Monday, July 16, 2012

The Challenge of Funding Big Infrastructure Projects

The California high speed rail project continues to chug along slowly.  Last week the California legislature narrowly approved $4.3 billion in state funding to be added to $3.2 billion in federal funds previously authorized.  This represents a 10% downpayment on the currently estimated construction cost. 

The California High-Speed Rail Authority (Authority), established in 1996, has a statutory mandate to plan, build, and operate a high-speed rail system to be coordinated with California’s existing transportation networks.  Five design-build ventures have been pre-qualified for the first 29 mile segment starting in Fresno, heading north. 

Any such infrastructure project faces big political hurdles.  The Erie canal system was built with bonds issued by the State of New York after the federal government refused to get involved.  The project was a huge success:  tolls soon paid off the  bonds obtained and the state derived a substantial profit before the canal was replaced by railroads for commercial purposes. 

The transconinental railroad was authorized and funded by Congress in the middle of the Civil War as a public private partnership.  This was accomplished with outright bribes of Congressmen.  The result was the government overpaid for construction of the line, gave away much more land than what was needed to build the railroad, and did not get to participate in any of the profits.  Yet, the transcontinental railroad was a huge success in opening up the West more quickly than would have occurred without government help, moving populations out West, and increasing the taxable base of commerce.  As bad a bargain as the government struck, in the long run it was surely a good investment for the country.  


Today, high speed rail has no shortage of political enemies.  There are the farmers through whose lands the new line will travel.  There are the communities in urban areas concerned about noise.  There are those who believe it's too expensive and will be a drag on the public fisc for decades to come.  There are those who don't live near the high speed rail or near a station, and wouldn't use it if they did, and wonder what's in it for them?  On the other hand, there are the environmentalists who claim high speed rail travel will be greener than expanding airplane travel, there are those who warn that with an additional 20 million people expected in California in the next 40 years, we won't be able to build enough roads and airports to accommodate the need.  There are the 100,000 man year construction jobs that are promised for the central valley, which can surely use those jobs.  Then there are dreamers who envision walking to the train station in downtown LA and walking to a meeting in downtown San Francisco 2 hours and 40 minutes later--all this with comfortable legroom and no TSA gauntlet to run.  


The opponents have the upper hand.  They appear to have public opinion on their side.  They have no shortage of places where they can take a stand:  in Congress where Congressional Republicans have vowed to block further funding for high speed rail;  in the state legislature, where expenditures require a 2/3 majority; in the courts where they can repeatedly mount challenges under the California Environmental Quality Act; and in the courts fighting eminent domain actions.  


Me, I'm a dreamer.  And I'm getting mighty sick of airplane travel.  






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