WASHINGTON — Republicans on Thursday complained about the skyrocketing cost and lack of administrative transparency surrounding the construction of the California high-speed rail project, while Democrats and regulators steadfastly defended the partially bond-financed project as an antidote to gridlock and a way to create jobs.
“I consider myself a strong advocate of high-speed rail,” Rep. John Mica, R-Fla., chairman of the House Transportation Committee said at a hearing yesterday. “I’ve done everything I can to support high-speed rail.”
However, Mica said California’s high-speed rail project, which aims to connect the San Francisco Bay area with the Los Angeles basin by 2033, has become a major concern to lawmakers who provided it with $2.25 billion of stimulus funds under the American Reinvestment and Recovery Act, which is to be combined with nearly $10 billion of bonds approved by California voters in 2008.
The California High-Speed Rail Authority’s initial business plan estimated the project would cost a total of $45 billion, but that number swelled to $98.5 billion last month when the authority released an updated plan that won the support of many state Democrats, including Gov. Jerry Brown.
Mica, however, said the new estimate calls into question the wisdom of the billions invested in the project. “California seems to be imploding every day,” Mica said.
Committee member Rep. Bill Shuster, R-Pa., also took a grim view of the project. He suggested the stimulus money would have been better spent beefing up the infrastructure of the densely populated Los Angeles area, rather than on carrying out the project’s first phase — a stretch connecting the cities of Fresno and Bakersfield in the state’s agriculture-heavy Central Valley.
The authority’s new business plan lays out the construction and estimated funding for the high-speed systems in five stages. After the $6 billion Fresno-Bakersfield stretch, the next step would be an extension either north to San Jose or south to the San Fernando Valley at a cost of up to $26 billion.
“Some of us believe this is a truly poor investment,” Shuster said. “These costs are getting out of hand.”
Rep. Loretta Sanchez, D-Calif., testified and told the committee that though she can understand concerns about the skyrocketing cost, it would be costlier to abandon the project and the thousands of jobs it would create if it breaks ground as planned this spring.
“We need to invest,” Sanchez said. “We must have the courage to say that we need high-speed rail. It will cost money, and we need to look at it and figure out how we will make it work.”
With less than 20% of the new total cost accounted for in existing financing, the project’s backers hope private investors will play a big role in raising the necessary funds. Rail officials hope to use their bond authorization to issue Build America Bonds for the project, if the BAB program is ever reinstated. BABs are taxable bonds that were created under the ARRA. The issuer receives a subsidy from the federal government equal to a certain percentage of the interest costs. But Republicans have opposed any reinstatement of the program.
Federal Railroad Administrator Joseph Szabo told the committee, it is important that officials and policymakers not give potential business partners reason to balk at investing in the high-speed system.
“The worst thing that we can do is show uncertainty,” Szabo said. “Right now, there’s very strong interest from the private sector.”
Transportation Secretary Ray LaHood defended the project in a hearing last week, vowing not to be “dissuaded by naysayers.”
Szabo said federal officials are acting responsibly by making sure California lays its money on the table before committing the appropriated stimulus dollars, but he also said repeatedly that he considers the project a commitment to be carried out.
“We continue to believe that the need for the project is indisputable,” Szabo said. “We’re committed to the project.”
