California Leaders Call for HSR Funding to Create Jobs

This is a welcome letter:

In an effort to deal with California's spiraling unemployment rate, Gov. Schwarzenegger and the state's two senators, Barbara Boxer and Dianne Feinstein, sent a letter Monday to President Obama urging funding of the state's high-speed rail project and improvements in its intercity rail service.

They urged Obama to fund the projects through federal stimulus funds, the $787 billion American Recovery and Reinvestment Act.

"With unemployment in California reaching 12.5 percent – the highest unemployment rate in nearly 70 years – the impact of providing 130,000 construction-related jobs statewide cannot be understated," the letter said.

As talk ramps up of a "second stimulus" in the form of a job creation bill, and as the jobs crisis continues to worsen, high speed rail funding becomes all that much more important to California and the nation's economic recovery. California simply cannot have recovery without jobs in sustainable infrastructure, and we aren't going to have a long-lasting recovery if we don't start moving away from oil dependence. And the nation as a whole cannot have meaningful economic recovery if California, a major part of the national economy, is lagging behind and mired in high unemployment.

Given that over $50 billion in HSR funding applications were submitted to the FRA for only $8 billion in available funds - all of it for projects meeting the federal guidelines of being "shovel ready" by September 2012 - the Obama Administration and the Congress ought to strongly consider fully funding every HSR application as part of its job creation efforts. There's no reason states should be fighting against each other for that money, since many of the states applying have significant job creation needs of their own.

UPDATE: The complete letter:

November 23, 2009

The President
The White House
Washington, DC 20500

Dear Mr. President,

We write in strong support of California’s applications for high-speed and intercity rail funding through the American Recovery and Reinvestment Act (ARRA). California has led the nation in its commitment to creating a statewide high-speed rail system.

Our state has been a leader and innovator in addressing environmental and transportation challenges on a national level. Last November, California voters approved nearly $9 billion in state bonds for high-speed rail construction, far outpacing other states’ efforts to secure local and state funding for these projects. California has completed design and planning for the nearly 800-mile system and made significant progress on the environmental review, making our state uniquely qualified to employ federal funding quickly.

California’s high-speed rail applications have broad support across the state, with backing from leading business, environmental and labor leaders. The California Chamber of Commerce, the Labor Federation of California and the Sierra Club have all endorsed California’s applications for funding. The success of California’s high-speed rail system is enormously important to our state. High-speed rail will help ease congestion and improve air quality. With unemployment in California reaching 12.5 percent – the highest unemployment rate in nearly 70 years – the impact of providing 130,000 construction-related jobs statewide cannot be understated.

We appreciate your attention to the needs of California and thank you for your commitment to this important issue. We stand ready to work with your administration in the coming years to ensure that high-speed rail has the resources necessary to continue to be a national priority.

Sincerely,

Barbara Boxer
Dianne Feinstein
Arnold Schwarzenegger

Good framing, good letter. Kudos to all three for writing this.

Don't Let Arnold Schwarzenegger Divide and Conquer

One of the consistent points this blog has made since we launched in March 2008 is that HSR is part of an overall effort to revive passenger rail in California. HSR isn't a substitute for other forms of local rail - in some places, like the Peninsula and Southern California, it enhances local rail by enabling more and faster service on commuter lines such as Caltrain and Metrolink. Prop 1A recognized the need for a linked system by offering about $1 billion for non-HSR passenger rail in the state. And this site cheered on ballot initiatives for other local passenger rail projects, including Measure R in LA County and the authorization of funds for SMART in Sonoma-Marin.

Unfortunately, these are challenging times for sustainable mass transit advocates. The recession has been accompanied by a revival of Hooverism at both the state and federal levels. In 2009 California eliminated state spending on local mass transit, and has put on hold the issuance of bonds from Prop 1B in 2006, which includes money to improve existing passenger rail systems. The federal government has been a bit more friendly to transit, but the authorization of a new transportation bill that would provide stable funding for passenger rail of all kinds has been stalled all year and may not be approved until sometime in 2010 (if we're lucky).

This is an environment where mass transit advocates, especially passenger rail advocates, need to stick together and advocate for more funding for rail as a whole, with specific funding to local, regional, intercity, and HSR projects as appropriate. We need to advocate for a holistic plan, instead of doing what the Hooverites want us to do, which is fight over the scraps.

That coalitional approach is not made any easier by the actions of Governor Arnold Schwarzenegger. The LA Times got around to reporting the controversy over the state's singular focus on HSR funds in its federal stimulus application, to the exclusion of other passenger rail:

Gov. Arnold Schwarzenegger quietly spiked an effort last month to win $1.1 billion in federal high-speed rail stimulus funds for 29 projects to improve the safety, speed and capacity of heavily traveled commuter corridors through Southern California.

Instead, he ordered state officials to seek money for only one project -- the proposed bullet train between San Francisco and San Diego.

The governor's decision was intended to increase the state's chances of receiving high-speed rail money, officials said. California is competing with more than 40 applicants from 23 other states.

Richard Tolmach, one of the state's main HSR deniers, has been peddling this story for weeks and apparently finally got someone to bite. He wants to frame this as further evidence that HSR is bad, should be opposed, and is a threat to other passenger rail in the state. And yet, there is logic in what Arnold did. With over $50 billion in stimulus applications submitted this month, and only $8 billion to go around, California was going to have to pick and choose among a number of worthy proposals. There was no way around it. And even if you disagree with the outcome, it cannot be denied that it does make sense for the state to have focused on the high-profile HSR project, which after all has received glowing praise from the very federal officials who are tasked with distributing these funds.

Even if all $1.1 billion in non-HSR funds were applied for, it is extremely unlikely that much of it would have ever been awarded by the feds. Federal officials have sold this as a high speed rail stimulus, so there would have been risk if they awarded that money to non-HSR projects like those along the Pacific Surfliner corridor.

There is also a legitimate argument to be made that even with the above in mind, since HSR won't be complete for another decade, there was benefit to applying to provide more immediate improvements to existing passenger rail systems. I get that, and appreciate that thinking. There's no doubt that California's existing intercity rail corridors need more investment.

But the decision to not pursue that investment in this particular round of funding is by no means a death knell for those efforts. The article explains some other options for providing funding for Metrolink Positive Train Control, one of the projects Arnold chose not to include in the stimulus application:

However, Richard Katz, a former assemblyman who sits on the Metrolink, high-speed rail and Metropolitan Transportation Authority boards, was more optimistic that conventional rail projects, such as positive train control, would not be jeopardized by the governor's concentration on high-speed rail.

For example, Katz said, Metrolink, which serves six counties, needs roughly $200 million to $210 million to install positive train control by 2012.

About $70 million has been requested from other federal sources, and efforts are underway to try to redirect $97 million from state transportation bonds that are earmarked to rebuild the Colton railroad crossing.

If positive train control cannot get enough federal or state funding, Katz said he believes the MTA would lend Metrolink the money.

As to the more ambitious - and necessary - projects to include more grade separations and new tracks along the Surfliner corridor, their future funding sources are less obvious. But that should not mean backers ought to turn their fire on the CHSRA, which did what any other agency would do and argue they should get funded first.

This is a crucial moment for passenger rail advocates in California. Either we can let Arnold Schwarzenegger, who has never been a friend to rail, divide us and weaken passenger rail - or we can unite and push hard for renewed funding for these other worthy projects. Here are four ways we can get started:

1. One obvious place to begin is the federal transportation bill. There is no reason it should remain stalled in Congress. If Democrats lose Senate seats in 2010, as is projected right now, then it is not possible to push through a new transportation bill that would properly fund passenger rail. All hands will need to be on deck for that one.



