BILL ANALYSIS �
AB 842
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Date of Hearing: January 13, 2014
ASSEMBLY COMMITTEE ON TRANSPORTATION
Bonnie Lowenthal, Chair
AB 842 (Donnelly) - As Introduced: February 21, 2013
SUBJECT : High-speed rail: funding
SUMMARY : Prohibits the expenditure of state and federal funds
for high-speed rail in California, except under certain
conditions. Specifically, this bill :
1)Makes findings and declarations that spending state and
federal funds on highway and bridge improvements and repair
projects should take priority over spending those funds on
California's high-speed rail project.
2)Prohibits state agencies, including the High Speed Rail
Authority (Authority), from spending state and federal funds
on the construction of California's high-speed rail project
except as necessary to meet contractual commitments entered
into before January 1, 2014.
EXISTING LAW :
1)Establishes and provides the Authority with the responsibility
to develop and implement a high-speed rail system in
California.
2)Authorizes the sale of $9 billion in general obligation bonds
to partially fund the development and construction of
California's high-speed rail system.
3)Authorizes the expenditure of an additional $950 million in
general obligation bonds for capital projects on other
passenger rail lines to provide connectivity to the high-speed
rail system as well as for capacity enhancements and safety
improvements to those lines.
4)Authorizes the Legislature to establish conditions and
criteria on the use of high-speed rail bond funds appropriated
for planning and capital costs.
5)Requires the Authority to complete and submit to the
Legislature funding plans and financial analyses prior to
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requesting an appropriation of bond funds for eligible capital
costs and prior to committing bond proceeds for expenditure
for construction and real property and equipment acquisition.
6)Provides explicit authority for the Legislature to reduce the
amount of indebtedness authorized by a bond act to an amount
not less than the amount contracted at the time of the
reduction.
FISCAL EFFECT : Unknown
COMMENTS : In 2008, voters approved Proposition 1A, the Safe,
Reliable, High-speed Passenger Train Bond Act, a $9.95 billion
general obligation bond to fund the proposed California
high-speed rail project and related improvements. The state
subsequently received a total of $3.5 billion in federal grants
for planning, engineering, and constructing up to 130 miles of
dedicated and fully grade-separated high-speed rail line in the
Central Valley. Of this total amount, $2.6 billion was made
available in the 2009 federal American Recovery and Reinvestment
Act (ARRA). ARRA, which was intended to provide economic
stimulus, required that $2.6 billion be spent prior to September
2017. As part of California's 2012-13 budget, the Legislature
appropriated to the Authority $7.2 billion, which included $3.9
billion of Proposition 1A bond funds and $3.3 billion of federal
funds.
Last year, the Authority issued its first design-build contract
for construction of a 29-mile segment between Madera and Fresno.
The value of the contract is just under $1 billion.
Additionally, the Authority is currently in the process of
procuring design-build services for the next 60-mile phase of
construction from Fresno to the Tulare-Kern County line near
Bakersfield. This second contract is estimated to cost between
$1.5 billion and $2 billion.
By introducing this bill, the author intends to emphasize his
belief that money being spent on high-speed rail should instead
go to fund other important infrastructure projects. To
highlight this point, the author makes reference to a California
Transportation Commission report predicting that basic
infrastructure maintenance in California will fall 60% below
what is needed over the next ten years.
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The author also contends that with estimated costs of the
high-speed rail project ballooning far beyond the original cost
estimates, the project has become a massive waste of taxpayer
money and is coming at a time when California cannot afford to
fund its current infrastructure needs let alone a non-essential
high-speed rail is project. It is the author's contention that
continuing to fund high speed rail beyond contractual
commitments entered into before January 1, 2014, would be
irresponsible and should not be considered.
Recent court rulings have put the future of the project in
limbo, at least in the near term. The first court ruling
essentially concluded that the Authority's funding plan was
invalid because it did not meet the requirements of the law.
The court found that the funding plan failed to identify the
sources of all funds to be invested in the initial operating
segment. Furthermore, the funding plan failed to certify that
project level environmental clearances were complete for the
entire initial operating segment. The court subsequently
ordered the Authority to rescind its approval of the funding
plan. The court also ruled on a bond validation hearing and
found that the Authority had not met the legal standards for
issuing taxpayer bonds. As a result of the ruling, the state's
ability to sell the voter-approved bonds is in question.
The ultimate result of these court decisions is still unknown,
although the Authority indicates it expects to satisfy the
court's objections and be able to proceed with the project with
minimal impact to the project's schedule.
Related legislation : AB 1455 (Harkey) of 2012, would have
reduced the amount of authorized indebtedness for the Authority
to the amount contracted as of January 1, 2013; excluded from
these provisions indebtedness authorized for other rail
purposes. That bill failed passage in the Assembly
Transportation Committee.
SB 22 (LaMalfa) of 2012, would have reduced the amount of
indebtedness authorized by Proposition 1A to the amount
contracted as of January 1, 2012. That bill failed passage in
the Senate Transportation and Housing Committee.
AB 76 (Harkey) of 2011, would have reduced the amount of
authorized indebtedness for the Authority to the amount
contracted as of January 1, 2012. That bill failed passage in
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the Assembly Transportation Committee.
AB 2121 (Harkey) of 2010, would have reduced the amount of
general obligation debt authorized pursuant to Proposition 1A to
the amount contracted by the Authority. That bill was amended
in the Assembly Transportation Committee to require the
Authority to annually submit a six-year funding program and a
project progress report to the appropriate policy and bridge
committees of the Legislature. AB 2121 died in the Senate Rules
Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file
Opposition
Teamsters
Analysis Prepared by : Janet Dawson / TRANS. / (916) 319- 2093