California high speed rail plan faces make-or-break vote

SACRAMENTO, Calif., July 6 Fri Jul 6, 2012 3:00pm EDT

SACRAMENTO, Calif., July 6 (Reuters) - California's high speed rail project faces a fiercely contested financing vote in the state Senate on Friday that could determine its fate following years of controversy over the high cost of the plan, now pegged at $68 billion, and concerns about its management.

The project, expected to take decades to complete, has the backing of Democratic Governor Jerry Brown, who says a bullet train network will boost job creation and provide an alternative to car and plane travel in the country's most populous state.

Unions have also lobbied hard for what amounts to the most ambitious public works project to date in California, which has a 10.8 percent unemployment rate.

But Republicans oppose the plan, whose estimated costs have ballooned from an initial $45 billion to over $68 billion. They predict it will be a massive financial burden for the state.

A vote by the California Senate is expected on Friday over whether to approve the issuance of $2.6 billion in state bonds that would 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.

While the plan passed the Democratic-controlled Assembly by a 51-27 vote on Thursday, its fate in the Senate is uncertain. The Senate has a slimmer Democratic majority, and some key members have expressed reservations about the plan.

Voter sentiment on the high speed rail line has soured since a 2008 statewide vote in which Californians approved nearly $10 billion in state debt to help finance the plan. A June USC Dornsife/Los Angeles Times polls found that a majority of voters would oppose the project if given another chance to vote on it.

The state has struggled in recent years with large deficits that forced deep spending cuts to basic programs. Federal funding is crucial to help finance the system, as are local governments and public-private partnerships.

The California high speed rail project is the centerpiece of President Barack Obama's priority to upgrade the nation's transportation infrastructure, a goal he highlighted in this year's state of the union address.

The United States has fallen sharply in the World Economic Forum's ranking of national infrastructure systems in recent years. In its 2007-2008 report, U.S. infrastructure ranked sixth best in the world but fell to 16th in the 2011-2012 report.

DECLINING INFRASTRUCTURE

Brown says the project is instrumental in keeping the nation's most populous state at the forefront of technological innovation, and could help ease traffic congestion and protect the environment.

But with federal funds involved, the state has had to make concessions in some aspects of the project.

The U.S. government has insisted that construction on the bullet train line start in the state's Central Valley, a highly agrarian middle swath of the state home to farms and ranches.

That insistence has irritated both lawmakers from urban centers in coastal northern and southern California, as well as farmers who described the project as an "imminent threat" to some of the most agriculturally productive land in the United States.

"In the past, California Farm Bureau has said we support the concept of high-speed rail as long as it conserves irreplaceable farmland, avoids premature conversion of farmland for urban sprawl, and complies with established environmental law," California Farm Bureau President Paul Wenger said on Tuesday.

"As of now, the proposed system does not meet any of those goals and we can't support it until it does," he added. Wenger said the proposed line would cut through farmland, rural roads, and key irrigation canals.

Critics worry that should the first round of construction proceed in the Central Valley only to see funding to later run dry, California would have spent billions to build a "train to nowhere."

The Legislative Analyst's Office said the California High-Speed Rail Authority had "not made a strong enough case for going forward with the project at this time" in a report published in April, and noted that the source of funding for the project beyond Friday's initial round is "highly uncertain."

Other bullet train projects have fared poorly. Last year, Florida Governor Rick Scott rejected $2.4 billion in federal funds to build a high-speed line between Tampa and Orlando, saying it would put the state on the hook for billions of dollars it did not have.

Ohio and Wisconsin also rejected federal funds for high speed rail projects.

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