2. Advocates should also join the push for $4 billion in HSR funding in the FY 2010 budget. This would create a precedent for ongoing HSR funding at that level, creating less pressure on California government to try and get their HSR money from other rail projects.



3. Passenger rail activists also need to get active in the push for a second federal stimulus. Although Obama Administration officials have dismissed such talk, it is only continuing to grow as unemployment continues to rise. Infrastructure is always a popular target of stimulus spending, and given how many states submitted passenger rail stimulus applications, it's clear there is an appetite out there for more money than what the feds have offered so far.



4. We also need to fight back against the steady defunding of mass transit, including passenger rail, at the state level. All forms of passenger rail - streetcars, light rail, commuter rail, Amtrak California, and high speed rail - are necessary to meet California's 21st century challenges. Given our state's financial crisis, it may seem like a tall order to find new sources of funding for these projects. But it is imperative that we do so.

Folks like Richard Tolmach are happy to exploit the lack of proper funding to attack high speed rail and ensure that passenger rail in California remains a moderately successful but niche element of our state's transportation network. And given that HSR is necessary to Caltrain's survival, Tolmach's approach would jeopardize even the existing services we have.

We should not play his game. Nor should we play Arnold Schwarzenegger's game. Passenger rail advocates need to avoid the temptation to fall out over modal preferences, and instead unite to grow the pie, rather than fight over who gets to eat the ever-smaller slices.

Video From LA Union Station HSR Rally

Thanks to @TedNguyen and OCTA for this short video of the HSR stimulus funding rally yesterday at LA Union Station. Included are snippets of remarks by OCTA CEO Will Kempton, CHSRA Board Chairman Curt Pringle, and Governor Arnold Schwarzenegger:

CA Submits Second Federal HSR Stimulus Application - Up to $10 Billion Could Be Headed Our Way

Across California the California High Speed Rail Authority is hosting rallies in support of the state's application for federal rail stimulus funds. You can follow along at the Authority's official Twitter feed, @cahsra.

The official application was unveiled today in a press conference with Governor Arnold Schwarzenegger, Speaker Karen Bass, and a whole host of other dignitaries, including most of the CHSRA board. The total amount of the application is $4.7 billion, which closely tracks the $4.5 billion the board approved on September 23. When combined with state and local matching funds, including funds from Prop 1A that would be eligible to be spent with the 50% match required under AB 3034, the total funding this could generate for the HSR project is $10 billion, more than enough to get actual construction work underway.

Some of the statements from the LA event:

At a news conference at Union Station, Gov. Arnold Schwarzenegger said he is a high-speed rail "fanatic" and asserted the project would provide a $10 billion economic boost to the state.

"I think it is disgraceful for America to be so far behind when it comes to infrastructure," Schwarzenegger said. "In Europe and Asian countries, they're traveling now up to 300 miles (per hour on bullet trains) while we're traveling on our trains at the same speed as 100 years ago. That is inexcusable. America must catch up."

Schwarzenegger said California deserved to get more than half of the $8 billion in federal stimulus money set aside for high-speed rail development because it is further along in planning than other states and is ready to break ground in 2011, a year before the federal deadline for getting the money.

Also, Schwarzenegger said "those stimulus dollars will go further in California than in any other state because California has pledged to match -- dollar for dollar -- all money received" from the federal government....

In a statement, Los Angeles Mayor Antonio Villaraigosa touted the project's environmental benefits.

"A high-speed rail system that runs faster on one-third the energy of air travel, and one-fifth the energy of car travel, will dramatically reduce CO2 emissions and the time people spend stuck in traffic on our state's freeways," he said.

Among the backers of the application is Senator Barbara Boxer, who put out this statement:

Senator Boxer said, “I am pleased to support the request that the California High-Speed Rail Authority is making today. California voters have already committed nearly $10 billion in state bonds for this effort. This investment of federal high-speed rail funds could help us create more than 130,000 jobs in California, reduce air pollution and congestion on our roads, and accelerate our push for a cleaner and more efficient transportation system.”

Of course, CHSRA's approved application wasn't the final version. The applications for federal stimulus come from the governor's office. And that is where things are starting to get interesting. No small amount of money was shifted around between the September 23 proposal and today's proposal. From the September 23 application:

$1.28 billion for San Jose to San Francisco, including station improvements, grade-separations, electrification and safety state-of-the-art "positive train control" in an upgraded, shared alignment with Caltrain.

$466 million for Fresno to Merced, including right-of-way acquisition, grade-separations, utility relocation, environmental mitigation, earthwork, guideway structures and track.

$819.5 million for Bakersfield to Fresno, including right-of-way acquisition, grade-separations,
utility relocation, environmental mitigation, earthwork, guideway structures, track relocation and new track.

$2 billion for Los Angeles to Anaheim, including high-speed train facilities at Los Angeles Union Station (LAUS), Norwalk Station, and the Anaheim Regional Transportation Intermodal Center (ARTIC); right-of-way acquisition, grade-separations, utility relocation, environmental mitigation, earthwork, guideway structures, tunneling, and track work.

And from the October 2 application:

$2.18 billion for Los Angeles to Anaheim, including high-speed train facilities at Los Angeles Union Station, Norwalk Station and the Anaheim Regional Transportation Intermodal Center; right-of-way acquisition, grade-separations, utility relocation, environmental mitigation, earthwork, guideway structures, tunneling, and track work. Total jobs created: 53,700.

$980 million for San Francisco to San Jose, including station improvements, grade separations, electrification and safety state-of-the-art "positive train control" in an upgraded, shared alignment with Caltrain. Total jobs created: 34,200.

$466 million for Merced to Fresno, including right-of-way acquisition, grade-separations, utility relocation, environmental mitigation, earthwork, guideway structures and track. Total jobs created: 10,500.

$819.5 million for Fresno to Bakersfield, including right-of-way acquisition, grade-separations, utility relocation, environmental mitigation, earthwork, guideway structures, track relocation and new track. Total jobs created: 16,500.

$276.5 million for preliminary engineering and environmental work in all system segments including Los Angeles to San Diego via the Inland Empire, Los Angeles to Palmdale and Bakersfield, Sacramento to Merced and the Altamont Rail Corridor. Total jobs created: 12,000.

The differences appear to be:

-$300 million on the Peninsula

+$180 million for LA-Anaheim

We still don't know yet what the details of the shift have been, as the detailed application information has yet to be provided to the public.

Apparently the funding request for the Transbay Terminal train box is still in the plan, but due to a lack of political lobbying leadership on the Peninsula, other voices on behalf of other parts of the state were more successful in retaining funding.

There are also rumors flying around about money for Caltrans' Division of Rail, which operates the popular and important Amtrak California routes. Some reports I've heard claim that $300 million was moved out of HSR and into Caltrans rail projects. Richard Tolmach, a die-hard HSR denier, put out a press release quoted in the comments to yesterday's post, where he claims that CHSRA staff "successfully convinced the Governor's office on the afternoon of Thursday October 1 to block about $3 billion of conventional rail proposals under development by Caltrans."

The problem here is that under Track 2 of ARRA, most of the money is intended to serve high speed rail projects. It is likely that Amtrak California has gotten some funding, as they should. But the notion that $3 billion would ever have been dedicated by the state to funding non-HSR intercity rail is ridiculous, and it is simply not credible to believe that the USDOT would have ever been willing to fund $3 billion in non-HSR intercity rail even if the state of California asked it to do so. Tolmach is spinning - and that's being generous - when he says, without producing any evidence, that the CHSRA tried to undermine other passenger rail. We have no reason to believe any such thing occurred, in no small part because we have no reason to believe any other passenger rail was likely to get a whole lot of money.

