BILL ANALYSIS Ó
AB 471
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Date of Hearing: May 2, 2011
ASSEMBLY COMMITTEE ON TRANSPORTATION
Bonnie Lowenthal, Chair
AB 471 (Lowenthal) - As Amended: April 25, 2011
SUBJECT : High-Speed Rail Authority: Inspector General
SUMMARY : Creates an independent Inspector General to oversee
the High-Speed Rail Authority (Authority). Specifically, this
bill :
1)Requires the Governor to appoint the Inspector General for a
six-year term, to be subject to Senate confirmation.
2)Directs the Inspector General to review the Authority's
policies and procedures and conduct audits of the Authority's
activities.
3)Requires the Inspector General to report quarterly on the
Authority's expenses for travel, meals, membership fees,
gifts, etc.
4)Requires the Inspector General to report annually to the
Governor and the Legislature a summary of his or her
investigations and audits. The summary shall include, but not
be limited to, significant problems discovered by the
Inspector General, and whether recommendations the Inspector
General has made through audits and investigations have been
implemented by the Authority.
EXISTING LAW:
1)Enacts the Safe, Reliable High-Speed Passenger Train Bond Act
for the 21st Century to provide general obligation bonds to
fund the planning and construction of a high-speed passenger
train system and complementary improvements to other specified
rail systems in the state.
2)Establishes the Authority and charges it with the planning,
designing, constructing, operating, and maintaining a
state-of-the-art high-speed train system for California.
3)Grants the Authority broad powers to:
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a) Conduct engineering and other studies related to the
selection and acquisition of rights-of-way and the
selection of a franchisee, including, but not limited to,
environmental impact studies, socioeconomic impact studies,
and financial feasibility studies.
b) Evaluate alternative high-speed rail technologies,
systems and operators, and select an appropriate high-speed
rail system.
c) Establish criteria for the award of a franchise.
d) Accept grants, fees, and allocations from the state,
from political subdivisions of the state or from the
federal government, foreign governments, and private
sources.
e) Select a proposed franchisee, a proposed route, and
proposed terminal sites.
f) Enter into contracts with public and private entities.
FISCAL EFFECT : Unknown
COMMENTS : The Authority is established in state law to direct
the development and implementation of intercity high-speed rail
service.
The high-speed rail system that is envisioned will encompass
more than 800 route miles and will provide intercity travel in
California between the major metropolitan centers of Sacramento,
the San Francisco Bay Area, the Central Valley, Los Angeles, the
Inland Empire, Orange County, and San Diego. The estimated cost
for the initial phase of the project is $43 billion and all
environmental, planning, and engineering work of the Authority
is expected to be performed by private firms under contract with
the Authority.
Within state government, the Authority is an anomaly:
1)It is not overseen by any Governor's cabinet-level agency;
2)It relies heavily on the use of consultant contracts to
complete its work, with minimal means of internal oversight;
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3)It is responsible for development of the largest public works
project ever undertaken in California; and,
4)It is governed by gubernatorial and legislative appointees who
are not required to have any prescribed qualifications; the
only criterion for making appointments to the Authority board
is that they be "geographically diverse."
Since voter approval of $9 billion in bond funds for high-speed
rail in 2008, the Authority has repeatedly come under criticism
for:
1)Relying on overly optimistic revenue forecasts based on
questionable ridership projections;
2)Developing inadequate business plans and unrealistic funding
scenarios;
3)Insufficiently assessing project risk and failing to develop
risk management strategies; and, having weak internal
controls.
According to the author, by establishing an independent
inspector general for high-speed rail, AB 471 creates an
independent and objective means to conduct and supervise audits
and investigations related to the Authority, prevent and detect
fraud and abuse, and keep the Governor and the Legislature
informed about problems and deficiencies related to the
Authority and to the project. The author asserts that this
enhanced level of oversight is merited because of the unique
organizational structure of the Authority, the sheer size and
complexity of the project, and the existing program deficiencies
identified to date.
REGISTERED SUPPORT / OPPOSITION :
Support
Planning and Conservation League
Opposition
None on file
AB 471
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Analysis Prepared by : Janet Dawson / TRANS. / (916) 319-2093