SACRAMENTO (AP) — Gov. Jerry Brown scored a big win for California’s $68 billion high-speed rail project by persuading fellow Democrats to dedicate a steady future funding source for it in the state budget.
The $108 billion 2014-15 general fund budget approved Sunday includes $250 million this year from the state’s cap-and-trade greenhouse gas emissions fund. More important to rail supporters is the promise of 25 percent of all future cap-and-trade revenue each year, which could eventually total $3 billion to $5 billion a year.
The money is a fraction of the state’s overall spending plan. But to high-speed rail officials and the governor, it signals the state’s investment in the beleaguered project, which has been saddled by delays and court challenges that have left it with little operating cash and uncertain political support.
Rail officials believe the ongoing revenue will be enough to leverage bond borrowing and start work on new parts of the project, such as a segment connecting northern Los Angeles County to Burbank. Building that section of the rail line could help generate goodwill from the politically critical Los Angeles area and blunt criticism over the decision to start construction in the less-populated Central Valley.
The renewed attention to high-speed rail funding also is a reminder of its most pressing problem: Where will the rest of the money come from?
A Sacramento County Superior Court ruling last year, which is on appeal, has essentially blocked the state from selling $8.6 billion in voter-approved bonds that are supposed to be the primary source of construction funds for the first 130-mile segment from Merced to Bakersfield.
The state also owes the federal government a $180 million matching payment due July 1 as part of the $3.5 billion in federal grants awarded to California.
Rep. Kevin McCarthy, a Bakersfield Republican who is on the verge of becoming House majority leader, vowed in a statement to “do whatever I can to ensure that not one dollar of federal funds is directed to this project,” as long as he is in Congress.
Four congressional California Democrats last week joined Republicans to block federal funds for the project as part of an amendment to the federal transportation bill by Rep. Jeff Denham, R-Turlock. The vote was mostly symbolic because no federal money was proposed this year, and it will likely be reversed in the Democratic-controlled U.S. Senate.
Jeff Morales, CEO of the California High-Speed Rail Authority, said the dedicated funding allows project officials to do work on several sections simultaneously “which delivers benefits sooner to travelers statewide, yields costs saving and creates an opportunity for potential private sector investment earlier.”
The agency also provided letters from nine major engineering and construction firms supporting a dedicated state funding source. Some firms indicated they might consider private financing if the funding were approved.
AECOM, a Los Angeles-based engineering firm, wrote that multi-year funding “sufficient to move the project forward on a more aggressive timeline, would attract our firm and private sector competitors from around the world.” The letter addressed to legislative leaders and Brown also said the money should be “sufficient to complete the project, in combination with funds from the state.” The revenue included in this year’s budget falls short of that.
Brown’s plan to fund the project with cap-and-trade revenue has been a sore spot for Democrats and environmentalists, partly because program’s mission to reduce greenhouse gas emissions to help the state meet its air quality improvement goals by 2020.
Critics believe the high-speed rail line will create more pollution than it reduces during its 15-year construction timeline.
Sen. Fran Pavley, D-Agoura Hills, author of the state’s landmark greenhouse gas law, AB32, abstained from voting on it Sunday night. She said the money should go to projects that can be completed most quickly.
“Using such a large percentage of continuously appropriated money for a project that, in the short term, will get minimal, if none, no greenhouse gas reductions, gives me pause,” she said in an interview later.
Senate President Pro Tem Darrell Steinberg, D-Sacramento, characterized the cap-and-trade financing plan as part of a holistic approach to infrastructure that will better integrate communities with public transportation. The plan also allocates 40 percent of future revenue for water and energy efficiency, natural resources and clean transportation and 35 percent for public transit and affordable housing.
Assemblyman Jeff Gorell, R-Camarillo, said the financing could be unconstitutional because the investments will not directly help meet California’s air quality targets.
“They barely put a dent in the emissions reduction goals this state has set as a priority,” he said.