And despite Tolmach's claims, the most persistent stories I've heard on this all day is that Caltrans rail programs actually got MORE money than they were expecting.

While we try to sort out what, if anything, was left on the cutting room floor, we should not forget the movie itself. California High Speed Rail is poised to get around $4 billion in federal funding, which will enable the project to spend potentially $9 or $10 billion by 2012 to get underway.

That is a tremendous accomplishment. Now it's up to the US Department of Transportation to deliver the goods. And based on what the White House has said, California can expect to receive most or even all of the money requested in this application.

Despite what the deniers, NIMBYs, and naysayers may argue, this train is leaving the station. California high speed rail is going to happen.

Taiwan HSR: Harbinger of Doom or Flawed Comparison?

We haven't yet seen this story appear as a talking point that widely in California or even among our HSR deniers in the comments, but we will soon. The Taiwanese government is going to have to bail out the private operator of the Taiwan HSR project. They have missed ridership projections and as a result the private consortium that designed, built, and is operating the system cannot meet its debt obligations.

Already our old friend Wendell Cox is is using the Taiwan HSR bailout to claim that California HSR will suffer the same fate. Cox, whose work is partly funded by bus and highway companies, is going to continue pushing this simplistic argument until the news media picks it up, which should happen any day now.

The problem is that the comparison is almost totally flawed and without merit. What happened to Taiwan HSR is unlikely to happen here. The true lesson of Taiwan HSR is that HSR runs into financial problems when you ask the private sector to fund most of its construction and operations, and therefore leave you unable to weather the 5-year long ramp-up period in ridership.

Yonah Freemark, who has established himself as one of the premier transportation writers in the country, gives us some further insight on the problem over at the Transport Politic:

The Taiwanese system, which cost more than $15 billion, was the first in the world built entirely with private funds — 80% of which were secured through bank loans at high interest rates. Though the line’s fare revenues, lower than projected, make up for operations, maintenance, and even most interest payments on the initial capital costs, elevated depreciation charges put the railroad into its misery. The recession, which decreased interest in travel, put the final stake in the company’s heart.

This financing system left Taiwan HSR facing massive up-front loan repayment costs. And that in turn left them stuck when the recession hit. To those who would say that if HSR needs a bailout to weather economic downturns then it's not worth doing, I would ask their opinion on the $15 billion airline bailout the US Congress enacted in the wake of September 11 and the 2001 recession.

Freemark points out that California HSR is funded through a fundamentally different process, minimizing the need to devote ridership revenue to paying banks and private investors:

Of course, California’s plans are different. While both the Taiwanese and British projects relied on bank loans that accounted for 80% of construction costs, the U.S. project will only be dependent on a 20% private investment....

The two experiences cited above indicate that a fully private project is very risky, and that makes sense; making up a huge initial capital cost like that of a rail line through loan back payments requires enormous revenues and limited operating needs. California’s estimates demonstrate annual fare revenues ($2.3-2.5 billion) that are about double operations costs ($1.1-1.3 billion); Taiwan’s system has similar financials, but paying back the bank has bankrupted the company.

Is a 20% private share acceptable? A $7 billion private investment would require roughly $560 million a year in payments at 5% interest over a short 20 year-period (totaling about $4.2 billion in interest). California’s system would provide a generous profit of $500 million for the operating company if revenues and operating costs are as expected; in bad years, or if ridership estimates are too high, the system could sustain revenues 20% lower than projected without going into the red. This seems reasonable. California’s interest in a limited private involvement, then, avoids the risk inherent in a fully private project like that in Taiwan.

In other words, because California is looking at only a 20% private investment share, we will avoid the crippling problems Taiwan HSR has experienced. This is especially important when we recall DoDo's Puente AVE article, which is required reading on the topic of HSR ridership and financing.

DoDo's point was that there is a five year curve for HSR routes - it takes about 5 years for ridership to achieve its full potential. What that means is in those first 5 years, HSR operators have to be careful to not panic and raise fares to cover costs at the expense of driving away riders. He looked at France, which under the direction of Socialist president François Mitterand maintained its fare structure, enticed people to the trains, and by the mid-1980s had runaway success with the TGV. And he took a look at Taiwan HSR, showing that bad decisions, made under political influence, led to cost overruns and a service whose quality was compromised from the start:

For the THSR, cost overruns were largely the consequence of a switch to Japanese suppliers after planning based on European high-speed technology was already well-advanced. The decision was widely rumoured to have been political (and led to an epic political, media and court battle ending in damage payments to Eurotrain), and the overseeing company THSRC did not go with the actual Japanese offer, but stuck to its guns on specifications. Thus f.e. a German maker had to be contracted to supply fixed-track high-speed switches (no need for those on Shinkansen lines with their strictly single-direction tracks).

Likewise, both lines were opened half-finished: one-third of the Seoul-Busan KTX line was delayed (until 2011, now thanks to those sleepers maybe even further), THSRC started with a reduced schedule, both started with some stations unfinished (for the THSR, including both downtown terminuses!) or without urban transit connections. Also, both lines started with hefty ticket prices that had to be reduced later.

And yet Taiwan HSR had started to overcome these problems:

The failure to meet expectations after the start was widely discussed as a national scandal in both countries. However, you can also see on the graphs that there was steady growth thereafter. And that at the expense of other modes of transport.

The modal shift was particularly spectacular in Taiwan. In just 20 months, all but one single daily flight between the cities served by THSRC was eliminated (last December, THSRC's share of the air/rail market was 99.95%...), leaving the highway as only competition. Total domestic air passenger transport fell almost by half(!). The steady uninterrupted annual growth of highway traffic was not only stopped but turned back.

In short, Taiwan HSR is a successful project in terms of ridership and achieving many of its goals of shifting transportation modes. The problem with Taiwan HSR is largely with the method used to finance it - heavy private sector borrowing. The 80% private funding method left Taiwan HSR financially vulnerable to poor construction decisions, cost overruns, and the global recession.

California not only can avoid all this - we are in a very good position to avoid it. As Bob Doty repeatedly emphasizes, the way you deliver an on-time and on-budget project is by getting all the planning and engineering details agreed to at the outset, and then rigorously sticking to that plan, resisting pressure to meddle and change the details midway through construction.

Freemark ended his article lamenting the political push for private involvement in infrastructure projects. That has been a particular hobby horse of mine ever since I started this blog. With regard to California HSR, the push for private involvement comes from Governor Arnold Schwarzenegger, who along with his investment banker advisor (and CHSRA board member) David Crane are deeply enamored with public-private partnerships. They put the CHSRA on a starvation budget in 2007 in order to break resistance to greater private involvement in funding the train's operations. And it stems from their desire to use government to enrich the wealthy at the expense of everyone else.

California is going to elect a new governor next year. We will need to pay close attention to how the candidates talk about HSR, public-private partnerships, and what their plans are for HSR. The next governor could serve until 2018 if elected to two terms, making it particularly important for us to get that choice right.

When I wrote about DoDo's article in March I laid out my thoughts on how to avoid a Taiwan-style meltdown in CA. They are as applicable today as they were then, so I'm going to repost them here:

First, we cannot expect ridership goals to be met immediately. DoDo's analysis shows they will be met but not until around five years have passed. This will produce hackles from the usual HSR deniers (who will still be with us in ten years' time) - the Wendell Coxes and Martin Engels who will say that "omg you haven't met ridership - the HSR train is a boondoggle! kill all remaining extension plans!" We must resist them patiently but firmly and let the project steadily attract riders.

