Much has been made of the potential losers if AB 69, the bill authored by Assemblyman Henry Perea to delay applying cap-and-trade regulations to transportation fuels, fails to become law – but there is also a potential big winner: high-speed-rail. It has been pointed out that a predicted increase of anywhere from 15-cents to 70-cents per gallon of gasoline will hit hard the pocketbooks of low income people and those who have to drive long distances to get to their jobs. However, little has been said that a big chunk of the new revenue captured by the extension of cap-and-trade to transportation fuels ends up with the high-speed-rail project.
Under legislation passed in this year’s budget negotiations, high-speed-rail (HSR) gets 25% of the cap-and-trade funds continuing on into the future. Estimates are that HSR will receive $250 million in this budget year.
Once transportation fuels are added to the equation, the high-speed rail funds could triple over this year’s figure. As Dan Walters noted in his Friday column in the Sacramento Bee, “With motorists buying about 1.2 billion gallons of gas each month, even a 15-cent increase would generate $2 billion-plus a year.”
With HSR’s 25% entitlement of the cap-and-trade funds, that adds about $500 million to the HSR coffers above the initial $250 million, depending of course on market fluctuations, or three times what the rail authority anticipated out of the cap-and-trade funds the first year. That is using the low-end of the possible per gallon increase. If the increase is greater so is the transfer of funds to the bullet train.
As I wrote before, these cap-and-trade funds for high-speed-rail become crucially important for the agency which has yet to prove it has the funding necessary to build the rail because, as the Legislative Analyst noted in a summary the high-speed-rail authority “could seek to leverage this continuous revenue stream to secure a loan from the private sector or the federal government to support the completion of the IOS (Initial Operating System)within the 2022 time frame.”
So with Gov. Jerry Brown’s pet project due to gain big bucks if AB 69 does not become law, what do you think he would do if the measure ever reaches his desk?