California OKs funding for high-speed rail line

Senate President Pro Tem Darrell Steinberg, D-Sacramento, left, and Sen. Mark Leno, D-San Francisco, celebrate after Leno's bill authorizing about $4.5 billion funding for a high-speed rail system was approved by the Senate at the Capitol in Sacramento, Calif., Friday, July 6, 2012. The bill, which would allow the state to begin selling $2.6 billion in voter -approved bonds, passed by a 21-16 vote and now goes to Gov. Jerry Brown who has supports the measure. / AP Photo/Rich Pedroncelli

(AP) SACRAMENTO, Calif. - California lawmakers approved billions of dollars Friday in construction financing for the initial segment of the nation's first dedicated high-speed rail line connecting Los Angeles and San Francisco.

The move marked a major political victory for Democratic Gov. Jerry Brown and the Obama administration. Both have promoted bullet trains as job generators and clean transportation alternatives.

"No economy can grow faster than its transportation network allows," U.S. Transportation Secretary Ray LaHood said in a statement applauding the legislative vote. "With highways between California cities congested and airspace at a premium, Californians desperately need an alternative."

The bill authorizes the state to begin selling $4.5 billion in voter-approved bonds that includes $2.6 billion to build an initial 130-mile stretch of the high-speed rail line in the Central Valley. That will allow the state to collect another $3.2 billion in federal funding that could have been rescinded if lawmakers failed to act Friday.

Brown pushed for the massive infrastructure project to accommodate expected growth in the nation's most populous state, which now has 37 million people. He said the project is sorely needed to create jobs in a region with higher-than-average unemployment.

Members of the state Senate voted 21-16 along party lines after intense lobbying by Brown, Democratic leaders and labor groups. The bill, which passed the state Assembly on Thursday, now heads to Brown for his signature.

"The Legislature took bold action today that gets Californians back to work and puts California out in front once again," Brown said in a statement. The governor celebrated with Senate President Pro Tem Darrell Steinberg of Sacramento, a fellow Democrat, in the lawmaker's office right after the vote.

The first segment of the line will run from Madera to Bakersfield. The final cost of the completed project from Los Angeles to San Francisco would be $68 billion.

Republicans blasted the Senate decision, citing the state's ongoing budget problems.

"It's unfortunate that the majority would rather spend billions of dollars that we don't have for a train to nowhere than keep schools open and harmless from budget cuts," Sen. Tom Harman, R-Huntington Beach, said in a statement.

Sen. Ted Gaines, R-Granite Bay, said the project would push California over a fiscal cliff.

"It will require endless subsidies and will blast a massive hole into our budget," Gaines said in a statement.

The Bay Area Council, a group of business leaders from the San Francisco Bay and Silicon Valley areas, cheered the vote. The council backed the 2008 statewide bond measure regarding the rail line and had been working to sway legislators in support of the project in recent weeks.

"This is a courageous step forward for California's future," said its president and CEO, Jim Wunderman.

In recent days, Democratic leaders included more funding to improve existing rail systems in an effort to entice support for the bullet train.

The bill now allocates a total of $1.9 billion in bonds for regional rail improvements in Northern and Southern California. The upgrades include electrifying Caltrain, a San Jose-San Francisco commuter line, and improving Metrolink commuter lines in Southern California.

Dan Richard, chairman of the California High-Speed Rail Authority, which is managing the project, said California would have lost billions of dollars in federal aid if the Senate fails to pass the bill before adjourning Friday for a monthlong recess. California entered a contract that called for the federal government to provide money for building the Central Valley segment if the state also put up its share, he said.

"Not only will California be the first state in the nation to build a high-speed rail system to connect our urban centers, we will also modernize and improve rail systems at the local and regional level," Richard said.

California was able to secure more federal aid than expected after Florida, Ohio and Wisconsin turned down money.

Steinberg, the Senate leader, said the vote signaled the "biggest, boldest public works project in decades in California." He likened it to the state water project that was first undertaken by Brown's father, Gov. Pat Brown, in the late 1950s. The massive network of dams, reservoirs and canals is still used today.

The bill approved Friday authorizes the state to sell a portion of a $10 billion high-speed rail bond that voters approved in 2008 under Proposition 1A. The bond passed with 53 percent support, but a recent Field Poll showed support for Brown's November proposal to temporarily raise state sales and income taxes could slip considerably if lawmakers approved funding for high-speed rail.