Second, we need to oversee the financing process to ensure that the project's finances are not going to be imperiled by expectations of high ridership out the gate. This is a long-term project; its financing should be long-term as well. This is one reason I am skeptical of some of the more broad public-private proposals for how to fund the train. Government has the luxury of waiting for the system to mature and work properly; the private sector instead demands immediate profits at the expense of long-term planning (and we see how well THAT worked out).

Third, construction delays. I have always said that we are likely to see both delays and cost overruns, but that we can and should work to ensure the are minimal. Sometimes the two are linked - Peninsula NIMBYs are inherently arguing that it is OK to both make the HSR project more delayed and more expensive to suit their demands. We may well see similar problems on other sections of the route. We cannot let these delays compromise the overall system. The route has always been intended to be opened in stages, as was BART, but the finances, operation, and political support for the project cannot be made dependent on that staging. Further, the stages should be opened for practical reasons, and not in an effort to cut corners or costs. Again the long-term vision for the system must be kept in mind at all times.

Fourth, fares. Whether the $55 fare from SF-LA is possible even in 2018 dollars is an open question. But the system cannot raise ticket prices to try and cover financial shortfalls or cost overruns if they are to build a long-term ridership base.

It is entirely possible that ten years from now the short-sighted short-term political and economic worldview that helped create the present economic mess will have been replaced with a renewed emphasis on long-term planning and infrastructure, and that Californians will be willing to wait a few years for HSR ridership to rise to expectations.

But I wouldn't bet on it. Instead we are going to have to continue to fight to ensure that HSR is built the right way, the proper way, without compromising for people who put all sorts of petty and small concerns above the HSR project itself.

CHSRA's New Pitchmen?

UPDATE 2: Shane Goldmacher explains what went down:

Several rail board members demanded more information about the selection process and the winning bid, calling the staff panel’s report inadequate and saying they might want to hear presentations from the runners-up.

“The staff report and recommendation here wouldn’t be adequate in kindergarten,” said Richard Katz, a board member.

Jeffery Barker, a member of the staff panel and deputy director at the California High Speed Rail Authority, said Mercury’s bid scored 91, the runner-up 90.

Commissioner Lynn Schenk said that was “awfully close – within the margin of error of subjectivity.” And she raised questions about the “formal and informal, professional and other relationship with members of the selection team” and Mercury.

A vote was postponed until the rail board’s October meeting.

I'm all for more time to examine the advantages and disadvantages of the two bids. My guess is this will eventually be rebid with a different oversight and decision process.

UPDATE: As I predicted, this contract was anything but a done deal. Shane Goldmacher reports the CHSRA board voted to postpone the vote on awarding the contract.

Back to the original post...

A little while back the California High Speed Rail Authority announced it was putting out for bid a $9 million contract to handle its communications - everything from designing the form (but NOT the content) of the next Business Plan to public outreach to local communities along the proposed HSR line. Kris Deutschmann of KDC Communications had been leading the communications, along with several other project assistants. I have had very good interactions with Kris and those other assistants. But with the passage of Prop 1A the CHSRA saw the need to ramp up its communications strategy, and invited bidders. KDC bid, as did many others, mostly the usual suspects of California political communications. Yesterday, we learned that the winner was Mercury Public Affairs.

Needless to say, this has raised a few eyebrows.

Mercury Public Affairs has some heavy hitters. Adam Mendelsohn is a partner - he used to be Arnold Schwarzenegger's strategist. Steve Schmidt is a partner too - he managed Arnold's 2006 campaign for reelection (and the "senior campaign strategist" for the McCain 2008 campaign). Not all of their partners are Republicans - one is Fabian Núñez, Democratic Speaker of the Assembly from 2004 to 2008.

The choice of Mercury for this contract by a subcommittee of the CHSRA board (the full board will vote on the choice at today's meeting in Sacramento) is being seen by some as a potential "payback" that might raise "ethical" issues. Shane Goldmacher at the LA Times - one of the state's best political reporters - examines this in his article on the contract:

Two members of the staff panel are former Mendelsohn colleagues.

Ethics watchdogs raised questions about the appearance of favoritism.

"You can't help but raise your eyebrows," said Kathay Feng, executive director of California Common Cause.

"We are seeing a revolving door of legislators and former state officials and state employees going from public service to private PR firms . . . and pulling on all the personal relationships that they've developed to build up their business."

Kathay Feng, who I know and respect as a colleague, is not wrong to point out the revolving door of state officials and employees. And the personal relationships do count for a lot.

However, in the world of Sacramento communications consultants, virtually everyone has a political relationship:

One member of the staff panel, Jeffrey Barker, previously served as associate and deputy communications director in the governor's office, working daily with Mendelsohn. Barker, who began working for the rail commission in August, also worked with Schmidt....

Barker, now deputy director of the California High Speed Rail Authority, said the panel followed a "regimented process" and that there was no conflict of interest.

"We evaluated these proposals based strictly on communications and outreach abilities," he said.

Barker said he and Bowman "knew members of every single [public-relations] team that came in," not just those at Mercury.

So while my Calitics co-blogger Brian Leubitz reads this as having "that whiff of a payback", I don't think that's exactly right. Virtually anyone picked for this contract would be subject to the same charges.

And yet I don't think it is coincidental that Mercury won the contract. It's not a matter of payback but of political logic. The CHSRA's new chairman is Curt Pringle. He's a Republican, mayor of Anaheim, and close to the governor. Another one of Arnold's key point people on the CHSRA board is David Crane, who I wrote about at Calitics in 2007 (before I started this blog).

From what I am given to understand, Pringle and Crane are charting a more assertive course for the CHSRA in leading the HSR project to completion. They are apparently doing so with the support and engagement of the governor's office, which may see HSR as a "legacy project" for a governor with 18 months left in office.

As anyone who is familiar with my writing at Calitics knows, I am not a fan of this governor. His legacy is going to be a state in ruins, a California dream turned into a nightmare. He has usually chosen to play a governor on TV, but has notoriously neglected the details of behind-the-scenes governance. Further, he spent most of his term in office trying to gut the CHSRA's funding, and delayed the Prop 1A bond not once but twice - it was originally to go before voters in November 2004, and again in November 2006. As it turned out, the delay to November 2008 may have ultimately worked in our favor, but that's no thanks to Arnold. History will not be kind to him, nor should it be.

And yet the California HSR project is in desperate need of political leadership. As a separate Authority, the day-to-day management of the project isn't in the hands of legislators or a department of the executive branch that reports to the governor. This is intended as a good thing - authorities have more ability to cut through red tape and get things done, at least in theory, without political meddling or micromanaging.

The downside is that the independence of authorities like the CHSRA means that politicians don't feel they have the same stake in the project as they might otherwise have. This is a particular problem in our term-limited legislature, which aside from a handful of folks like Fiona Ma and Cathleen Galgiani hasn't seemed to give a fuck about the project, except when Senator Alan Lowenthal ramps up another effort to gut the project and turn HSR into glorified and disconnected commuter rail.

Without strong political leadership the CHSRA has started to get bogged down in places, particularly on the Peninsula. Good leadership, and a stronger communications strategy, would have pushed back much harder against the Peninsula NIMBYs, calling them out as anti-environment nutjobs who put their own deluded notions of aesthetic value above safety, economic recovery, and the fight against global warming - all while doing more intensive outreach to reasonable Peninsula residents who generally like the idea of HSR but want to ensure it'll get built in a good way. And with a broken legislature almost totally unable to shepherd projects to completion - but having just enough power to kill good ideas and strangle worthy projects - it was obvious that the CHSRA needed some more robust communications and better political connections.

