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Monday, Apr 15 2013 11:00 PM

ANOTHER VIEW: No surprises in GAO's analysis of high-speed rail

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    Kevin McCarthy

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By KEVIN McCARTHY

The Californian's April 11 editorial, "Oops! HSR plan wins general support of GAO," about a Government Accountability Office report on the California High-Speed Rail Authority's project plan, noted that, as a staunch opponent of the $68 billion boondoggle, I "probably didn't expect the answers" I received. On the contrary, the GAO report, which I requested in 2011 amid mounting concerns about the plan's viability and cost and ridership estimates, confirmed the very answer I anticipated I would receive: The future of California high-speed rail continues to rely entirely on tens of billions of federal funding from a cash-strapped government drowning in nearly $17 trillion in debt.

Disappointing but unsurprising was the fact that the editorial board chose to subjectively highlight a few predictable portions of the report but conveniently failed to consider the glaring flaws GAO found in the rail authority's project plan. Turning a blind eye to red flags seems to be trendy among proponents of California high-speed rail -- a quickly diminishing group as even some of the project's original Democrat backers, such as former rail authority Chairman Quentin Kopp and rail authority Vice Chairwoman Lynn Schenck, have joined the bipartisan chorus against this flawed high-speed rail project.

First, the editorial states "[The GAO report] specifically mentioned congressional support for additional funding as 'one of the biggest challenges to completing this project.'" Interestingly, I turned to Page 37 of the report, which states "obtaining sustained congressional and public support for appropriating additional funds is one of the biggest challenges to completing this project." Perhaps The Californian finds it easier to fault congressional representatives for high-speed rail's troubles and not also the majority of Californians (56 percent in a Field Poll) who would oppose high-speed rail if it were publicly voted on again. GAO continues, cautioning that because "future funding proposals will likely be met with continued concern about the general level of federal spending, the largest block of expected money for the California project is uncertain." This fiscal concern alone should trouble every Californian taxpayer about this project's potential to turn into a colossal boondoggle. This is assuming the current $68 billion price tag sticks; questionable, considering GAO found that a lack of detail about risk assessment and post-construction operating costs could lead to "increased risk of such things as cost overruns, missed deadlines, and unmet performance targets."

Honing in on what positive news could be extracted from the GAO report, the editorial board emphasized that ridership forecasts are in fact "reasonable." What they did not highlight was GAO's acknowledgement that these forecasts are inherently difficult to develop, that "there is no industry standard or established criteria for developing or evaluating intercity passenger high-speed rail ridership forecasts," that the rail authority is still updating and revising how it develops its ridership forecasts, that in a study of 62 rail projects, 85 percent of those projects overstated ridership forecasts, where actual ridership on average was 41 percent lower than forecasted. Why would rail advocates overstate ridership forecasts? The report gives us some insight into why: Because voters insisted in Proposition 1A that the project operate without an operating subsidy, and too low of a forecast could scare off private investment.

The one thing the editorial did get right was that it was logical and responsible to request the report. When I first requested the report in December 2011, the most recent cost estimate by the rail authority was $98.5 billion, almost triple the initial cost of $33.6 billion when first sold to California voters in 2008. A few months after I requested the GAO audit, the rail authority changed its business plan, created blended routes, and announced overall costs at $68.4 billion. If it took the threat of an independent audit to get the authority more serious about its plan and more transparent to California taxpayers about what they could be getting into, the report did its job.

But the fact remains that with a $68.4 billion price tag, only $11.5 billion in funding has been identified. Public- and private-sector investment remains highly uncertain, if not unlikely, a problem so extreme that Sacramento is looking to China for help. California faces a structural annual deficit that has required higher taxes and deeper cuts to services -- hardly the fiscal environment California should rely on to commit more money to high-speed rail. The federal government is $16.8 trillion in debt, and running almost a trillion-dollar deficit this year. And it is important to note that our financial situation today is different than the situation with the highways of 1956 or the railroads of 1862. In 1862, public debt was about $500 million (10 percent of U.S. GDP) and in 1956, public debt was $272 billion (about 62 percent of U.S. GDP). Today, our public debt is larger than what our entire economy produces. That is why I am fighting to stop irresponsible spending and balance our budget so we can begin to pay this debt down, unshackle economic growth and job creation, and create a debt-free future for generations of Californians to come.

Neither an editorial headline, the spin from the high-speed rail agency, nor a blast from infrastructure past can mask the financial perils that remain, and have been independently confirmed, in California's high-speed rail project.

Rep. Kevin McCarthy, R-Bakersfield, represents the 23rd Congressional District. Another View presents a critical response to a previous editorial, column or news story.

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