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Questioning Of High-Speed Rail Plan Continues

The California High-Speed Rail Authority business plan released at year's end is inconsistent, unrealistic and potentially illegal, according to a Legislative Analyst's Office (LAO) report to the Assembly Transportation Committee.

The plan lacks a complete discussion of various risks, contains no risk management strategy and has an overly general and inconsistent timeline, according to the LAO. "For example, regulatory approvals are expected by 2018 but procurement is scheduled to be complete by 2014," the LAO reported. "This could mean the train technology and rolling stock will be procured before regulatory agencies approve their use."

The LAO called the plan's expectations of federal funding "highly uncertain." The plan is based on the federal government providing about $3 billion a year through 2016 for the project, even though the state now receives only about $3 billion annually for the entire transportation system, including gas-tax funded highways. The plan also appears to assume the public sector will fund insurance and provide a revenue guarantee to private investors, even though the high-speed bond measure approved by voters in 2008 explicitly prohibits a public operating subsidy, the LAO concluded.

Still, the new business plan is an improvement from a 2008 version, according to the LAO. At a mid-January hearing, Transportation Committee members offered tepid support of the new business plan and asked hard questions of rail authority representatives. The new plan pegs construction cost at $42 billion based on year-of-expenditure estimates. The earlier plan estimated construction at $33 billion in 2008 dollars. The new plan decreased the 2008 version's annual ridership estimate from 55 million trips in 2030 to 41 million trips in 2035. The new plan also pegs ticket prices at 83% of a comparable airline ticket, rather than the earlier forecast of 50% of a plan ride. The new plan assumes local governments will prove less money for the project, and private investors much more.

The business plan is available on the High-Speed Rail Authority's website

The Legislative Analyst's Office report is available at www.lao.ca.gov.

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