So in Mercury they'd get both. Adam Mendelsohn, Steve Schmidt and Fabian Núñez would be contracted to help sell HSR to the public. And it has to be said that Arnold Schwarzenegger did a pretty good job of promoting HSR last year whenever he spoke on the subject. I can see the logic to this.

All this being said, this is by no means a done deal. The board has to vote on the contract today and expect to see some "no" votes. There is clearly a power shift going on at the CHSRA, and those that did some of the hard work to keep the project alive and get it approved by the voters might not necessarily be pleased to see a governor that hadn't exactly been HSR's best friend suddenly want to take over. I can't blame them for feeling that way.

My own view is this: the CHSRA clearly needed to shift its approach now that it has the bond money, now that it has federal support, and now that it has to face some real and difficult battles at the project level. If Arnold, Mercury, Pringle, and their team have a sensible plan to navigate HSR through those waters, then I am willing to join up and support them for the sake of getting this built (which as everyone knows has always been my top priority on this blog).

Of course, I'll continue to watch them closely, and offer criticism where necessary. This blog has never been a rah-rah cheerleader for the CHSRA and we're not about to start doing that now.

Thursday Open Thread

Busy day here, and my train-related thoughts are currently occupied with a meeting this evening at Monterey City Hall on the debate between building light rail or bus rapid transit along the Monterey Branch Line from Castroville to Monterey. I'll be speaking in favor of a light rail solution, as that's likely to generate more riders and more transit-oriented development, but we'll see what the rest of the community's reaction is. The ROW is already publicly-owned. I'd like to think my city isn't populated by the same kind of NIMBYs we've seen on the Peninsula, but we'll see.

Not much happening around the HSR-sphere today. There has been an interesting discussion about the mid-Peninsula station in the comments to the previous post.

Arnold Schwarzenegger is busy trying to scare voters into backing his May 19th budget ballot propositions. Whether they pass or fail the state is still facing a multi-billion dollar budget shortfall, which may generate pressure to cut the CHSRA's budget, and will make it more difficult to sell the Prop 1A bonds. Democrats are busy lobbying Congress to pass legislation allowing the federal government to back California's short-term cashflow borrowing, which would greatly help matters.

Arnold Schwarzenegger on HSR; and an Unusual Poll

So, I don't quite know what to make of this poll, but I'll pass it along anyway. The San Francisco Examiner is reporting on a poll done by BW Research Partners. The poll is about HSR, but takes what I would consider something of an odd tack - asking if Californians would support HSR even if it meant limiting air travel to do so:

Would you support limiting flights to cities in California and having passengers use a high-speed-rail system to get to destinations in Central and Southern California?

Support: 56%
Oppose: 17%
Not Sure: 26%
No answer: 1%

Would you still support limiting flights if you knew that the high-speed rail would cost about the same as air travel, but would take 2½ hours to get to Southern California?

Yes: 79%
No: 8%
Not sure: 12%
No answer: 1%

The survey by BW Research Partnership, a public-opinion research firm, asked as many as 2,000 registered voters questions about how they would envision the future of the major airports in San Francisco, Oakland and San Jose.

Umm...OK. I'm not quite sure that the issue is "limiting flights", since the experience of HSR on major corridors (Madrid-Barcelona, or London-Paris) is that the travel market shifts and flights decline as a response to changing ridership patterns and not to legislative mandates. I'm not aware of any efforts to officially limit flights in order to help build HSR, so I really don't know what generated this poll. Nor do I know who paid for it.

It is worth noting that HSR will be integrated with air travel in California - at SFO, SJC, potentially PMD (Palmdale) ONT and SAN. SFO's administrators welcome high speed trains, and we're seeing similar support emerge among San Diego airport planners.

Still, the poll does show that at least in the SF Bay Area, Californians strongly support HSR even if it were to be framed as undermining air travel.

Public support as shown in this poll (for whatever it's worth) is bolstered by support from leading American politicians, including Governor Arnold Schwarzenegger, as expressed on Meet the Press yesterday morning:

Schwarzenegger was joined on the Sunday morning show by New York City Mayor Michael Bloomberg and Pennsylvania Gov. Edward G. Rendell, who are part of a bipartisan coalition of elected officials pushing for increased infrastructure investment.

"Look, everyone gets stuck in traffic. There is no reason why we should get stuck in traffic," Schwarzenegger said on the show.

More than once during the interview, the three elected officials spoke of high-speed rail.

"This country desperately needs to build a high-speed rail passenger system," Rendell said, adding that other infrastructure projects also were of vital importance.

You can see some of Arnold's remarks on this, including his desire to use public-private partnerships to fund this (but also willing to consider a higher gas tax), here:



Of course, Arnold tends to play a governor on TV but not off screen. He is notorious for playing up his leadership when the cameras roll, but for not being willing to assert leadership within government for important projects or bills. If Arnold wants HSR to be built, he could for example ensure that the CHSRA gets the $29.1 million it needs to continue operations, or help produce a solution to the Transbay Terminal mess, or help resolve the dispute on the Peninsula. That's more valuable at this point for the HSR project than going on Meet the Press yet again to show how awesome he us.

Sacramento Meltdown

Note: Rafael contributed to this post as well.



As the LA Times reports, the state of California still doesn't have a budget after a 30-hour marathon session in the state senate. Lawmakers on both sides were so exhausted many fell asleep at their desks.

That means pretty soon CHSRA officials will no longer get paid, their consultants are already being offered IOUs. If the impasse is not resolved, the HSR project could be seriously delayed unless the Obama administration awards some stimulus funds directly to the authority, bypassing the deadlocked state legislature. It's conceivable that might happen, but politicians from other states will wonder if it's wise to spend anything at all on such an ambitious project in a state whose own funding depends on a budget process that is broken beyond repair. As an indication of things to come, consider that the national media are now lampooning (starting at 2:10) the whole thing as the political equivalent of a horror movie, the production of which the proposed state budget would subsidize. While they mention why lawmakers are asleep, the mere fact that it has come to this means the Bear Republic is now the front line in this era of serious financial crisis.

It should be noted that Prop 1A and the HSR project are not to blame here. Our bonds haven't even been sold yet. Of course, the longer this crisis goes on, the more costly it is going to be to float those bonds, and that means less money for high speed trains and tracks.

But perhaps the worst possible outcome of this mess is a proposal that is likely to be on the May 2009 special election ballot. It's a "hard spending cap" - a far-right effort to ensure that the spending cuts that are being made can never be reversed. It's actually worse than that, as it would prevent the state from ever taking on a major new project, regardless of its level of popular support, regardless of its need, and regardless of its ability to pay for itself.

The way a cap like the one proposed works is this: spending is only allowed to grow by a rate determined by population growth and inflation. If those numbers are 0, then no spending growth is possible. The cap might allow for 5% growth in spending, but only meet the educational and social services need of those new people and the higher cost of doing business thanks to the inflation. ALL state spending is subject to this cap, even something like high speed rail.

In practice what this means, as the state of Colorado discovered when their cap hit hard earlier this decade, is that government programs have to fight each other. If California wanted to spend $2 billion of the Prop 1A bonds in, say, 2012, then $2 billion in corresponding cuts have to made elsewhere in the budget. HSR would be pit against schools and hospitals. I don't know about you, but that's not a good situation for us to be in.

Worse, the spending cap means that California will have to make further cuts in coming years even above and beyond what Governor Arnold Schwarzenegger proposes, and that's itself a set of rather conservative spending plans. The California Budget Project shows what the impact looks like:



In short, a spending cap like the one proposed could be catastrophic for the California High Speed Rail project. The Legislature has already voted to put it on the ballot in May. Defeating it is going to be a high priority for HSR supporters and transit advocates around the state.

