Jerry Brown’s bullet train fiasco and Trump
California governor Jerry Brown has staked out the turf as President-Elect Trump’s opponent, hiring Eric Holder to gin up a legal strategy and appointing Congressman Xavier Bacera as his A.G. to oppose anticipated Trump policies in sanctuary cities, the environment, and what some call California’s “values.”
But I have to wonder if Brown doesn’t have a vulnerable flank in this battle: the looming financial collapse of his most cherished project, the so-called “bullet train” between the Bay Area and Los Angeles. Yesterday, the Los Angeles Times published information from a “confidential” Federal Railroad Administration report that was leaked to it revealing absolute incompetence and out-of-control overspending on the first segment under construction. The report by Ralph Vartabedian should be read in its entirety to grasp the level of chaos in the project:
California’s bullet train could cost taxpayers 50% more than estimated — as much as $3.6 billion more. And that’s just for the first 118 miles through the Central Valley, which was supposed to be the easiest part of the route between Los Angeles and San Francisco.
Keep in mind that that cost estimates have already been increased a number of times, and as a result, the trains will have to run on ordinary tracks, at ordinary train speeds, in both the L.A. and S.F. metropolises, lowering the average speed of the journey well below “bullet train” status and requiring five hours or more for the journey, making a day trip unrealistic for most business travelers.
A confidential Federal Railroad Administration risk analysis, obtained by The Times, projects that building bridges, viaducts, trenches and track from Merced to Shafter, just north of Bakersfield, could cost $9.5 billion to $10 billion, compared with the original budget of $6.4 billion.
Bad as this is, there will be many, many more cost overruns – this is just a down payment. The really important part of the report is the description of the systemic incompetence of the Rail Authority, an organization that has never built anything, and one that has seen a revolving door for top-level personnel: “the rail authority’s senior deputy, its chief administrative officer and its top information technology executive recently left.”
The federal document outlines far-reaching management problems: significant delays in environmental planning, lags in processing invoices for federal grants and continuing failures to acquire needed property.
The FRA estimates that the first stretch will be delayed seven years. But that has to be premised on nothing more adding delay. And that seems inevitable:
The California system is being built by an independent authority that has never built anything and depends on a large network of consultants and contractors for advice. Engineering and construction experts have warned that early cost and schedule problems will be difficult to reverse and that early cost increases likely will drive up the final cost of the project.
Here is a secret that Donald Trump already knows: when you rely on consultants and contractors, they will use every excuse in the book to run up costs unless the client watches them like a hawk and forces them to work to budget and standards. He rescued Central Park’s Wollman Rink, which had been bogged down in endless change orders, repair, rework, and redesign issues that kept costs ballooning, the same syndrome California’s half-fast train already is experiencing.
The Trump administration and GOP Congress have some leverage and a spotlight to shine on Brown’s Folly:
The Federal Railroad Administration is tracking the project because it has extended $3.5 billion in two grants to help build the Central Valley segment. The administration has an obligation to ensure that the state complies with the terms, including a requirement that the state has the funding to match the federal grants.
Rep. Jeff Denham (R-Turlock), chairman of the House rail subcommittee, said Friday he would conduct an oversight hearing in the near future and fight any further federal funding.
“Despite past issues with funding this boondoggle, we were repeatedly assured in an August field hearing that construction costs were under control,” he said in a statement. “They continue to reaffirm my belief that this is a huge waste of taxpayer dollars.”
The railroad administration’s analysis shows that the state authority could lose $220 million in one of the federal grants this year if it cannot submit paperwork by June 30, to meet the Sept. 30 deadline of the Obama administration’s stimulus act.
To hit those milestones requires spending $3.2 million per day, a very high rate of construction spending. But Morales said the rail authority’s construction progress and spending rate ensure that all of the grant funds will be used. So far, the authority has spent $2.2 billion of the grant, leaving $300 million to spend.
California is facing a budget deficit and is heavily reliant on tax revenues from a tiny number of high-income taxpayers, mainly in Silicon Valley and San Francisco, and:
… the Legislature already has balked at giving the rail authority the ability to borrow against future state revenues, saying it would have to make do with existing allocations. And that was before Gov. Jerry Brown warned Tuesday that California’s projected 2017-18 budget shows a $1.6-billion deficit.
He does not know it yet, but the California governor may be setting himself up to be a tool of persuasion for Trump in altering the culture of federal construction contracting. By declaring war on the president-elect, Jerry Brown invites a response from a man not known for restraint in countering his opponents. And the failures of the California project exemplify exactly the sort of waste Trump needs to control in his promised trillion-dollar infrastructure program. I have written a couple of times about Trump’s use of Air Force One as an example to others of the cultural change he needs in defense procurement, where change order cost overruns are epidemic. Lockheed just capitulated to Trump’s cost control demands on the F-35 program, revealing that a powerful wind of change has already taken hold in that realm of federal deal making.
Now Trump needs to set an example of how not to do construction spending in order to warn all parties to infrastructure spending that they too could become objects of scorn if they don’t change their ways.
Alinsky understood this:
“Ridicule is man’s most potent weapon.” There is no defense. It’s irrational. It’s infuriating. It also works as a key pressure point to force the enemy into concessions.
“Pick the target, freeze it, personalize it, and polarize it.”
So POTUS may well add his voice to the House hearings, probably via Twitter, ridiculing Jerry Brown and drawing attention to the Wollman rescue he performed – and shining a spotlight that may illuminate a few California voters on their governor's incompetence.
Jerry Brown is 78 years old, and it is showing. I am not sure he is up to the battle that lies ahead. His dream is crumbling before his eyes, and he has taken on a guy who is a “counterpuncher.”