California panel declares high-speed rail project "not financially feasible"

When the California legislature undertook the most expensive public-works project in American history, they also created an independent review board to ensure that the LA-to-San Francisco high-speed rail project would have solid financial footing.  Perhaps they intended this panel to be a public-relations rubber stamp, but if so, it just proves that their miscalculations weren’t limited to cost projections.  Yesterday, the California High-Speed Rail Peer Review Group sent a “scathing” letter to the political leadership in Sacramento, calling the project’s finances and costs “fundamentally flaw[ed]” (via Andrew Malcolm):

In a scathing critique that could further jeopardize political support for California’s proposed $98.5-billion bullet train, a key independent review panel is recommending that state officials postpone borrowing billions of dollars to start building the first section of track this year.

Gov. Jerry Brown has said he will ask the Legislature in the coming months to issue the first batch of $9 billion in voter-approved bonds for a high-speed rail network that backers say will create jobs, help the environment and transform the state’s economy.

But in a report Tuesday, a panel of experts created by state law to help safeguard the public’s interest raised serious doubts about almost every aspect of the project and concluded that the current plan “is not financially feasible.” As a result, the panel said, it “cannot at this time recommend that the Legislature approve the appropriation of bond proceeds for this project.”

So who sat on this expert panel?  Amazingly, some actual experts:

The panel includes private-sector financial experts, a University of California dean of engineering, a former Caltrans director and a local government representative. Their warnings are likely to weigh heavily on lawmakers as they consider the project in coming months, said Sen. Joe Simitian (D-Palo Alto), a longtime supporter of high-speed rail who has grown increasingly concerned about the project. Simitian has raised the possibility of putting the entire project on hold for a year to reevaluate the current plan.

“We can’t simply dismiss the legitimate concerns by a group of this caliber,” Simitian said. “Denial is not going to move the project forward.”

The chair of the Rail Authority claims that the report is both misleading and “deeply flawed”:

Tom Umberg, chairman of the authority board, said in a letter to lawmakers that the report is “deeply flawed, in some areas misleading and its conclusions are unfounded.” He appealed to lawmakers to look beyond it as they reconvene for the year on Wednesday. “As the report presents a narrow, inaccurate and superficial assessment of the HSR program,” Umberg wrote, “it does a disservice to policy-makers who must confront these decisions.”

Of course, this comes from the same Rail Authority that initially predicted that the project would cost $33 billion, only to admit three years later that projected costs had nearly tripled to $98.5 billion … before ground had even been broken on the project.  Something tells me that between the Rail Authority and the CHSRPRG, the latter will have more credibility than the former with legislators who have to explain borrowing for a project when California can’t pay its bills now.

Will the panel’s report change the mind of Governor Jerry Brown?  Of course not:

Brown spokesman Gil Duran said in an e-mail that the Peer Review Group’s report “does not appear to add any arguments that are new or compelling enough to suggest a change in course.”

Hey, if Brown thinks that a project whose costs have tripled from their earlier estimates — the estimates on which voters relied when approving the project in 2008 — presents no fiscal problems, then why should he worry when the state-mandated review board tells him that the project can’t work?  Sounds like California’s political class has learned nothing from their financial travails of the last several years.  Voters, on the other hand, might have other ideas of fiscal sanity — and perhaps start cleaning house in the legislature in the fall before the legislature cleans them out financially for good.