Analysis: California bullet trains may not leave station

Reuters News
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Posted: Jul 20, 2011 7:33 PM
Analysis: California bullet trains may not leave station

By Jim Christie

SAN FRANCISCO (Reuters) - All's good with California's planned multibillion-dollar high-speed train system, really.

The authority overseeing its launch released on Tuesday a statement heralding bright prospects for California if political leaders go forward with the 800-mile system.

"With its potential for running on 100 percent clean electricity, diverting growing numbers of travelers from crowded freeways and encouraging infill development in cities across California, the state's high-speed rail project will provide Californians an environmentally sustainable option for traveling throughout the state," the statement said.

Rather than conveying confidence, the statement suggests the authority is well aware its planned rail network is at serious risk of being derailed and that to survive it must be cast as a big green positive for a state that fancies itself an environmental leader and where dystopian fears run deep.

But state lawmakers, even those quick to wrap themselves in green mantles, aren't buying what the California High-Speed Rail Authority is selling -- and they may put plans for bullet trains zipping across the most populous U.S. state on hold.

State Senator Alan Lowenthal, who chairs a legislative committee overseeing the planned high-speed rail system, said lawmakers are losing patience with the authority and that a verdict on the rail system's fate could come in a few months.

"We're really waiting for October for when they give us a real financial plan," Lowenthal, a Democrat, said. "What the legislature is most concerned about is the financing, obviously, and the implications of the financing."

"Their plan was predicated on all this money coming," Lowenthal said. "It may be more wish than reality."

SHOW ME THE MONEY

California voters approved in 2008 nearly $10 billion in state debt to help finance the system, which doesn't come close to the rail authority's projected cost for it of more than $40 billion. Others see they system's cost topping $60 billion.

Along with state bond sales, the U.S. government is expected to help finance the system. So too are local governments and companies through public-private partnerships.

Those expectations are looking iffy, especially with Washington focused on tackling its deficit, although the Obama administration signed a memorandum of understanding on Tuesday with the rail authority on common goals and expectations.

Shrugs greeted the tie-up in California's legislature, where there also is confusion about the U.S. government's insistence the system start in the Central Valley.

Laying down tracks in the sparsely populated valley would be easy. But the idea is falling flat with lawmakers from urban centers in coastal northern and southern California.

Critics have dubbed the potential Central Valley line a "train to nowhere" and say it would be a financial sinkhole if built -- a fear many lawmakers also have about the full rail system in the wake of scathing reports.

California's Legislative Analyst's Office hammered the rail authority with a report in May that said "The uncertainty surrounding the eventual cost of the system represents a significant challenge to the Legislature's ability to make sound decisions about appropriation for the project."

The authority suffered another blow this month when researchers at the Institute of Transportation Studies at the University of California, Berkeley issued a study critical of the authority's ridership projections.

"As such, it is not possible to predict whether the proposed high-speed rail system in California will experience healthy profits or severe revenue shortfalls," said Samer Madanat, director of the institute.

With so much doubt and uncertainty surrounding California's high-speed rail effort, lawmakers could stall it.

"Nobody feels at this moment that everything is hunky-dory," Lowenthal said. "We're not going to go forward unless we have real assurances."

(Editing by James Dalgleish)