful voice of opposition.
Yet, the real importance to the governor getting the cap and trade money on an ongoing basis is that the bullet train can borrow against the revenue stream.
The question is will a private sector concern invest in the project – as was part of the original plan. Do investors think the bullet train will make money for them? The continuous government revenue stream is designed to give investors comfort.
Governor Brown often compares the building of the train despite obvious pitfalls with the challenges President Abraham Lincoln faced in beginning the construction of the continental railroad during the dark days of the Civil War.
It is true that government backed bonds help build that railroad. But private enterprise was also involved. Private railroad companies issued their own bonds and they also received public land from the government that they could sell to settlers at a good profit.
Securing private funding for the bullet train would be ease the tug of war over money but not end the many battles high-speed rail construction faces.