California Audit Slams Risky|and Costly High-Speed Rail Project

SACRAMENTO (CN) - Funding for California's high-speed train program, the first phase of which is estimated to cost around $100 billion, is becoming "increasingly risky," and there is no plan to secure the billions needed to get the project rolling, the state Auditor's Office said Tuesday.

The California High-Speed Rail Authority was created in 1996 to help develop a high-speed intercity train service after voters approved the Safe, Reliable, High-Speed Passenger Train Bond Act for the 21st Century.

In April 2010, the state auditor's office reported concerns about the Rail Authority's "inadequate planning, weak oversight, and lax contract management" in the project.

Among the findings of a follow-up report released Tuesday, the auditor noted that the Rail Authority has only secured about $12.5 billion in funding, even though the first phase of the rail program will cost between $98 and $117 billion.

"Although the authority identifies the federal government as its largest potential funding source, the plan provides few details about how it expects to secure this money," the 82-page report says.

A 2012 business plan draft from the Rail Authority only once mentions the projected $117 billion cost of the project's first phase, with the rest of the document relying on the lower $95 billion estimate, according to the auditor's office.

"Neither of these cost estimates includes phase one's operating and maintenance costs, yet based on data included in the 2012 draft business plan, we estimate that these costs could total approximately $96.9 billion from 2025 through 2060," the report says.

"The authority projects that the program's revenues will cover these costs but it does not include any alternatives if the program does not generate significant profits beginning in its first year of operation," it continues.

The auditor's office also expressed concern that the Rail Authority, which has few staff members, has overdelegated control to contractors, and "may not have the information necessary to make critical decisions of the program's future."

More than 50 errors or inconsistencies in monthly progress reports suggest that the Rail Authority relied on misleading information, according to the report.

Californians and local politicians should know how much the rail project will cost, and lawmakers should try to establish an independent review group.

"Additionally, the authority should clearly disclose that the 2012 draft business plan assumes that the state will only be receiving profits for the first two years of operation in 2022 and 2023, and will potentially not receive profits again until 2060 in exchange for the almost $11 billion it assumes it will receive from the private sector," the report says.

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