$8 billion for HSR While Public Transit Starves

The latest news on the state and federal fronts is decidedly mixed. HSR is poised to make out like a bandit from the federal stimulus:

The most important news is the massive amount of money proposed for high-speed rail - $8 billion - and the large increase in Amtrak funding, up to $1.3 billion from $800 and $850 million in the respective House and Senate bills. This represents the largest single expenditure on rail in United States history and promises a new day for train travel. The U.S. Department of Transportation will lead the distribution of these funds; most of the money is likely to go to existing programs such as California High-Speed Rail, Midwest High-Speed Rail, and Southeast High-Speed Rail. States will get no supplementary money for rail programs, which implies that the bill’s writers want states to focus on implementing high-speed rail over standard-speed intercity rail.

I'm not going to argue with $8 billion for HSR - that's much more than the $2 billion I hoped would come from the stimulus. Still, I'm not quite comfortable with focusing on HSR at the expense of other intercity rail systems. The fact is that America needs more passenger rail period and needs a comprehensive program to implement them that includes high speed and non-high speed trains. Still, as The Transport Politic pointed out in the above quote, this is still the biggest amount the US has ever spent on passenger rail and should be considered a victory.

Less encouraging, however, is the doom about to face local public transit agencies, particularly those here in California. The final federal stimulus bill contains some transit grant funds, but zeroed out the proposed $2.5 billion for new starts. But the real catastrophe comes from Sacramento, where the proposed budget deal will eliminate state funding for local transit agencies in its entirety, a cut of $536 million that comes on top of nearly $3 billion in cuts that have been made since summer 2007. This is especially ironic given that the budget deal includes a 12 cent increase in the gas tax - but none of that will go to transit.

Many sustainable transportation advocates argue for a higher gas tax - but believe it should fund increased mass transit options. While schools and health care need more funding, that should come from other sources. Using the gas tax to do that is just not good policy.

Sure, this is an HSR blog, and perhaps we could be satisfied with the $8 billion coming to a high speed rail project near you. But as I have repeatedly insisted, HSR is just part of a bigger strategy to reshape American transportation. The big picture goal is to reduce our dependence on oil and sprawl. HSR is a good solution for the LA-SF corridor, but it won't help bring folks from Hollywood to Union Station, or from the Sunset District to the Transbay Terminal. HSR needs local transit to attain its highest ridership goals and to be the kind of success we know it can be.

The state budget deal is far from final, and Republicans may walk away from it once their wingnut base gets word of the tax increases. But the use of gas taxes for non-transit related funds, particularly when local transit is getting left in the desert with a canteen and a compass, is especially egregious.

Republican Budget Stalemate Hurts HSR Project

At yesterday's CHSRA board meeting the effect of the state's budget crisis on HSR became clear - unless Republicans stop obstructing a budget solution, the Authority may have to suspend planning and design work, and terminate contracts with consultants and engineers whose accumulated expertise on our HSR project has become vital.

The California High Speed Rail Authority's budget for the current fiscal year, which ends in June, included $29 million from the sales of high-speed rail bonds authorized by voters in November. But because of the state budget crisis, the credit crisis and the poor market for bonds, the state treasurer has not sold any of the rail bonds.

That's left the rail authority without cash at a time when Californians are eager to see the 800-mile fast train system built. At an authority meeting Thursday, officials said they had halted payments on engineering and design contracts in progress and are holding off on awarding new contracts.

"Unfortunately, I have quite a backlog of bills that need to be paid, but no money to pay them," said Carrie Pourvahidi, deputy director for the authority.

The article is a bit misleading on this. The credit crisis and the poor market for bonds are part of the issue. But the state budget crisis is THE central issue. The crisis has led Treasurer Bill Lockyer to refuse to try and sell authorized bonds, and led the Pooled Money Investment Board to stop all infrastructure spending. To the extent that the market for California bonds isn't good because of the budget crisis, it's because the bond markets are concerned that the state may default on its debts.

And why is that a possibility? Because Republican politicians - from legislators to Arnold Schwarzenegger - continue to block a budget solution. I usually try to keep my more partisan comments to Calitics but we cannot escape the fact that it is Republican obstruction alone blocking a solution. Democrats have compromised far more than the media reports - agreeing to nearly $8 billion in spending cuts that have their labor allies VERY angry with them. Speaker Karen Bass agreed to most, but not all of Arnold's demands on cutting environmental and labor protections. But Arnold vetoed the Democrats' solution, and Republicans refuse to budge.

That won't stop HSR deniers from using this manufactured budget crisis to blame HSR. They've done it before - when the CHSRA wasn't funded as a result of the summer budget delay, pushing back the release of the 2008 Business Plan, HSR deniers said it was a sign the CHSRA was a flawed agency unfit to manage the project. It is likely we will see the HSR deniers use thus cash crunch story for the same purposes.

Arnold has proposed giving the CHSRA the funding they need:

On the other hand, the governor's early state budget proposal for the 2009-10 fiscal year includes $123.8 million for high-speed rail, just a half million dollars short of the agency's request.

But if he keeps blocking budget deals, this doesn't really matter. If consultants and engineers are let go, they may decide to take their expertise elsewhere in the country or in the world, and we will not easily replace them.

The big picture involves conservative anti-government ideologies. One reason the HSR deniers oppose the project is they refuse to accept that government can plan and implement this kind of project effectively, even though HSR has been successfully built by governments around the world. By starving government of revenue they are able to "prove" their case with a self-fulfilling prophecy. They opposed Prop 1A and HSR, so they starve the Authority of funds and then say "oh wow they can't manage money!"

California Republicans need to recall their Constitutional obligations to this state and provide it with a balanced budget that protects Constitutionally-guaranteed services - and respects the will of the millions of Californians who voted their endorsement of HSR by approving Prop 1A on November 4.

The HSR Deniers Stir

Leading HSR deniers at the Reason Foundation are attacking Arnold for having supported Prop 1A and abandoning Milton Friedman's dogmatic economic conservatism:

What are some of these “necessary programs”? How about a $9.9 billion bond for a long-dreamed-of high-speed rail project between Los Angeles and San Francisco that is expected to cost at least $45 billion, which even supporters such as the Los Angeles Times editorial board think will require “many billions more” in subsidies?

As we repeatedly explained, the Reason Foundation willfully ignores the economic stimulus and long-term economic value of high speed trains, their overall savings to the traveler, and their overall savings in cost of energy used. It's no surprise that they're continuing to attack HSR and those who supported it as being fiscally irresponsible, as that is going to remain their central anti-HSR, anti-mass transit charge for at least the next decade.

That isn't to say Arnold Schwarzenegger is a paragon of fiscal responsibility. He continues to refuse to sign a budget deal, demanding concessions on privatization of government construction projects and weakening of environmental and labor protections. Although Democrats have agreed to most of this, Arnold wants all or nothing - and yet STILL refuses to say whether the Dems' workaround that avoids the 2/3rds rule is something he'll support.

As Obama debates and continues to make the wrong moves on the stimulus (in this case insisting it be capped at $775 billion when most economists say $1 trillion is best) Arnold's game of chicken with the state's solvency is particularly damaging. We already have shut down all infrastructure projects in the state to save money - precisely the opposite of what we should be doing, including spending the $950 million in Prop 1A on non-HSR trains as quickly as is practical.

California's delays and ongoing financial problems will likely be fodder for Congressional Republicans, who are already beginning to make noise about opposing Obama's spending plans. They will argue that we can't afford new government projects and may even filibuster the stimulus as they did with Clinton's 1993 stimulus. If that happens - and if Obama doesn't find a way to break it - then future spending plans, including the federal contribution to California HSR, will be imperiled.

