The plan to build a bullet train has so many funding uncertainties and so many other details that remain unclear that the state should delay any decision this year to commit billions of dollars to the project, the nonpartisan research branch of the Legislature recommended Tuesday.
The tough advice came on the day before two key legislative committees are to examine the plan and an accompanying request by Gov. Jerry Brown for funding to start a $6-billion construction segment in the Central Valley.
The Legislative Analyst's Office said in a 10-page report that the majority of funding for the $68-billion project "remains highly speculative.... We recommend that the Legislature not approve the Governor's various budget proposals to provide additional funding for the high-speed rail project," the report said.
The office has repeatedly warned that the state is taking on a large and unpredictable risk with the project, a conclusion echoed by the state auditor, a peer review panel and outside watchdog groups. But Brown, the Obama administration and organized labor have remained solid supporters of the project, calling it an investment in the state's future that will someday be an essential part of the transportation system.
Dan Richard, chairman of the California High-Speed Rail Authority, said the recommendations by the analyst "overlook the significant environmental and economic benefits of reducing freeway pollution, improving transportation and creating jobs. This project is important for California and it would be a mistake to delay this project and lose billions of dollars in critical federal funds."
Richard did not address the primary concern raised by the analyst: the lack of a certain funding source for the project. When the rail authority approved its final business plan only last week, it said the majority of future funding would come from federal grants, though Congress has eliminated appropriations for high-speed rail projects in each of the last two years.
The plan said that if federal grants were not available, the state could tap revenues from future auctions of carbon dioxide allowances, also known as cap-and-trade funds. Under the state's aggressive effort to reduce greenhouse gases, it will begin auctioning allowances to businesses later this year and expects to generate billions of dollars annually.
But that program was based on a goal of reducing greenhouse gas emissions in the state to their 2009 levels by 2020, the analyst report said.
The initial operation of the bullet train would not even begin until 2022, the report notes. "As a result, there could be serious legal concerns regarding this potential use of cap-and-trade revenues," the report said.
In addition, construction of the train will emit so much carbon dioxide that it could take 30 years before the system would actually achieve a net reduction. And the report found that many other projects could reduce greenhouse gases more effectively than the bullet train. It said a thorough cost-benefit study would probably reveal more cost-effective options.
Brian Weatherford, the analyst who wrote the report, also noted that the project does not have all of its environmental clearances, which could cause delays if the state attempts to move quickly into construction. He said a number of major changes were enacted just recently, and they have not yet been fully evaluated. The report cited the decision just last week to restore high-speed rail service to Anaheim, which had been dropped.
The analyst noted that the rail authority is making decisions despite having some key administrative vacancies. For example, it currently does not have a chief executive officer. Richard acknowledged that criticism, saying the authority planned to strengthen its leadership.