Understanding Government

Could it be a mirage?

California’s planned 800-mile bullet train system has been dodging flak from administration opponents since President Barack Obama announced his support. While the massive project has generated much skepticism, and many questions have been sloughed off as reflexively political.  But as Lance Williams of CaliforniaWatch reports, state Treasurer Bill Lockyer, a prominent state Democratic leader, has some serious reservations — and we don’t mean tickets bought way in advance.

Basically, Lockyer fears that projections of generous federal financing may be far off the mark and that capital from private investors won’t emerge. Additionally, Lockyer said “I’ve been disappointed by the lack of a disciplined business plan that makes any sense, and I’m not sure the economics work out.” OUCH.

Lockyer’s concerns echo those made by the state’s Legislative Analyst’s Office, state auditor and the University of California at Berkeley’s Institute of Transportation Studies. Lockyer said he was initially concerned that investors would balk at construction because ridership, fare and profit projections are simply too difficult to forecast. That concern was largely overcome because the voter-approved measure called for general obligation bonds, not financial instruments backed by the project alone.

But Lockyer remains concerned because the project could raise the state’s debt load to uncomfortable levels and force choices down the road between the rail project and other needs from flood control to school construction.

Meanwhile, the Treasurer is also questioning the most-bang-for-the-buck decision — helped along by the Federal Railroad Administration — to build the first segment of track in the Central Valley. Building the first few dozens of miles across flat, sparsely populated land with the least amount of organized political resistance will create something tangible, though project opponents are gleefully dubbing it the railroad to nowhere. Launching construction in San Francisco or Los Angeles may make more sense.  Even if it’s never fully completed, the segments could serve commuters, but that strategy comes with its own risk — namely that vexatious litigants could mire the project in delays and enough costly litigation that funding would be exhausted before the first mile is completed.

If the promises of profitability made by 19^th century railroad promoters are any guide, Lockyer and the rest have plenty to be skeptical about. Only by taking the politics out of the equation would it be possible to weigh the project’s efficacy. Is David Gunn looking for work these days?