Nine years after California voters narrowly gave their blessing to a $9.95 billion bond to launch a $43 billion statewide bullet-train project, a reckoning is needed. The narrative pushed by the California High-Speed Rail Authority and by Gov. Jerry Brown is of the project making steady advances.

The truth is the project not only is seven years behind schedule, it has exploded in cost — to $64 billion — while shrinking in scope. The truth also is the rail authority has failed to honor a key promise made in 2008 to win passage of Proposition 1A — that construction of the first segment wouldn’t start unless the state had enough funding in hand to build a segment that could be self-sustaining. The state is now proceeding with the construction of a first segment going from San Jose to ... an almond orchard in rural Kern County. That is laughable.

Two developments this year show why it is so crucial that the fate of the project become a central issue in the 2018 governor’s race.

The first is the inability of the rail authority to fill its most important position. It’s been nearly a year since rumblings began that rail authority CEO Jeff Morales was leaving, eight months since he confirmed his June exit and seven months since a Los Angeles Times story depicted disarray at the rail authority. In 2012, when then-CEO Roelof Van Ark resigned, Morales was hired just four months later.


While the rail authority’s board met in closed session on Nov. 15 to discuss the CEO opening, there’s no public evidence of progress. Perhaps a choice has already been made. But it’s quite possible that high-powered transportation executives want nothing to do with California’s debacle.

The second development is a new Legislative Analyst’s Office report showing the riskiness of counting heavily on funding from the state’s cap-and-trade program in which pollution rights are auctioned off. An October Los Angeles Times analysis noted the state expected to eventually get $5.2 billion from bonds to be paid off with proceeds from cap-and-trade fees. But the LAO warned that it was “highly uncertain” how much cap-and-trade might generate for the state and that the amounts could vary wildly from year to year. Given this report, a rational investor is unlikely to buy such bonds.

So why would the rail authority propose such a dubious funding mechanism — a bond paid off with an unreliable revenue stream? Because of desperation stemming from its core problem: It has never plausibly explained how the project will be built. After $10 billion in available state and federal funds are gone, the authority has no funds it can count on besides cap-and-trade revenue, so it wants to leverage those dollars. As for attracting outside investors, that can’t happen without the state offering ridership or revenue guarantees — which, as the LAO pointed out way back in 2010, appears illegal.

If the 2018 gubernatorial candidates — Gavin Newsom, Antonio Villaraigosa, John Chiang, Delaine Eastin, John Cox and Travis Allen, so far — think this is salvageable, they need to explain how.


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