California high-speed rail plan nearing key votes

SAN FRANCISCO, July 5 Fri Jul 6, 2012 5:17am IST

SAN FRANCISCO, July 5 (Reuters) - California lawmakers were nearing a vote on Thursday on a make-or-break $8 billion financing pl an to launch the state's planned high-speed rail system, which has been mired in controversy over its management and cost, now pegged at $68 billion.

Votes in favor of the plan would mean California could begin selling bonds for its most ambitious public works project and lock in federal funds for a line in the state's Central Valley, while a "no" vote would stop the entire plan in its tracks.

Lobbied hard by unions who see the plan as a bonanza for new jobs in a state with 10.8 percent unemployment, Democrats who control the state Assembly are expected to approve the plan over Republican opposition as early as Thursday afternoon.

But the plan for a rail system to connect California's far-flung metropolitan areas faces uncertain prospects in the state Senate, which was expected to vote on it on Friday.

"We're charging ahead on this," said Art Pulaski, the chief officer of the 2.1-million-member California Labor Federation and a political ally of Democratic Governor Jerry Brown.

Brown sees a bullet-train network, which would take decades to complete, as a massive jobs program and a way to advance environmental goals with an alternative eventually to car and plane travel.

Senate Republicans are against the plan, predicting it will become a massive financial burden for California. Up to six Senate Democrats also may be opposed. Without their votes, the plan would fall short of the majority needed to clear the chamber.

Senator Leland Yee, a Democrat from San Francisco, said the plan's supporters have their work cut out winning him over, a sentiment other Democratic senators have shared with Reuters in recent days.

"Right now, my choice is not to support this particular arrangement," Yee said.

Voters approved the sale of nearly $10 billion in general obligation bonds in 2008 to build the system, but polls have since found them souring on the idea, which assumed the U.S. government would open the money spigot for the system and the private sector would also help fund it.

Their buyer's remorse has intensified as California has struggled in recent years with large deficits that forced deep spending cuts to the state's most basic programs.

INTENSE SCRUTINY

Over the same time, the authority in charge of planning for the high-speed rail network has seen its plans for routes, financing, cost estimates, ridership and travel times subjected to intense scrutiny and stinging criticism.

California's nonpartisan Legislative Analyst's Office, which studies state finances, released a report in April that said the California High-Speed Rail Authority had "not made a strong enough case for going forward with the project at this time."

Brown has sought to salvage the authority by appointing Dan Richard, a veteran board member of the San Francisco region's Bay Area Rapid Transit rail system, to its board. He took charge earlier this year and jumped into tackling concerns raised in the Legislature by the authority's previous leadership.

But a key issue he has not been able to tackle is the Obama administration's insistence that initial federal funds for California's high-speed rail network be spent in the state's Central Valley farming region.

Congressional Republicans have criticized that and so have some Democrats in California. T he White House s ees California as critical to keeping its plans for high-speed rail projects on track after Republican governors in Ohio, Wisconsin and Florida rejected federal funds for them.

"California is the signature high-speed rail project in the nation," said Petra Todorovich, a rail policy expert at Regional Plan Association in New York, a nonprofit urban planning group. "It has the potential to have transformative impacts on the state, on its geography, and how people get around."

Some Democrats in California's Senate say money should go to urban coastal areas, where improved rail service could ease traffic congestion and generate revenue to cover the costs of building and operating speedier rail lines.

Those concerns have found their way into the funding plan before the Legislature.

It proposes California sell $2.6 billion in bonds to unlock $3.2 billion in funds from Washington to build a Central Valley track. The plan would also spend more than $2 billion in a mix of federal, state and local funds on rail projects in urban areas to prepare to link them to a statewide system.

But it remained uncertain whether that would rally enough Democrats in the Senate behind the plan, which does not account for the tens of billions of dollars needed to fully extend the rail system across the state.

"That is the elephant in the room," said Democratic Senator Mark DeSaulnier, who is working on an alternate plan to present to his caucus.

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