California’s High-Speed Rail Project: A Model of Government Waste and Abuse
How has California’s high-speed rail project survived for 14 years without a plan, a budget, or a single accomplishment?
By Tim Cavanaugh, Contributing writer to Reason Magazine
If you were looking to take some easy shots at government waste and abuse, you’d have a hard time topping California State Auditor Elaine M. Howle’s recent assessment of the Golden State’s 14-year-old high-speed rail project. The California High Speed Rail Authority, she writes in a 47-page report issued at the end of April, “paid at least $4 million of invoices for which it had no evidence…that the contractors had performed the work invoiced” and “does not generally ensure that invoices reflect work performed by contractors.”
The Authority’s free-spending ways become even more clear in a spot-check by the auditor: “Of 22 regional contractor invoices we reviewed, the Authority paid 20, totaling $6.9 million, without documenting that the Program Manager had performed a required review.…It spent $46,000 on furniture for its Program Manager’s use based on an oral agreement.” The Authority’s plans also “lacked detail” about ridership projections for the train, about where its funds will come from, about whether state, local, or federal agencies or private partners will be paying for the project, and about how the Authority would manage risk.
As if to drive the point home, Howle singles out the leg of the bullet train line that is generally considered the simplest, cheapest, and shortest. “Creating a viable funding plan may be a challenge as matched funding for the least expensive corridor eligible for Recovery Act funds—Los Angeles to Anaheim—amounts to $4.5 billion, while projected costs total $5.5 billion,” Howle writes. She adds that “the regional contractor working on the Los Angeles-to-Anaheim corridor completed 81 percent of planned hours but spent 230 percent of planned dollars.”
The auditor’s report is full of such grotesque details. (Among other things, it appears the Authority has done no research on the project’s potential revenue, including such no-brainers as an analysis of ridership on existing high-speed trains.) If you want the short version, just read the audit’s title: “High-Speed Rail Authority: It Risks Delays or an Incomplete System Because of Inadequate Planning, Weak Oversight, and Lax Contract Management.”
And that’s just the bullet train’s most recent pan. Earlier in the year, the state’s legislative analyst’s office noted that the Authority’s plan contains no timeline and no specifics and that it “appears to violate the law” by using bond funds to subsidize its operations. (The Authority now claims to have corrected this problem, and it recently hired a $375,000-a-year CEO to help get the project on track.) Since 1996—twice as long as the Transcontinental Railroad took from approval to completion in the 1860s—the bullet train project has cost taxpayers more than $250 million, yet not one millimeter of track has been laid.
If all those taxpayers were in California, we could at least take comfort in knowing that only the guilty are being punished. But the bullet train is the centerpiece in President Barack Obama’s national rail plan, and this spring California became the recipient of $2.25 billion in federal funding. Together with $9 billion in bond funds that state voters approved in 2008, that takes care of a little more than one-fourth of the project’s projected $43 billion cost. (Comparisons with the Bay Bridge expansion and the Boston “Big Dig” suggest the final price tag will end up closer to $100 billion—and probably more, because the state’s dire fiscal situation and degraded credit status mean it will be paying higher interest rates in the future.) The good news is that the federal funds are contingent on the project being underway by September 2012, so they will probably end up not being disbursed.
Continue reading this outstanding article at Reason Magazine...
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