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Auditor warns high-speed rail is getting off track

April 29, 2010 |  1:07 pm

California may not be able to complete the high-speed rail system voters approved borrowing billions of dollars to create because of poor planning and lack of funding, the state auditor warned Thursday.

State Auditor Elaine Howle reported Thursday that the authority overseeing the rail system could very likely fall billions of dollars short of the funding it needed to complete the project. She wrote to Gov. Arnold Schwarzenegger and the Legislature to warn that construction of the system could face delays or might not be completed.

The California High Speed Rail Authority is counting on up to $19 billion from the federal government but only has a commitment of $2.25 billion so far. The federal funds are needed in addition to the $9 billion in borrowing approved by state voters.

The authority is charged with building a system of bullet trains speeding at up to 220 mph between Southern California and Northern California. Howle’s report, which concludes the authority’s planning has been inadequate, also takes aim at its goal of attracting private investment to the project. Investors typically seek government matching funds, and Howle writes that the authority has yet to articulate clearly how much that will cost and what government agencies will be called on to provide the funds.

Her audit also questioned oversight of the money the authority did have. She said it was not properly monitoring its spending as required to make sure no more than 2.5% went to administration. "Unless it tracks these funds and develops long-range plans for spending them, it risks running out of them prematurely,’’ Howle said. Howle recommended that the authority develop alternative plans in case the system had to be scaled back, and she said more needed to be done to address risks that might keep private investors from paying for much of the system.

Some of the recommendations were previously made by the nonpartisan state Legislative Analysts Office and are already being acted on, according to Carrie Pourvahidi, interim executive director of the rail authority.

"We welcome additional oversight of California’s high-speed train project," Pourvahidi said, adding that the authority was "refining" its business plan "to respond to questions about funding, risk management and ways to attract private investment."

-- Patrick McGreevy in Sacramento

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