Mama's House

I recently received my absentee ballot in the mail, nearly a full month before I have to cast my votes. I thought I would share how and why I'm going to vote on each measure. Hopefully, this gets the rest of you interested in voting and if you should disagree with any of my votes I would hope you would leave a comment explaining why and maybe you'll even persuade me to change my vote.

The following comes from the Legislative Analyst's Office.

BACKGROUND

The authority estimated in 2006 that the total cost to develop and construct the entire high-speed train system would be about $45 billion. While the authority plans to fund the construction of the proposed system with a combination of federal, private, local, and state monies, no funding has yet been provided.

PROPOSAL

This measure authorizes the state to sell $9.95 billion in general obligation bonds to fund (1) pre-construction activities and construction of a high-speed passenger train system in California, and (2) capital improvements to passenger rail systems that expand capacity, improve safety, or enable train riders to connect to the high-speed train system.

The High-Speed Train System. Of the total amount, $9 billion would be used, together with any available federal monies, private monies, and funds from other sources, to develop and construct a high-speed train system that connects San Francisco Transbay Terminal to Los Angeles Union Station and Anaheim, and links the state’s major population centers, including Sacramento, the San Francisco Bay Area, the Central Valley, Los Angeles, the Inland Empire, Orange County, and San Diego.

Other Passenger Rail Systems. The remaining $950 million in bond funds would be available to fund capital projects that improve other passenger rail systems in order to enhance these systems’ capacity, or safety, or allow riders to connect to the high-speed train system. Of the $950 million, $190 million is designated to improve the state’s intercity rail services. The remaining $760 million would be used for other passenger rail services including urban and commuter rail.

FISCAL EFFECT

Bond Costs. The costs of these bonds would depend on interest rates in effect at the time they are sold and the time period over which they are repaid. While the measure allows for bonds to be issued with a repayment period of up to 40 years, the state’s current practice is to issue bonds with a repayment period of up to 30 years. If the bonds are sold at an average interest rate of 5 percent, and assuming a repayment period of 30 years, the General Fund cost would be about $19.4 billion to pay off both principal ($9.95 billion) and interest ($9.5 billion). The average repayment for principal and interest would be about $647 million per year.

Operating Costs. When constructed, the high-speed train system will incur unknown ongoing maintenance and operation costs, probably in excess of $1 billion a year. Depending on the level of ridership, these costs would be at least partially, and potentially fully, offset by revenue from fares paid by passengers.

PROPONENTS of the proposition say it will:

• Ease Congestion on the highways and in the airports
  
• Create new jobs
  
• Save energy
  
• Clean and protect the environment

MY TAKE:

Well what the proponents say is all well and good and who wouldn't want to get from San Diego to San Francisco in about 4 hours time? But my main complaint about this proposition is that California taxpayers could be paying a lot for nothing.

There is no guarantee that the other $35 billion or so (remember the total cost of $45 billion is only an "estimate" and some estimate that the costs could indeed be a lot higher) needed to complete the high-speed rail project will be funded. It is assumed that the additional necessary funding will come from "any available federal monies, private monies, and funds from other sources" when "no funding has yet been provided." So how exactly is this thing going to be paid for? More issuing of bonds perhaps? Or maybe even an increase in taxes?

Of course, I'm assuming that the bonds will be issued before all of other necessary funding is accumulated. But even if that's not the case, why vote yes for the authority to issue these bonds before we get the rest of the funds? I suppose you could argue that this would encourage investors. But I really believe the only thing that encourages investors is a return profit on their investments, not a mere sharing of costs, and I don't think this proposition achieves that.

MY VOTE:

No on State Measure 1A.