Arnold Schwarzenegger + Jim Gibbons = Maglev to Vegas?

So claims the Las Vegas Sun:

For over 20 years, boosters have dreamed of and lobbied for a train that could travel from Southern California to Las Vegas at 300 mph.

The proposed magnetic levitation train line linking Las Vegas and Anaheim, Calif. — attacked by critics as a multi-billion dollar pipe dream — has gained new life.

Near the bottom of a news release detailing Gov. Jim Gibbons’ meeting last month with President-elect Barack Obama was the announcement that Gibbons and California Gov. Arnold Schwarzenegger had agreed to move ahead with the high-speed train project.

“Arnold and I agreed to jointly work together on the project,” said Gibbons, who is planning to travel to Sacramento to talk with Schwarzenegger about it.

The train, Gibbons argues, should be a candidate for federal economic stimulus money.

The rest of the article goes on to discuss "pork" in the stimulus bill and how infrastructure stimulus should emphasize projects with lasting value. We agree, of course, and HSR is one of the best possible examples of infrastructure that provides both short-term stimulus and long-term economic value.

The question here is, does Harry Reid's maglev from Anaheim to Vegas count toward that goal? Maglev is a notorious form of vaporware on an intercity scale - the cost is enormous and no project to build intercity maglev has gotten off the drawing board. That hasn't stopped Reid from getting $45 million from Congress to study maglev to Vegas, even though a competing firm has a more realistic plan to build conventional steel-wheel HSR from Victorville to Vegas. Reid dismissed the Desert Xpress plan:

Reid has criticized that project because he doesn’t think people will drive from Los Angeles to Victorville and then board a train to Las Vegas.

What Reid apparently doesn't realize is that it's a mere 50 miles from Victorville to the planned HSR station at Palmdale Airport:



So wouldn't it make sense, Senator Reid, Governor Gibbons, and Governor Schwarzenegger, to link a Vegas HSR line to our existing HSR plan - using the Desert Xpress model, merely extended west across the flat Antelope Valley desert from Victorville to the Palmdale Airport station? That would solve the cost issue, provide a direct train connection from LA to Vegas, and even could help logroll both Nevada's and California's HSR needs into a single plan.

I have to confess I've never believed that HSR to Vegas is a particularly high priority for either California or the United States as a whole - there are other corridors that have a greater need for HSR. But if Nevada and their powerful Senator are bent on HSR to Vegas, let's do it the smart way, the right way, instead of wasting millions on a maglev train that will never get built.

The New Hoovers Are Still Trying to Kill HSR

As we repeatedly explained at this blog during the campaign, the New Hoovers have it in for high speed rail. HSR is a necessary part of California's economic recovery, but Republican politicans - from Arnold Schwarzenegger to GOP legislators - are bent on using this economic crisis to achieve the dismantling of government that they could never get during normal times. They have used the 2/3rds rule and the governor's veto power to prevent a balanced budget from being enacted. As a result California has had to borrow money to pay for basic operations, but the strain of that borrowing has nearly exhausted our short-term borrowing capacity.

As a result of Arnold's most recent budget-blocking action the Pooled Money Investment Board had to cut off all funding for infrastructure projects - throwing a whopping 200,000 people out of work. As an AP article explains that action jeopardizes HSR planning efforts:

The state treasurer says the high-speed rail board won't be able to tap any of that money until lawmakers pass a balanced budget.

Without an agreement to close the budget gap, the treasurer won't be able to sell any bonds and won't allow the board to get a loan to tide it over until the bonds are sold. The state's loan fund, the Pooled Money Investment Account, is needed for other state operations, said Tom Dresslar, a spokesman for Treasurer Bill Lockyer....

Carrie Pourvahidi, one of the rail board's deputy directors, said the board is counting on getting $29.1 million from the Pooled Money Investment Account to pay for its operations in the first half of 2009.

Without that money it would have to shut down in late January or early February, she said.

[Mehdi] Morshed said he doubts any federal money could be allocated quickly enough to fill that void.

"If we can't pay our bills, we would just have to stop spending, which means we would have to tell our contractors to stop work. Then, hopefully, later on, when we have the money, we can pick it up," he said.

As you may remember we just went through this mess - during the summer Republicans blocked passage of a budget for three months, delaying the delivery of the updated Business Plan until just after the November election. When the state is out of money the CHSRA cannot continue its planning operations. This current delay - again caused by Republican intransigence - could cause consultants to leave the HSR project:

But if the state does not resolve its own fiscal problems in time to keep the board operating, even a short-term shutdown could prompt some of the engineers, planners and environmental consultants who have been working on the project to abandon it for more reliable clients, he said. That could cause delays.

"The federal government's going to pump billions into infrastructure nationwide," Morshed said.

"Then everybody's going to scramble for the people who are going to deliver those projects. Whoever has their hands on somebody, they are in better shape than the other person. If we lose some (consultants), we may lose them for good or a very long period of time."

Arnold Schwarzenegger needs to get his head out of his ass and sign the Democrats' budget plan. Otherwise California is going to suffer for quite a long time - the infrastructure projects Arnold championed in his Newsweek op-ed will be severely weakened and compromised by this ongoing crisis. Not to mention the effect of California being thrown into an outright economic depression which HSR is supposed to help alleviate.

Federal aid will still be necessary to complete the project and while that looks more promising, New Hoovers in Congress are beginning to stir in their own opposition to infrastructure stimulus spending:

House Minority Leader John Boehner of Ohio said he has "grave reservations about taking $1 trillion from struggling taxpayers and spending it on government programs." He suggested tax cuts as a better alternative to kick-start the economy.

As far as I can tell Republican politicians in Sacramento and Washington, D.C. are, instead of trying to help resolve one of the worst economic crises we've faced in 75 years and help build for our future, are using the crisis to settle old scores and trying to reverse what remains of the New Deal.

Canadian author Naomi Klein described this phenomenon as the shock doctrine. And it's now threatening to cripple the HSR project California voters approved last month. Things were bad in the 1930s, but at least our government wasn't being held hostage by a clique of ideologues determined to score points even at the expense of the economic security of millions of Californians, of the state's future prosperity.

Hey Arnold

The governator has a rather hypocritical op-ed in Newsweek on the importance of infrastructure to economic stimulus and recovery. Here are some quick excerpts:

America has failed to invest in its infrastructure for the past 50 years, and the bill is coming due. The situation is reminiscent of the ancient Roman Empire, which grew strong because of its advanced aqueduct system, but which fell into decline when that feat of engineering tumbled into disrepair. We're in danger of repeating that history, but it's not too late to fix the problem if we take decisive action now....

None of this makes sense in America. It doesn't make sense that in the greatest country on Earth we still rely on trains that go the same speed as they did 100 years ago, so our shipping times and commutes are longer than other countries....

In 2008 alone in California, we've committed more than $10 billion dollars in infrastructure investment, which will create at least 200,000 jobs over the life of that investment. And when our state unemployment rate has broken 8 percent, that kind of investment has a profound effect.

That last bit is a reference to Proposition 1A and high speed rail, although it'd have been nice had Arnold actually said that openly. But that's a quibble compared to the hypocrisy of this article.

Why do I say hypocrisy? I fully agree with everything I just quoted. The problem is this is another example of our governor's penchant for greenwashing - go tell the national media how awesome you are but back at home, help destroy the state.

You see, despite Arnold's claims to be an infrastructure builder, he has instead helped create a state budget crisis so severe that earlier this week the Pooled Money Investment Board voted to halt ALL infrastructure projects in California - immediately. 200,000 workers face unemployment as early as January 1.

