California’s bullet train is going off the rails, and the overseers are running for cover. The WSJ reports that Roelof van Ark, the chief executive, and Thomas Umberg, the chairman of the High Speed Rail Authority, announced they will step down from their posts as the odds against the project grow longer.
The highly indebted, cash strapped state has commitments of $3.3 billion of federal money in hand against the roughly $100 billion that the train is now estimated to cost (the price will certainly go even higher). Voters authorized almost $10 billion in bonds in a referendum, but that was when the train looked much cheaper and more federal funding was available. Since then the cost estimates more than doubled to $99 billion, ridership estimates have been slashed indicating that the completed system will require unending subsidies, and Congress has stopped voting new funds for high speed rail.
To make matters even worse, the federal funds that are available can only be used for a “spur” out into the Central Valley, rather than the main line from Los Angeles to San Francisco. The “spur” is the least needed, least wanted and least useful part of the system and will never generate significant traffic. There are, in other words, federal funds to help with the part of the system that nobody really wants, and the heavily indebted state must find at least $70 billion to fund the rest.
One recent poll now shows that 53 percent of voters now want the bond sales stopped, and only 33 percent want the state to go ahead. In a new referendum, 59 percent would vote to reverse the decision that authorized the state to assume new debt for the rail system. Many voters have been sobered by the state’s worsening fiscal position and the looming tradeoffs between painful service cuts and higher taxes; others feel that rail backers provided misleading information about the costs of the system and want a revote now that they know something closer to the truth. As the director of the well respected Field polling organization told Reuters explaining these results, “The matter is somewhat different now than it was when it was billed to them.”
In order to get the federal funds for the Bakersfield spur, the legislature has to commit to use the bond authority granted in the referendum, and given the growing public unease about the project, what once looked like a formality threatens to become a serious obstacle. Both the public and the legislature were taken aback when the review board appointed by the (Democratic Party-controlled) legislature to advise lawmakers about whether to issue the project advised against going ahead. Now legislators will have to defy both their constituents and their own chosen experts to press ahead.
The demand to kill the project is growing. The San Jose Mercury says that the cry to drop the project is at “fever pitch.” According to Business Week, at least one major rating agency is losing faith:
Fitch Ratings analysts yesterday wrote that the project “is likely to struggle under the weight of state cuts and a voting public that will continue to feel the effects of the economic downturn.”
(Fitch thinks high speed rail has a long term future, partly due to concerns about carbon emissions, but also notes that these systems will need long term subsidies.) Lawsuits are springing up from NIMBYs and others who do not want the high speed rail — and California courts historically have been very sympathetic to such cases. The managing authority doesn’t just have two vacancies at the top; only about half of its jobs have been filled. Many think that the stench of death now hanging over the project means that top engineers and executives will shun what looks like a ride to nowhere. More ominously still, some key Democratic legislators who have backed the plan in the past are looking for the exists. From the Silicon Valley based Mercury News.com:
Republicans are uniting in opposition, and three key Democratic state senators — Joe Simitian, of Palo Alto, chairman of the budget subcommittee overseeing transportation; Alan Lowenthal, of Long Beach, chairman of the Select Committee on High-Speed Rail; and Mark DeSaulnier, of Concord, chairman of the transportation committee — have started applying the brakes.The three have supported high-speed rail and voted to put it before the electorate in 2008. But in separate interviews last week, they indicated that the current plan could not win their vote.They voiced concerns about plans to start in the Central Valley with a 130-mile link that will not attract enough riders and could become California’s version of the Alaskan “Bridge to Nowhere.”“This is an albatross potentially,” Lowenthal said.
Yet none of this deters the system’s chief backer. Governor Brown is doubling down on the project even as longtime supporters jump ship. According to the LA Times, powerful interests are pushing him forward.
Brown is under pressure from unions, engineering firms, big-city mayors and the Obama administration to stabilize and press ahead on a nearly $100-billion project that would be the biggest in California’s lofty history of extraordinary public works gambles. With so much at stake, Brown is putting his own people in charge, although their ability to quickly reverse the damage of a wave of negative outside reviews of the project remains unclear.
Backers remain. The unions, of course, can see only good things in a twenty-plus year construction project that keeps going over budget. Parsons Brinkerhoff is a New York based engineering firm which helped bankroll the referendum campaign that persuaded voters (briefly, until they got some honest numbers to work with) to back the project. As a lead contractor, it is still on the case, making plans and, one supposes, charging fees. Presumably it is looking for a generous return on the political money it has spent in the Golden State. Investment banks who expect to make the usual fees from floating the bonds are also chomping at the bit.
Governor Brown sees the project as a return to California’s glory days. When his father was governor and even farther back in the past, Californians dared to dream and to build. Whether it was the Golden Gate Bridge, massive water and irrigation projects, or the Los Angeles freeway system, California was a state that got the big jobs done. Brown wants the blue model back and he’s assembled the old alliance to make it happen: the unions, the mayors, the investment banks and the construction companies. He wants the dream back and he wants to do and to build — and it’s an instinct that Via Meadia admires.
From the time of the Erie Canal to the land grant college program to President Eisenhower’s decision to build the interstate highway system to the Apollo moon landing, bold initiatives by state and national leaders have helped build the infrastructure and the institutions that promoted economic growth. Governor Brown is right to see that a state like California needs to dream and to build.
So far, so good. But good isn’t enough when you need to be great. Governor Brown isn’t like the visionaries who persuaded New Yorkers to build the Erie Canal after the War of 1812. (By linking the Great Lakes to the Hudson River by water, the Canal made New York City the prime port for all the output of the newly settled Middle West.) He is more like somebody who wants to keep digging canals even as railroads appear. He is clinging to the old rather than dreaming of the new.
Brown’s vision is backward looking and preservationist rather than futuristic. The high speed rail project aims to preserve Blue California rather than to lay the foundations of a 21st century, cutting-edge state. The interests behind it are protecting existing turf rather than pioneering something new. The unions and the big city mayors want to preserve or even revive the political economy and urban geography of the mid 20th century. They want a California of strong urban cores rather than exurban sprawl, and they want to return to a large unionized labor force guaranteed lifetime employment, and they want the state government to supply long term funding to make it all work. They want new canals in the age of rail.
But the stuff that used to work doesn’t work anymore. Between the unions, the legal system and the various regulations and requirements that have built up over the years, the big projects cost much more than they used to. Because California’s economy is so heavily bogged down by excessive regulation, litigiousness and a culture of benefits and entitlements, growth is too sluggish to support huge new expenditures. And high speed rail is of all forms of mass transit the one most poorly suited to the decentralized, exurban, car-based society Californians continue to build.
The blue social model can’t produce great results anymore. If you want to think big, you can no longer think blue. This is Governor Brown’s problem in a nutshell. The political coalition that backs him cannot produce coherent and workable plans anymore. The greens, the unions, the planning bureaucrats, the mayors and so forth each bring so many requirements to the table that the only designs that make them all happy are so cumbersome and expensive that they cannot be built. The political imagination of the blue coalition can no longer visualize the future: it can only project its nostalgia ahead.
California, like the country as a whole, is desperate for new ideas and a new vision. Governor Brown is completely correct that the state cannot passively drift into the new century but neither he nor the coalition behind him has any idea how to get California moving again.