March 4, 2014, a group of farmers met with Governor Jerry Brown. They meet regularly, at least a couple of times a year to discuss agricultural issues. This time in the course of conversation, Jerry Brown disclosed he has always had the fantasy about having a high-speed train in California ever since his father took him on train ride when he was a little boy. Brown actually referred to the train as his choo-choo train several times during the visit. He seemed resolute in his support despite the fact there were a few of the members of the group who would be directly affected with loss of farmlands. John Tos was in the group.
Tos is a primary litigant in the high-profile Tos/Fukuda/Kings County case, otherwise known as the Taxpayers’ Prop 1A case. John Tos wonders how this train project continues to move forward despite being in violation of the law and based solely on Brown’s fantasy. A fantasy, that in fact will cost Californians and US citizens billions of dollars, just for the legacy of one Californian Governor.
And in fact budget talks, particularly about the use of the future funds of the cap-and-trade program are proceeding as if it’s business as usual in California. Meanwhile the Sacramento appellate court ponders whether or not to overturn Superior Court Judge Michael Kenny’s decision. He ruled that the HSR Authority did not comply with Prop 1A regarding the funding plan. The Appellate Court ruling is expected in the next 60 days. While everyone waits for that decision, there are a couple of important questions to answer.
Will the legislature risk the entire Cap-and-Trade program for the High-Speed Rail program? It appears from new reports the Legislature is leaning toward giving Brown 25% of the revenue from High-Speed Rail.
To be crystal clear, even receiving millions from the cap-and-trade program is a drop in the bucket compared to what is needed to build the first 300-mile segment of the train line, which will cost at least another $25 billion above and beyond the $6 billion they have. Both the LAO and Lou Thompson from the Independent Peer Review Group admit a large shortage regardless of receiving cap-and-trade funds. A big question is what is the amount of money that will be raised by the auctions.
The Rail Authority cannot touch remaining bond funds unless they find a 50% match in the form of federal, state or local funds. Plus they currently are blocked by a court decision to access any bond funds.
The law that governs Cap and Trade, AB 32 was primarily meant to help projects reduce Green House Gases (GHG) immediately. The high-speed train is a much longer term environmental strategy and will only be successful if in fact the proper ridership materializes. Many agree the Central Valley would not be the source for such ridership. After all, it’s not a commuter train; it’s an expensive train ride, closer to the cost of a plane ticket rather than a regular rail ticket. Most people would never be able to afford a high-speed train ride on a daily basis.
Another reason the train project is not cap-and-trade dollars worthy is the effects of the building materials were not measured in the rail project’s studies and will pollute for decades. It doesn’t follow the mandates of AB 32 and after all this is about air quality. The train project is not expected to be green house gas neutral for more than 20 years after it begins operation. It will contribute to air pollution not alleviate it. Plus, it’s not even going to be operational by 2020, a requirement of the law. There is no money to complete the required 300-mile stretch from Madera to the San Fernando Valley. See arguments by TRANSDEF who analyzed the High-Speed Rail study in an extremely compelling report. It clearly shows why the use of cap-and-trade funds for the train is completely inappropriate.
The Legislative Analyst's office recommended that the Legislature slow down and develop standards for the use of the cap-and-trade dollars however it looks like the immediate need for the cash for the capital starved train project will win out. The Governor may not get the cash he wants but he might get something. The question is, is it enough to raise the confidence level of the federal government, presently the only source of funds for the project. See LA Streetsblog's view of cap-and-trade plans on the table for this year’s budget and the LA Times article about the horse-trading going on in the capital. Darrell Steinberg expresses his views in the LA Streetsblog article about the best use of cap-and-trade dollars.
A reminder, there is a court case challenging cap and trade revenue as an unauthorized tax. It lost at the Superior Court level. It’s in the Appeals court now and a move to use those funds in an inappropriate way could jeopardize the entire cap-and-trade program for other deserving projects.
It is unlikely that the federal government will come up with more large-scale grants. The US House voted this week to block the Surface Transportation Board from issuing new permits, which would allow California’s high-speed rail project to proceed. However, the US Senate will have the last word on this issue and it is expected not to follow suit.
Brown’s idea that using cap-and-trade dollars for the train which is expected to balloon when the oil companies are charged a fee as polluters, probably won’t go over well with the public. Why? Because the result could be a net effect of .12 cents a gallon at the pump when the oil companies pass on their charges. See the San Francisco Chronicle’s article called a bump at the pump. Yet, the ballot measure’s voters guide published prior to the vote, expressly promised voters in Capital letters that the train project would produce NO NEW TAXES. It might not be a formal tax increase, which would require a 2/3 vote by the legislature but it walks like a duck, quacks like a duck and looks like a duck, it’s a duck. Fee or tax, the result would be the same, an increase for all at the gas pump.
Bigger picture, the state is $300 billion behind in repairing existing infrastructure projects and the state is severely underfunded in badly needed social programs and in case anyone forgets taking care of the under-privileged, not the privileged, is supposed to be at the core of the Democratic platform.
It will be interesting to see if the legislature gives in to a boy’s fantasy to ride a high-speed train in California rather than have the courage to do the right thing for the state. Rumor has it, that courageous move could hurt them in their political careers however remember there is safety in numbers. If a large group of Democrats stand up and tell the Governor no, it would be really hard for him to wield an ax to their campaign contributions from the Democratic party.