Before Friday's vote, at least half a dozen Democrats in the 40-member Senate remained opposed, skeptical or uncommitted. Some were concerned about how the vote would impact their political futures, while others were wary about financing and management of the massive project.

One dissenter, Sen. Joe Simitian, D-Palo Alto, said public support had waned for the project, and there were too many questions about financing to complete it.

"Is there additional commitment of federal funds? There is not. Is there additional commitment of private funding? There is not. Is there a dedicated funding source that we can look to in the coming years? There is not," Simitian said.

[IMFurious]

Imagine this scenario:

"Hi! I'm Governor Brown and my state is bankrupt, not knowing how we are going to survive economically, and may declare bankruptcy. I and the federal government have come up with a great idea to solve all of our problems: Borrow another $4.6 billion for NEW spending! Would you like to invest $100M of your money to buy my bonds?"

Before you laugh, remember that it is us taxpayers who are going to eventually foot the bill for this fiscal idiocy.

[josephp5]

This is exactly the kind of investment in the future that all of the United States should be pursuing.

Yes, it will be expensive and California must sell bonds to pay for it. But it is like planting seed corn for the future---if you try to save money now by not buying seed, you will have no growth in the future. $5 Billion may sound like a lot of money, but it is what the US spends in Iraq and Afghanistan every two weeks! And what do we have to show for that?

The real reason Republicans scream about expenditures like this has nothing to do with the deficit. They don't care beans about the deficit! If they did, they would let the Bush tax cuts expire, since that accounts for more than half of it! The real reason Republicans howl about things like this is because 1) they get most of their campaign money from Big Oil which doesn't want any government expenditures on competing clean energy, and 2) because they want the economy to stagnate and shrivel because they think they can use it for their own political advantage by blaming Democrats for it.

[taxed01]

The illegals will have high speed rail. Isn't that great?

[kaylag04]

by jsa56 July 7, 2012 1:41 AM EDT
"I am sure you would support a new $100 billion freeway to accommodate Escalades, Expeditions and other behemoths. That would be patriotic. California cannot be building endless roads to cope with its burgeoning population"
______________________________________________________________
jsa - California's population, of people and industry, is not "burgeoning". In fact, it is "unburgeoning" at a record rate, and building a line from Madera to Bakersfield ain't gonna reduce congestion...ever.

[pokey5735]

When will people wake up and see that Democrats will not stop spending until we are completely bankrupt. And that will be soon!
Please, people of California, do not vote for a Democrat candidate. Not if you value this state.

[AOCGUY]

California is broke; no solution in sight and now the state is borrowing/spending $20million/mile on a train. Now I believe high-speed rail is a good thing as is infrastructure upgrade, but living within ones means is also important, actually more important. I don't live in California, thank God, but if I did I would consider suing the state for fiscal irresponsibility.

[SoCal_Gridlock]

It takes $150 and a little over an hour to fly between LAX and SFO.

Yet another stupid, ridiculous, wasteful decision by our lawmakers.

[ObamasGuppies]

Why? You Liberals have bankrupt the state. Do you need high speed rail to get the Liberals to the Welfare office? I'm glad that the cesspool of Liberlaism is broke. I have no pity for anyone that lives there. Why do you think so many employers are leaving California? They're tired of the Democrats taxing them to death. Now you have moonbeam running the state.

[fredrickh]

Revenue means nothing unless you provide the expenses. Oh, expenses exceed revenue - oh those pesky facts. Who would buy bonds for a union boondoggle from a state that is on the verge of bankruptcy. Prediction: California will have that major trillion dollar earthquake before this is completed. Mankind will be extinct from the planet before this is paid for. The big dig in Boston for example: 2 billion dollar cost estimate - 18 billion current cost and rising because even though it is considered complete there is currently and in the future millions more to be spent to fix it because of design flaws and shoddy construction. California will try to tax cars out of existence to force people to use a service that most do not want and are loath to pay for.

[JamesSao]

by legalbutnotjust July 7, 2012 4:18 AM EDT
So, is it really tax and spend, or print and lend? The answer can come at the flip of a coin for all I care. You got a better idea on how to put people back to work?
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The result of both is the devaluation of the dollar. See the stock markey soaring lately? Reason? The wall street boys are salivating over Bernahke's anticipated QE3. Waiting for virtually free money that the Fed will just print and overload the money supply. Of course tools like legal could care less. Free govt money is their heroin and they will never kick that habit.