The rules, published in the Federal Register on June 23, 2009, require that applications for stimulus funds to build high-speed rail projects would be approved only after “rigorous analysis,” factoring in a careful examination of the proposed project’s “financial plan (capital and operating),” “reasonableness of financial estimates,” and “quality of planning process.” Grant recipients would make regular progress reports, corroborated by Federal Railroad Administration audits. Even the most cursory analysis shows that the California bullet train falls far short of compliance with the rules.
State auditors, the University of California’s Institute for Transportation, and an ad hoc peer-review committee appointed by the legislature all lambasted the project’s financial plan as incomplete, overly ambitious, and based on unverifiable numbers. In January, the peer-review group issued its assessment: “We cannot overemphasize the fact that moving ahead on the HSR project without credible sources of adequate funding, without a definitive business model, without a strategy to maximize the independent utility and value to the state, and without the appropriate management resources, represents an immense financial risk on the part of the state of California.” The peer review followed a damning analysis published in November by the state’s nonpartisan Legislative Analyst’s Office, perhaps the most respected agency in Sacramento, which concluded that rail officials had yet to address how to fund the (at least) $98-billion-system linking Los Angeles and San Francisco.
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