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The Budget Deficit and High Speed Rail in California Are Totally Separate

By Robert Cruickshank

I've always believed that the main obstacle we will face in convincing Californians to build high speed rail this year isn't the pointless arguing over ridership projections or financial details. It's the fact that California faces a multibillion dollar budget deficit, and that will cause some voters to think "well gee maybe we shouldn't spend money when the state is in a deficit."

This thinking is very deeply flawed, but it's out there, as evidenced by a letter to the editor in yesterday’s Ventura County Star. The author, Ron Ruiz of Westlake Village, relies on several incorrect assumptions to argue that there is some kind of tradeoff between HSR and education funding:
“Despite the cuts to education, the California High Speed Rail Authority, as part of our transportation system, is seriously considering designing and constructing a high-speed rail line (200-plus mph) at an estimated cost of more than $33 billion....

“Wouldn't our leaders be more responsive and supportive to the people of California if they used their energy and wherewithal to provide the money that is critically needed for our strapped, declining educational system, instead of earmarking dollars and bond measures for a low-priority, nonsensical high-speed rail line that will serve but a fraction of our citizens?

“California's education system needs help and a lot more serious support from our legislators.

“Different departments? Different budgets? Different rules? If that's the case, then if our state lawmakers have made it impossible by regulation to effect this very urgent and reasonable budget trade-off, then those same lawmakers ought to be able to figure out how to bring about the necessary regulatory changes to make this budget trade-off work, in spite of the pressure from other special-interest groups.

“The buttressing of our decaying education system right now seems far more pressing and urgent than having a fast train.”

Ron Ruiz' problem is he doesn't understand why we have a budget crisis in the first place. The reason is California has a structural revenue shortfall - in other words, for the last 30 years we have not raised enough tax revenue to pay for our basic needs. The answer to this is NOT to turn to bonds - a structural problem needs a structural solution, and bond debt isn't such a solution.

Such an understanding of the real origins of our budget crisis shows us that this isn't a zero-sum game. HSR funding - which California's portion is $9 billion, not the $33 billion Ruiz claims - doesn't come from the same pot of money as education funding. They are not just separate, but completely unrelated. And it's not "regulation" that is the issue here, but the basic method of government. California needs more tax revenue to pay for its schools. That is a completely separate issue from how we finance high speed rail.

We have discussed this issue here before - noting that California can afford to build this project and in fact cannot afford to not build it. In April I wrote Building High Speed Rail in a Financial Crisis which made the same point - that HSR bond money comes from a different source, and is repaid through a different means, than education funding or the state budget more broadly.

To make it very easy for Ron Ruiz to understand: education funding must be paid for by new taxes. High speed rail is paid for with new bonds - which are repaid by the fares of HSR riders. Bonds can't be used to fund education, and taxes won't be used to fund HSR. They are entirely separate accounts.

Still, it's easy for folks like Ruiz to muddy the waters on this issue. Californians don't have a good understanding of how their government works (and their politicians and journalists don't offer much help), and that makes it possible to argue that if we build HSR, it somehow comes at the cost of some other need. It doesn't. That's now how budgeting works.

But maybe I'm giving Ruiz too much credit. If he calls HSR "low priority and nonsensical" then perhaps he is just using budgets as a fig leaf for his own failure to understand the pressing need for high speed rail.

Robert Cruickshank is a historian, activist, and teacher living in Monterey. He is a contributing editor at Calitics.com and works for the Courage Campaign, in addition to teaching political science at Monterey Peninsula College. Currently he is completing his Ph.D. dissertation in US history, on progressive politics in San Francisco in the 1960s and 1970s. A native Californian, he was raised in Orange County and educated at UC Berkeley. This article originally appeared in his California High Speed Rail Blog and is republished with his permission.

Posted on May 21, 2008

Comments

Commissar Cruickshank,

If HSR is placed on the Novemnber ballot as a BOND ISSUE, which it is likely to be, how would it then be "separate" from the state budget process?

The taxpayers will have to pay off California's "share" later rather than sooner and with the accumulated interest added on. A budgeting "technique" that is partially to blame for today's budget mess.

Your own above notes HSR will cost California alone $9 Billion, which is approximately 1/2 of TODAYS budget deficit. Is that a large enough amount to be cause for concern?

Posted by: Jay Gould at May 22, 2008 10:36 AM

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