DENHAM: Accountability, oversight wins trumps need for rail

May 11, 2013 

Congress California

In this 2012 photograph provided by the candidate's campaign, Rep. Jeff Denham, R-Calif., poses for a photo. Denham is being challenged for reelection to California's 10th Congressional seat by Democratic challenger Jose Hernanadez. (AP Photo/File)

ANONYMOUS — AP

There are a lot of things we would like in California, and a shiny new train is one of them.

In 2008, I cast the deciding vote to place Proposition 1A on the ballot based on a plan for California high-speed rail that would cost taxpayers roughly $22 billion.

Proposition 1A was sold to voters as half of that money coming from bonds the state would issue and the other half from federal tax dollars, with the private sector kicking in the remaining $11 billion for the project with no ongoing taxpayer subsidy.

Over the next four years, this project spun drastically out of control, nearly tripling in cost with no viable business plan or private sector investment to pay for the project's inflating price tag.

Additionally, the $68 billion for Phase 1 of the high-speed rail project does not even include 280 miles for the Los Angeles-to-San Diego and Merced-to-Sacramento segments. At this rate, according to cost estimates, Phase 2 of the project could add $37 billion and bring the full project's price tag to an outrageous $104 billion.

Currently the project's business plan asks for an additional $38 billion from federal taxpayers.

Let's review the facts:

Washington is more than $17 trillion in debt and can't pay for existing programs.

California has billions in unfunded liabilities. As legislators, we hold the burden of answering the most basic question about the state's high-speed rail plans: How will California pay for it? That's a question to which the California High-Speed Rail Authority has failed to provide a credible answer.

The project will be one of most expensive transportation projects undertaken in the United States.

Several different business plans have been presented to the public and not one has shown interest from private-sector investors, which was a central argument in favor of Proposition 1A.

The rail authority continues to stumble through finding a path that doesn't disrupt valuable agriculture production or infringe upon landowners' rights while keeping costs from increasing further. Moreover, the plan relies on ridership numbers that are speculative and depend on population growth that many in California believe may not occur. Without these riders, there is no way the project will be able to operate without a subsidy, a legal requirement of Proposition 1A, and certainly no way for a private company to recoup its $11 billion.

Finally, none of these costs estimates include the fact that the authority intends to expand the project to San Diego and Sacramento, no doubt at additional cost to taxpayers.

Experts including the California state auditor and former rail authority Chairman Quentin Kopp have routinely issued warnings about the financial state of the project, saying that the project has become "increasingly risky."

Most recently, a report issued by the Government Accountability Office stated that "obtaining sustained congressional and public support for appropriating additional funds is one of the biggest challenges to completing this project."

Even President Barack Obama, one of the project's biggest supporters, includes zero dollars for the project in his budget after 2019. If the authority can't rely on federal taxpayers, or the president, to guarantee an endless stream of cash, then they should go back to California voters and ask for more money.

The General Accounting Office's April report found that "In addition to the challenges of obtaining public-sector funding, the authority may face challenges in attracting private-sector funding if its operating cost estimate and ridership forecasts prove to be optimistic."

When this plan was first sold to Californians, we were told the private sector would invest in it because this project would be profitable. But here we are, four years later, with no investor to speak of to account for the more than $11 billion needed in private investment. The rail authority can no longer ignore the facts that the project is lacking oversight and a disciplined plan to attract the private sector investment it needs.

Voters deserve to know the facts, and I intend to provide them. As chairman of the House Transportation Subcommittee on Railroads, I want to create jobs and expand upon our transportation portfolio, but we must be responsible for how we are spending taxpayer dollars. In this capacity, I will continue to hold the rail authority accountable to the voters and ensure no additional federal tax dollars go to this project until I am presented with a viable business plan that is in line with the promise made to voters.

To this end, my subcommittee will travel to Madera on May 28 for a field hearing to hear from the rail authority and other interested parties to address ongoing concerns regarding the viability of the proposed California project and receive an update on its status.

Denham, R-Turlock, represents the 10th Congressional District, which includes all of Stanislaus and part of San Joaquin counties. In 2008, he was a state senator whose district included all of Merced County and part of Stanislaus.


EDITOR'S NOTE

California’s high-speed rail project has been discussed since the early 1990s and evolved into a bond proposal that voters approved in all 2008. Project supporters now say that by 2029, a high-speed rail system will run from San Francisco to the Los Angeles basin. There has been controversy every step of the way and it continues even as the authority is buying land and hopes to have construction begin this summer. We have run numerous commentaries, pro and con, about high-speed rail and offer two more today. The Modesto Bee’s official position, in a nutshell: High-speed rail is an interesting idea, but this isn’t the right time or the right plan.

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