High-SPeed Rail:
State Auditor Says Funding Situation Has Become 'Increasingly Risky'

State Auditor Elaine Howle released a 73-page report January 24 concluding that the state high-speed rail project's funding situation has become exceedingly risky. The report is the third very negative independent report released recently on the proposed high-speed rail project.

Among the auditor's concerns:

• High-speed rail has secured only $12.5 billion of the $85.6 billion to $105.1 billion needed to construct the first phase. The plan "provides few details indicating how the Authority expects to secure this money," the auditor said.
• Neither of the High-Speed Rail Authority's cost estimates includes Phase I's operating and maintenance costs, which could total $96.9 billion from 2025 through 2060.
• Ridership projections by the agency assume an $81 ticket price and 29 million to 43 million riders annually, by the completion of Phase I.
• The authority has continued to struggle to provide for an adequate level of oversight for its contractors. As of early August, 21.5 positions were filled to oversee the multibillion-dollar program.
• The authority has failed to ensure that its members and the public are aware of contractors' and subcontractors' potential conflicts of interest.
• Three monthly program reports by the program manager had more than 50 errors or inconsistencies of various types, and the authority was provided misleading information.
• The authority engaged in "inappropriate" contracting practices involving information technology by splitting $3.1 million into 13 contracts with one vendor over 15 months. The State Contracting Manual expressly prohibits splitting contracts to avoid competitive-bidding requirements.
• A tracking system to ensure compliance with spending limitations in Proposition 1A – the voter-approved measure that authorized the high-speed rail project – is not fully in place.

Thomas Umberg, who is retiring as the chair of the authority, responded that the finding that funding has become increasingly risky is "speculative." He also said the state auditor does not understand the role of the program management team.

Mr. Umberg was elected to the Assembly as a Democrat from an Orange County district in 1990, 1992 and 2004. He was defeated by Senator Lou Correa in a 2006 run for state Senate. He then came in third in a race for Orange County supervisor in 2007. He was appointed to the High-Speed Rail Authority by the speaker of the Assembly. (Source: California State Auditor report "High Speed Rail Authority Follow-Up," Report 2011-504, January 2012.)

Other high-speed rail news:

Duplication of Existing Rail Service in the San Joaquin Valley? What has not been widely discussed in connection with spending billions just to construct an abbreviated high-speed rail route in the San Joaquin Valley is the fact that the area already has passenger rail service. Five trains leave Stockton daily between 7 a.m. and 6 p.m., with stops in Modesto, Merced, Madera, Fresno, Hanford, Corcoran, Wasco and Bakersfield. The stations are at convenient locations within the cities served. Travel time between Modesto to Fresno is just under two hours.

The current portion of the high-speed rail project (the so-called "train to nowhere") is in the southern part of the valley. Building this segment will use up much of the existing funding for the project. It is not clear where the line will start and stop, but the general area is Modesto to Fresno and Fresno to Bakersfield.

Will this track lay dormant? If not, will anyone chose to ride this segment instead of AMTRAK that has convenient station locations and extended service? (Sources: AMTRAK website; Washington Post, January 9.)

Tulare County Joins Kings County in Opposing High-Speed Rail. Tulare County supervisors voted unanimously January 10 to oppose the high-speed rail project in its current form. The county joins Kings County and Bakersfield in opposition. Supervisor Pete Vanderpool said, "The process by which this high-speed rail project has been undertaken has really left a bitter taste in everybody's mouth." (Source: Hanford Sentinel, January 12.)

January 27, 2012
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