Prop 1A state bond funds for high-speed rail construction were originally set at $9 billion and now they have approximately $8 billion left after deducting for administrative expenses and planning. The Rail Authority is currently blocked from spending any bond funds on construction since the Authority has not fulfilled the requirements of Prop 1A, federal funds have been limited and zero private investors have stepped up to the plate to contribute.
In order to remedy their dire state, the Authority and the Governor tried to finagle cap-and-trade auction dollars, dedicating 25% of the auction proceeds for the fledgling project. They were supposed to be the back-up plan to be used instead of bond funds if necessary. Using cap-and-trade funds as a continuous source of capital was the goal but questionable since they represent a tiny portion of the dollars needed for construction and now more problems have arisen since the dollars that are being generated from the cap-and-trade auction have been extremely low lately. Twenty-five percent of what has always been a concern. This article explains the recent disappointing results from the cap-and-trade auction.
Political journalist Dan Walters’s editorial discusses the desperate actions of the Governor trying to extend the cap-and-trade program beyond 2020 without legislative action. The Authority’s latest business plan shows the project receiving funds decades beyond the current cut off date. This is a clear overreach of authority per the Legislative opinion, issued April 19, 2016. It says “making and extending laws is the exclusive responsibility of the Legislature. Specifically the Governor does not have the authority to extend the laws regarding cap-and-trade beyond 2020 or set the rules around GHG reductions.” Nothing could be clearer. This action could be challenged in court since the Governor seems to believe he is above the law and is willing to risk everything in order to have high-speed rail as his legacy project.