How Are Trains Doing In The State’s Budget?   February 1st, 2004

by Noel T. Braymer, RailPAC President — Things can be confusing with all the political battles being fought over the California State budget. The budget proposed by the Governor keeps in place the current level of subsidy for Rail Operations. This means no cuts can be expected for state-supported rail services if the Governor’s budget is passed. In fact, plans are going ahead under the current budget to add a second daily service between Los Angeles and San Luis Obispo on the PACIFIC SURFLINER with connecting buses to the Bay Area. That’s the Good News.

So now we turn to the bad news. To try to balance the budget the administration is planning to divert $1.1 Billion from transportation spending in fiscal year 2004-2005 to the general fund. There is close to a $12.3 Billion budget shortfall in a $99 Billion State budget. The diverted money is collected from gasoline taxes approved by the voters under Proposition 42 to be earmarked only for transportation uses, both road and rail. Over the next six years at least $3.4 Billion in transportation spending is planned to be diverted. There is a clause in Proposition 42 that the money can be diverted during a fiscal emergency, and these actions would mean years of delay for transportation construction projects already years in the planning. The hope is this will be temporary. But, like all political promises there are no guarantees.

Part of the irony of this situation is during the recent election much was made of how California receives back from the Federal Government only about 75 cents out of each dollar Californians pays in Federal Taxes. Yet many transportation projects receive Federal grants with a local and State participation as a requirement for Federal support. Many projects are at risk of losing Federal funding if the State doesn’t come up with its share. The result would be the State losing more money in lost Federal grants than it saves from reduced State spending. An example of this is the SPRINTER diesel light rail service ready to begin construction this year between Oceanside and Escondido. Of the $352 Million budgeted for this project, $152 Million comes from Federal financing. The State is planning to cut off $80 million from its share of the project. The North County Transit District is planning to go ahead with the project, however, borrowing money if need be to keep the project on track.

The business community which usually supports reductions in Government spending is beginning to realize that cutbacks in State spending means loss of business since the State is a major consumer of goods and services. Increased fees are also hitting many businesses, which have to pay these new fees to do business. Transportation is a major factor in economic growth. California now rank’s 40th among the states in overall infrastructure investment based on personal income. The California Transportation Commission estimates the State already has a $100 Billion backlog in needed projects. The Southern California Association of Governments (SCAG) estimates that the Governor’s current proposal to cut transportation spending will cost just Southern California as much as $8 Billion in lost Federal aid. As traffic worsens California could fall behind complying with air quality requirements which is a requirement to qualify for Federal support which makes up to 30% of regional transportation spending. In Los Angeles County alone the current proposal of the Governor could cost $4 Billion in lost business that would be generated by the projects being cut.

What has not changed is the increasing traffic congestion in most of California. Traffic congestion remains a major concern for Californians. Increased rail service is favored by a majority of Californians as a part of the solution to growing congestion. Using bonds to cover the current budget deficit as proposed by the Governor will dry up bond funding for major construction projects for the State for years to come. This will heavily impact plans to use bonding to raise funds for the California High-Speed Rail project. It may well kill the project as currently proposed by the High Speed Rail Authority and delay many more projects. Much of the construction for rail in California in recent history was funded by voter approved bond measures.

The problem with simple solutions for complicated problems like the State Budget is they often result in unintended consequences. Using transportation money to balance the budget will cost the State more money than it will save, both in lost Federal grants and in lost economic growth that improved transportation brings. California is a rich state. If we were an independent nation we would be at least the 7th richest country in the World. In terms of wealth California is about on par with Great Britain. But, if we let our transportation infrastructure continue to deteriorate, we become a third world country instead of the Golden State. This is the time to contact your legislators and the Governor to demand a closer examination of the affects of dipping into transportation spending and what the real costs of doing this diversion of funds are.

This entry was posted on Sunday, February 1st, 2004 at 2:40 PM and is filed under Commentary.