Monday, April 7, 2008

Building HSR in a Financial Crisis

NOTE: We've moved! Visit us at the California High Speed Rail Blog.

One of the more common attacks on the HSR that I'm witnessing, especially from the right-wing, is the argument that we simply cannot afford to spend all this money on high speed rail at a time when the state is in such dire financial straits. This is nonsense, but popular nonsense - I would argue it is the number one obstacle to victory in November. The latest expression of this view comes from Phil Strickland, who writes a regular column for the Temecula Californian:

Example: After we've railroaded our children's educational future to make up for our government's inability to mind its financial P's and Q's, we will be given the opportunity to go on yet another spending spree ---- a $10 billion bond for building high-speed rail service from San Diego to San Francisco.

Mind you, that's only about a quarter of the estimated $42 billion cost of Stage 1. Another $10 billion is said to be gathering dust in our federal piggy bank just waiting to be shipped to California to get the government ante up to $20 billion.

The balance is to come from a private partnership and/or ---- surprise! ---- a special tax.

It is career-threatening to describe in a family publication just how truly special that bit of pickpocketing would be.


As is typical for a conservative, Strickland lays the blame for our state's unspecific financial crisis at the feet of "government." But the specifics matter. We face a structural revenue shortfall - meaning California routinely takes in much less money than it needs to pay its bills. This is the product not only of 1978's Prop 13, but more immediately of some $12 billion in tax cuts made during flush economic times since 1993. Half of that sum - $6.1 billion - comes from the 1998 cutting of the Vehicle License Fee, a cut which Gray Davis planned to reverse and Arnold Schwarzenegger preserved as his first act in office. That VLF - which would cost the average Californian about $150 a year - would if restored eliminate the proposed education, health care, and state parks cuts.

So why should HSR suffer for the state's unwillingness to balance its books by getting realistic about revenue?

Of course, as I have noted here before, the state has spent bond money on massive infrastructure projects in the middle of tough financial times before. Both the Golden Gate and Bay Bridges were built with public bond money during the depths of the Depression. They were invaluable economic stimulus projects, putting thousands of people to work at a time when the state desperately needed new jobs. Our situation today is not much different.

And since the bond would be repaid from fares once the system opened, it is highly doubtful that the public is going to be on the hook for this. But even if the public were, would that be such a bad thing? HSR is a necessary project, for reasons of the environment, energy, and the economy.

But Strickland betrays himself when he argues that HSR really is not necessary. Like the other conservatives we have profiled - Dan Walters and Jim Battin what really lurks behind their opposition is a complete failure to understand why the project is necessary:

As has been pointed out more than once, high-speed rail north to south is not a necessity.

What we need is regional rail and, given the money being thrown at highways, it could become reality with far less fiscal pain than continuing to pour and repour concrete to no effect.


The November HSR bond provides $950 million for regional rail. But to say that "high-speed rail north to south is not a necessity" is just an ignorant thing to say. As we have discussed repeatedly here, the era of cheap is coming to an end, and with it the ability to easily fly and drive between the two halves of our state. California's economy depends on north-south travel, and high speed rail is the only solution to that transportation need that can actually survive here in the 21st century.

HSR would also itself serve as "regional rail," connecting SD to Temecula, Riverside, and LA; connecting the South Bay to San Francisco; Orange County to LA.

But, even given the tack of creating regional systems that actually benefit the payee and linking them by high speed as needed, the state of our affairs dictates that this hardly is the time to be borrowing $10 billion for darn near anything.


Actually, this is precisely the time to be borrowing $10 billion for high speed rail. Bonds have been used to pay for infrastructure projects for over a hundred years in this state. Their beauty is that they do not need to be immediately repaid in full, but can be repaid by the infrastructure project itself upon completion. The bay bridges and the State Water Project both functioned in exactly this manner.

And the need for HSR is immediate. Not just as economic stimulus, but as a transportation solution. Airlines are beginning to drop like flies - three went bankrupt last week and several more are right behind them. The price of oil is showing no limit in sight, and the onset of peak oil, which will cripple supplies, marches relentlessly closer.

If we allow an unrelated fiscal issue to stop HSR in 2008, it's going to take years to revive the project's momentum. In that time Californians will suffer as their oil-based transportation systems begin to come apart. 2008 may not be the ideal year to propose HSR to voters, but it has to happen sometime. Since it won't break the budget - a budget that can be easily fixed with a few simple revenue solutions - HSR is something we should all support so that California doesn't face an even greater fiscal and economic crisis in the future.

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