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Monday, April 16, 2012

Does California Really Need High Speed Rail?

"To take from one, because it is thought his own industry and that of his fathers has acquired too much, in order to spare to others, who, or whose fathers, have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, the guarantee to everyone the free exercise of his industry and the fruits acquired by it." — Thomas Jefferson

I have written several articles on the folly of building a high speed rail line from San Francisco to Los Angeles. KQED News now reports that the California legislature is ready to approve the issuance of bonds to begin construction of the boondoggle:

The High-Speed Rail Authority unanimously approved a revised business plan Thursday afternoon in San Francisco. Board members voted 6-0, with one absent vote, to trim costs by about $30 billion.

The project is now estimated to cost about $68.4 billion — far more than what voters agreed to in 2008 when they authorized the project.

Vice Chairman Dan Richard praised the plan for cutting costs by using existing rail lines.

"This plan [ties] high-speed rail… to regional and local transportation systems in a much stronger fashion than our draft plan did, both in the Central Valley, here in the San Francisco Bay Area and in Southern California," Richard said.

Chairman Bob Balgenorth said the project would put thousands of people to work and bring California into the future.

"It's time for us to catch up with the rest of the world," Balgenorth said. "We used to be the leaders of transportation in California. We’ve fallen behind. But this is an opportunity to move forward."

Fernando Santillan, 26, came to board meeting from Fresno to support the project. Santillan says he would use high-speed rail for business. He believes it would help keep young professionals and university graduates in Fresno, rather than losing them to more bustling cities.

"There's a lot of talent in Fresno that would benefit from connecting to other like-minded professionals in the major cities, including San Jose, LA, San Francisco," he said. "And that would just exponentially increase our productivity, our creativity and the ideas we get from other cultural centers."

Most of the public speakers voiced strong support for the new plan, but a few, like Community Coalition on High-Speed Rail member Kathy Hamilton, opposed the project. Hamilton says the current plan is not the idea sold to voters back in 2008, and that the project is too expensive. Hamilton also doesn't believe ridership will be strong.

The plan will now go before the state legislature, where lawmakers will decide whether to authorize bonds to start construction.”

California’s fanciful bullet train project embodies everything that is wrong with government today. The state’s High-Speed Rail Authority on Tuesday released details of a revised business plan that claims laying down tracks from Los Angeles to San Francisco will now cost a mere $68 billion instead of $98 billion — as if that were a bargain.

In my history of working on public works projects I learned an important lesson. There are three budgets with every project. There is the political budget to convince voters that this project is a good deal. There is the engineer’s estimate that is based on past empirical data and the presumption that all will go as planned. And finally there is the final cost accounting that shows what was really spent due to changes in plans and cost overruns that are frequent in all public works projects. These cost overruns are the result of numerous causes but the most prevalent are; increased cost in labor and materials, changes in plans (contract change orders) due to redesign and change of materials, and delays caused by weather and other acts of God. The $68.4 billion is the political budget.

President Obama’s infatuation with the effort to create another government-subsidized rail entitlement means the rest of the country is on the hook for at least half of this still considerable sum. Retirees in Florida, ranchers in Montana, and school teachers in Mississippi, who will never ride California’s train, will be forced to pay for it anyway.

There is no warrant in the United States Constitution for subsidizing projects in a state that will benefit the people of that state. (Article I, Section 8).The closest on can come to finding justification for the subsidizing of an intra-state railroad is; “To establish post offices and post roads.” The Disneyesque California High Speed Rail is certainly not, by any stretch of the imagination a post office or a post road.

One might argue that the interstate highway system is similar to this high speed rail line. It is not. The Federal Interest Highway Act popularly known as the National Interstate and Defense Highways Act (Public Law 84-627), was enacted on June 29, 1956, when Dwight D. Eisenhower signed the bill into law. With an original authorization of 25 billion dollars for the construction of 41,000 miles (66,000 km) of the Interstate Highway System supposedly over a 10-year period, it was the largest public works project in American history through that time.

The beauty of the IHA was that it benefited all the people of the nation. It allowed that rancher in Montana to ship his cattle via truck to the stockyards in Kansas City or Chicago more effectively for less cost. It allowed the retiree in Florida to purchase things at the local Wal-Mart that were shipped from China to the Port of Los Angeles and then by rail to local distribution centers and finally by truck to their local Wal-Mart where they could be purchased at a lower costs. It allowed that school teacher in Mississippi to drive from her home to a town hundreds of miles distant for less cost and much safer. The Interstate Highway System benefited all of the people. Of course, over the ensuing years the original intent has been corrupted to include inter-modal transportation and pork projects like the Los Angeles Subway, a project that does not benefit the rancher, the retiree or the school teacher.

The money for the Interstate Highway and Defense Highways was handled in a Highway Trust Fund that paid for 90 percent of highway construction costs with the states required to pay the remaining 10 percent. It was expected that the money would be generated through new taxes on fuel, automobiles, trucks, and tires. As a matter of practice, the Federal portion of the cost of the Interstate Highway System has been paid for by taxes on gasoline and diesel fuel.

Politicians asked Golden State voters in 2008 whether they wanted this shinyhigh-speed-rail new train set. Fifty-three percent said “sure,” without devoting much thought to the cost of their choice. To put $68 billion in perspective, five major airlines offer flights from Los Angeles to San Francisco for $200 or less — an amount that includes $39.60 in various taxes. Volume discounts aside, for the cost of the rail infrastructure, California could purchase 340 million round-trip tickets — enough to provide nine round-trip flights for each of the state’s documented residents.

