Arnold's dishonest rail stand


By Steven T. Jones
Why can’t Gov. Arnold Schwarzenegger or his proxies explain their opposition to high-speed rail? They try, as they must. After all, this is a green project lauded across the ideological spectrum and around the world for its potential to prevent global warming, dirty air, and clogged freeways and airports.
But all the answers Arnold’s people give are illogical, unresponsive, or contradicted by the experts. In the end, it appears the Schwarzenegger administration is simply unwilling to support high-speed rail or to level with the public about why. Legislators and other Democrats say they’re solidly behind the project, something that will be tested this weekend in San Diego when the state party convention considers a resolution of support authored by longtime party activist Jane Morrison of San Francisco.
“It’s very timely because the governor is trying to cut the budget [for the California High Speed Rail Authority] back to $1 million and delay the bond measure,” Morrison told the Guardian. “I think this is a terribly important project.”

As I worked on my recent article on the topic, it was maddening to try to get a straight answer out of David Crane (the San Francisco venture capitalist that Schwarzenegger appointed to the CHSRA board) or the governor’s flacks.
Crane’s position is that you have to have a comprehensive financing plan identifying private capital sources before moving forward. Other sources close to the project, as well as another prominent venture capitalist that I consulted, all told me that the public commitment, in the form of approving the $10 billion bond in the fall of 2008, had to happen before the private sector would get involved.
So I asked him repeatedly (as the governor’s flacks lingered on the phone line) why he and CHSRA couldn’t put together that plan over the next year and a half and still do the bond measure as scheduled. It was a question he wouldn’t answer, instead becoming increasing angry that I wasn’t yielding to his expertise. He even accused me of misrepresenting what Quentin Kopp and Mehdi Morshed of CHSRA had told me and then called them up to get them all riled up (apparently misrepresenting to them what I had said). But Kopp and Morshed each liked my article and said I had quoted them accurately.
Yet at the next CHSRA meeting, which was focused largely on Crane’s demand for a more detailed financial strategy, there was a presentation by Lehman Bros that seems to validate my questions and discredit Crane’s answers.
“The funding of a high-speed train system in California will require a combination of private and public sources; however, public sources, including federal, state and local, will be essential in early development,” read one of eight Powerpoint slides, which Schwarzenegger spokesperson Sabrina Lockhart forwarded me.
Another of those slides contradicted something that she had told me, which is that the high speed rail bond would squeeze out other important bond issues, for prisons, freeways and the like.
“The $9.95 B in GO Bonds already scheduled for the 2008 ballot are affordable under the Administration's current debt ratio limit,” one slide read. “The Governor projects $100 B in bonds to be issued through FY 2015-16; HST bonds could be issued without exceeding a debt ratio of 6.5%.”
So I asked her again why the bond measure needed to be delayed and why, if the financial plan that Crane wants is so pressing, the governor is proposing to give this agency just $1.2 million this year, thus ensuring that none of the preparatory work would get done.
“The Governor wants to be sure we have clear road map for the entire financing of the project - that is what taxpayers would expect before we mortgage $10 billion. The discussion about issuing a bond for 25% of the system cost is a distraction from what's really required at this stage, which is a credible plan for financing the planned $40b system,” Lockhart wrote me in an e-mail, twice, ignoring the other questions I was asking and points I was making.
One of those points was Morshed’s belief that a $10 billion bond, with matching private funds (which shouldn’t be difficult to get considering the project is expected to pay for itself twice over) and some federal transportation money, would be enough to complete the San Francisco to Los Angeles link.
The other point dealt with a recent report on the subject by the Legislative Analyst’s Office, the nonpartisan state office charged with cutting through budgetary bullshit in the Capitol. Its report concluded that it’s “time to bite the bullet for the bullet train,” noting that the governor’s approach makes no sense.
“The administration proposes to indefinitely postpone submitting the high-speed rail bond measure to the voters. This would essentially end the project unless another source of funding is provided. The budget, however, requests $1.2 million to support the continued operation of HRSA during 2007-08. This amount does not include funding for the authority to continue to contract for work related to the development of a high-speed rail system.”
In other words, Schwarzenegger wants to waste millions of dollars in taxpayer money (on top of the $47.4 million spent so far on the project) just so he doesn’t have to be honest with the public about his apparent opposition to high-speed rail.
“If the Legislature decides that the project should proceed, it should provide funding for HSRA to continue its system development work in 2007-08. Otherwise, there is no reason to continue funding the authority. In that case, we recommend deleting the $1.2 million from the budget and enacting legislation to disband the authority,” the LAO concluded.
Indeed, the governor’s stall tactic won’t work for long. While Morshed was careful to tell me that Crane was asking “constructive and reasonable” questions about how the project will be funded (perhaps deferring to a guy who is essentially one of his bosses?), Morshed also said, “We can answer those questions in a fairly timely fashion.”
So in the next few months, once those questions are answered and everyone else is ready to move forward with the bond issue, will our supposedly “green” governor still stand in the way of the most significant environmental project that the state is proposing?