Arnold could have avoided this had he agreed to a Democratic budget plan sent to him by the Legislature yesterday. Instead he announced his intention to veto the solution and consign the state to another indefinite deficit.

The state's bond ratings are plummeting fast, but worse, without infrastructure projects in the works, it's going to be very difficult to attract federal matching funds in Obama's emerging stimulus package. If this budget mess - for which Arnold bears the primary responsibility right now - continues then it may become difficult for us to get HSR funds from Congress in 2009. It'll become all too easy for HSR deniers to argue we don't deserve or can't even use the matching funds.

Arnold's hypocrisy knows no bounds.

2008 A Record Setting Year for Ridership

At least here in California, according to Caltrans and Amtrak, who partner to operate the Amtrak California intercity routes:

Californians are leaving their cars, SUVs, vans, and trucks at home and riding trains instead in unprecedented numbers. Today, Caltrans and Amtrak reported a record-setting 5.5 million passengers rode California's state-supported intercity passenger trains in federal fiscal year 2008....

In 2007-08, the Pacific Surliner carried more than 2.89 million passengers, a seven percent increase from the preceding year.

In Northern California, Capitol Corridor (Auburn to San Jose) trains carried 1.69 million riders, an impressive 16.8 percent jump from the previous 12 months. Meanwhile nearly one million passengers (949,611) rode the San Joaquins service (Bakersfield to Sacramento/Oakland). This past July, ridership shot up a whopping 32 percent over July 2007, rising above 100,000 for the first time. The Capitol Corridor and the San Joaquins ranked as the nation's third busiest and sixth busiest lines, respectively.

Amtrak ridership in federal fiscal year 2008 increased to 28,716,407, marking the sixth straight year of gains and setting a record for the most passengers using Amtrak trains since the National Railroad Passenger Corporation started operations in 1971.

Some might cluck that this is just the product of the dramatic spike in gas prices that took place earlier this year and won't last. While that did fuel some of this ridership growth, ridership on Amtrak California routes has been steadily growing since 2002. Amtrak itself has set ridership records every year since 2002. There is every reason to believe ridership will continue to rise.

That growing ridership reflects a growing awareness among Californians of the value of passenger rail, and that was reflected in last week's election where most passenger rail proposals were approved by voters (Measure B in Santa Clara County, the BART funding plan, is still too close to call). In the article Eugene Skoropowski, managing director of the Capitol Corridor, noted that Prop 1B (passed in 2006) also intended money to be spent on rail expansion. Arnold Schwarzenegger's Department of Finance delayed this, using a flawed audit to claim new cars weren't necessary, but that has been reversed and new cars have been ordered.

We need to accelerate Prop 1A and Prop 1B rail funding. While we wait on federal matching funds for HSR - which we will press for in 2009 - California needs to wait for nobody to release the bond money for the other passenger rail projects that are awaiting funds. California legislators should make it a priority to spend that money as an infrastructure stimulus, as well as part of a long-term plan to grow rail in this state.

Record ridership is an opportunity to take passenger rail to the next level. Let's make sure our legislators follow through on it.

Arnold Endorses Prop 1A

I know there had been some doubt among the HSR deniers about Arnold's position, but as KQED's John Myers reports he is indeed endorsing Yes on 1A.

Arnold spoke at the Commonwealth Club last month and explained his support for high speed rail:

There is far more economic opportunity in fighting global warming than economic risk....We shouldn't let the budget crisis hold back good things for the future. 20 years from now you can't look back and say "well they had a budget crisis so we didn't do it." Just because we had a problem with the budget does not mean that people should vote "no" on high speed rail. Our rail system in America is so old, we're driving the same speed as 100 years ago, the same system as 100 years ago. We should modernize, we should do what other countries do...We should start in this state, we should show leadership.

It would be nice if he would actually get out and do some campaigning for it. That goes for the rest of you California political leaders.

Arnold Reiterates Support for Prop 1A

In remarks at the Commonwealth Club in San Francisco last Friday Arnold Schwarzenegger again explained his support for Prop 1A, the $10 billion high speed and passenger rail bond. His speech focused on anti-global warming actions and the economic value of reducing carbon emissions - and why we must continue to do do this even during, especially during, a credit crisis.

There is far more economic opportunity in fighting global warming than economic risk....We shouldn't let the budget crisis hold back good things for the future. 20 years from now you can't look back and say "well they had a budget crisis so we didn't do it." Just because we had a problem with the budget does not mean that people should vote "no" on high speed rail. Our rail system in America is so old, we're driving the same speed as 100 years ago, the same system as 100 years ago. We should modernize, we should do what other countries do...We should start in this state, we should show leadership.

I'm not exactly his biggest fan, but this is the "good" Arnold Schwarzenegger - the one who gets the need to build for the future, who understands that the green economy is going to be at the center of California's future. He spoke strongly against drilling, and noted that oil prices only came down through demand destruction - using more public transportation is the only way to bring down gas prices. (Of course Arnold, does that mean you will stop cutting public transit budgets?!) He even spoke favorably, though cautiously, of Sen. Darrell Steinberg's SB 375 - "I'll look at it carefully" - and its smart growth goals.

You can see the video yourself here - scroll to 26:50 for the Prop 1A discussion. (Couldn't get the embed to work for some odd reason.)

Let's hope Arnold takes this message around the state and help get Prop 1A passed.

The Commonwealth Club is also hosting a Prop 1A debate this Friday between Quentin Kopp , chairman of the board of the California High Speed Rail Authority, and Jon Coupal, head of the Howard Jarvis Taxpayers Association. Former US Secretary of Transportation Norman Mineta will moderate.

Arnold Changes His Mind, Will Sign AB 3034 Today

Even though everyone believed Sunday was the real drop-dead date to modify the fall ballot, the governor's office believes "we have a few days left" - and so Arnold will drop his petulant "I'm not signing anything until there's a budget" and will sign AB 3034 today. Presumably this really does mean Prop 1 will be replaced with Prop 1A. Guess we're gonna have to change the stationery.

"Any measures that must be placed on the November ballot must be acted upon quickly," the governor said in a letter dated Monday to legislative leaders. "I urge you to send me these measures that must be placed on the November ballot immediately."

The governor specifically references four measures, but only one of them — the high-speed rail bill — has been agreed upon by lawmakers....

The governor had repeatedly vowed to veto any bills sent his way until lawmakers agree on a state budget, now 57 days late. He changed his mind because "the governor believes that Californians should have the opportunity to vote on these specific measures," said his press secretary, Aaron McLear.

Quentin Kopp had already given up on AB 3034 and put out a statement yesterday stating that the Authority planned to adopt "most" of the AB 3034 recommendations. Now it seems like that's been superseded by AB 3034 itself.

As we explained last week this has been a sorry business with the legislature and the governor both failing to move quickly and effectively on the bill. One huge question mark is the updated business plan - AB 3034 mandates it be released by September 1, which is six days from now. Hopefully the Authority has been working on it, but I doubt anything they produce will satisfy the usual HSR deniers.

Nothing's certain until we see the printed ballots, but it does look like we're going to have to get used to "Yes on 1A." Thank god I didn't order those bumper stickers yet...

ACTION: Tell Arnold to Sign AB 3034

We have until Monday to convince Arnold to drop his childish refusal to sign new bills and put his name to AB 3034. Contact Arnold and tell him to sign AB 3034:

http://gov.ca.gov/interact

Phone: 916-445-2841

UPDATE CalPIRG has a handy dandy form to use to contact Arnold about this.

Rafael also suggests we contact our Assemblymembers to ensure they act swiftly on this on Monday.

There's your weekend homework, folks. Get to it!