Add us to your taskbar by dragging this icon RGI logo to the bottom of your screen.

Close

Funding debate rolls on

26 May 2008

USA: California Governor Arnold Schwarzenegger has reached agreement with local Democratic party leaders over private-sector participation in the state's proposed 1 287 km high speed rail network (RG 3.08 p151). This is reflected in a bill introduced to the Sacramento legislature at the end of March, which would make several changes to the $9·95bn bond financing proposal scheduled to appear on the election ballot in November. As well as limiting the amount of bond money that could be spent on environmental studies and consultancy fees, the bill would eliminate the requirement to complete the Los Angeles - San Francisco segment first, and require the various regions to compete for priority.

However, several legislators suggest the bill still needs a lot of work. If the measure fails to pass in both houses by a two-thirds vote, the bond issue could be removed from the ballot. This has happened twice before, and a third rejection could prove fatal. The project appears to have widespread political support despite California's $16·5bn budget deficit which is forcing cuts in many social programmes and reduced spending on education.

California High Speed Rail Authority hopes to obtain between 25% and 33% of the $42bn capital funding from the federal government, although this is far from assured. Washington failed to support previous high speed rail proposals in both Florida and California, which collapsed despite strong state and private-sector backing.

CHSRA officials held meetings on March 27 with more than 70 contractors, suppliers, operators and private finance executives to discuss the use of public-private partnerships. 'State support will be critical to mitigate risks and attract the necessary funding, as private-sector partners will seek returns commensurate with the perceived risks', reported Executive Director Mehdi Morshed. 'Federal financial and regulatory support is also crucial to the project's success.'

He stressed that 'high speed trains in California will always be owned by the public and regulated accordingly. Binding contracts will be put in place … at no point will partnering with the private sector involve a complete sale of taxpayer assets or a diminishing of the responsible regulation.'