Based on market capitalization, the state could even buy a few airlines — American, Delta, Jet Blue, Southwest and United — and have $40 billion left over. Taking to the skies quite simply is more efficient. It only takes an hour and 20 minutes to journey by air between Los Angeles to San Francisco. At best, a nonstop “high-speed” train would take an estimated two hours and 38 minutes, charging a pricey $326 fare. Based on the experience of Amtrak in the Northeast corridor, the trains will make so many stops that actual trip time would be closer to four hours.

Airlines already offer, on average, 61 flight options per day along this route, maximizing convenience. Granted, train passengers are not currently groped or photographed in the nude by the Transportation Security Administration (TSA) agents prior to boarding, but the solution to that problem is to abolish the TSA, not to create a $68 billion alternative.

I was involved with the proposed HSR in Texas. This line was supposed toTGV-Duplex_Paris run from Dallas to Houston via Austin and a spur to San Antonio. The line was a cooperative venture between Morrison-Knudsen and Bombardier of Canada. M-K would manage the project and Bombardier would furnish the rolling stock and electrification. They would be using the French TGV technology, the same trains that traverse the Chunnel between France and England. TGV had a proven track record in Europe and could run at speeds in excess of 250 mph.

At the time I believed that would be a great project for my firm to furnish mapping and Geographic Information Services (GIS) for. The Texas Railroad Commission, the state body that oversees all projects of this type, had given its tentative approval to the project and M-K was working on the preparation of the environmental impact report, something our GIS would help them with. I looked like the project was a go.

Then Southwest Airlines stepped into the fray. This proposed route of the HSR was also Southwest’s bread and butter in Texas. The CEO of Southwest began making the rounds of all the national TV shows decrying the disadvantages and horrors of steel-wheel trains. He claimed the in order to be safe the Texas HSR would have no at-grade crossing and would literally cut the state in half. Ranchers would not be able to drive their cattle from one end of their ranch to the other. Eventually he won the public relations battle and the Texas HSR went down the drain destroying the once great M-K construction company.

In its glory days, The Morrison Knudsen Company helped create the very fabric of America by building such mega structures as the Hoover Dam, the San Francisco-Oakland Bay Bridge and the Trans-Alaska pipeline. However, in 1995 after the Texas HSR debacle the 83-year-old construction firm, based in Boise, Idaho, was struggling to survive a devastating corporate crackup. Just six weeks after directors ousted the charismatic William Agee as chairman and chief executive officer, the company was frantically seeking $125 million in new bank loans needed by the end of this week to avert a bankruptcy filing. Eventually M-K was absorbed by the Washington Group.

If anyone believes that United, American, Southwest, and other commuter airline will sit still and allow a federal and state subsidized steel wheel train to cut into their most profitable routes they have a another thought coming. The same thing held true for the once proposed Bechtel-German Maglev Anaheim to Las Vegas HSR. Bechtel attempted to sell bonds, but there were no takers based on the ridership projections.

Another argument is jobs. No project should be created to create jobs. If this were the case we could dig a great ditch from Los Angeles to San Francisco using laborers with shovels. The great economist Milton Friedman commented on his experience in China while visiting a construction project and noticing the thousands of laborers toiling with shovels. When he inquired of his Chinese host why they were not using heavy earth moving equipment his host replied that look at all of the jobs we have created. Freidman’s retort was “why don’t you use spoons and you could create many more jobs.

What jobs will be created by the Disneyland Choo-Choo Train. Well to begin we will have jobs for the Architects, Civil, Electrical, and Mechanical Engineers, Environmental Scientists, Mappers, and Surveyors. These will not be new jobs, they will be professionals transferred from other projects. Firms like Bechtel, HNTB, HDR, URS, Parsons Brinkerhoff, and Harris will via for the design and construction management contracts. Support firms like Towill, Psomas, and David Evans will pursue the surveying and mapping contracts. Very few additional staff will be hired by these firms. The winners will simply obtain staff from the losers — that’s the way it works in these professions.

As for the equipment international firms like Siemens (Germany) ABB (Switzerland), and Bombardier (France) will furnish the electrification, systems, and rolling stock. Steel for the heavy rail will be supplied by firm in Japan, China, and Luxembourg. To my knowledge there is no firm in the United States manufacturing the heavy rail needed for HSR.

So what’s left for U.S. firms? All the local firms will furnish are concrete, bricks, heavy equipment operators, and laborers? All skilled labor for the systems will be supplied by the international firms mentioned above. Of course we will have the SEIU providing the people who will run the train — conductors, stewards, and janitors.

I suggest to Mr. Santillan that he consider using the Fresno Airport for his commuter needs. He can catch a low-priced flight to San Francisco, Los Angeles, San Diego or Sacramento from there. He can even connect to international flights to Paris or Tokyo. He does not need a $68 Billion plus taxpayer funded boondoggle to commute to L.A.

According to the High-Speed Rail Authority’s rather fanciful analysis, the expenditure makes financial sense because rail creates $76.1 billion in benefits, including $948,280,227 in carbon dioxide “savings,” $12.6 billion in time savings for drivers and a billion saved from “productivity increases” as travelers opt for a train instead of an airplane. All this assumes 19 million riders will get onboard each year. That’s hard to swallow, considering Amtrak’s most successful line, the Northeast corridor, boasts a mere 5.1 million customers.

The House Committee on Oversight and Government Reform opened an investigation on April 9 into this wasteful undertaking, which has already received $4 billion in funding from federal taxpayers. If it is true, as alleged, that some rail authority board members have been using the project to line their own pockets, California’s legislature ought to give voters a second chance at shutting down this boondoggle.

Click on the following links to read my previous comments on California High Speed Rail: August 28, 2010, March 1, 2011, January 23, 2011, February 28, 2012, February 21, 2011, February 8, 2011, September 7, 2010.


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