6:51 PM EST
Jeff Denham, R-CA 10th

Mr. DENHAM. I thank the gentleman from California.

I, as many other Californians at one time, supported the California high-speed rail project. It was initially supposed to be a $33 billion project with equal amounts coming not only from the California taxpayers, in the form of a bond, but also private investors and the Federal Government.

Yet this $33 billion project has ballooned up to $100 billion. So what do they do for cost controls? They cut off the very legs that Mr. LaMalfa talked about, the section going to Sacramento, the section going to San Diego; but, still, it is a $68 billion project with a more than $26 billion hole just in the first initial operating segment alone.

Tomorrow, as chair of the Subcommittee on Railroads, we will be discussing a review of the challenges facing California's high-speed rail.

I want to reiterate I believe that high-speed rail is our future. I believe that as a growing economy, with more trucks and goods movement on the road, with more goods movement on rail that we have to look at alternative opportunities to move people. High-speed rail is one of those opportunities.

But in Florida, a project that is being done by private investors will have no ongoing subsidy. They need no Federal dollars. Texas will have its own high-speed rail system, again, with private dollars, no ongoing subsidy. Yet here in California, you have a $68 billion project with no private investor, with huge subsidies and overruns, and a project that cannot even get out of the initial gate.

So where we are today: California has no money to meet its Federal obligation. On November 14, we had a court decision that came back and said that they cannot spend the $9.95 billion that was approved by voters because they had failed to complete a full business plan. So with no dollars available, the Governor came out this week and said that we are going to use $250 million of the cap-and-trade dollars, cap-and-trade dollars that were supposed to be used for environmentally friendly projects.

Yet this project is going to be a net polluter, a net polluter for at least the next 30 years. So how he could come up with a legality of using these cap-and-trade dollars I think is in question.

But I think a bigger issue is a timing issue: $180 million is due April 1. The Antideficiency Act says that the State has to have its first set of matches, and that 50/50 match is due April 1. Yet the legislature is not even going to vote on this new budget and this theoretical $250 million in funds until, at the earliest, late June. California budgets usually come in in August, and I think it [Page: H216]

is a real question on whether liberals and conservatives can

agree on whether or not this environmental money will be used on high-speed rail.

But specifically on the operating segment, itself, the judge has said not only that they need to come up with the money on this initial construction segment, which stops in Bakersfield--so now we are going to have two sets of rail that stop in Bakersfield, and then you have to get on a bus to get across the Tehachapis. But they don't even have the funding for the initial operating section, which goes all the way to Palmdale. You won't be able to get the speed that they need going around, instead

of through, the Tehachapis; and they have a $20 billion funding gap in that first segment.

So some real questions: Are they going to meet the timeline of April 1? Is using the cap-and-trade dollars actually legal? And, third, this huge funding gap, where does that money come from? I think the Federal taxpayers across the Nation need to be asking the question, If you are going to subsidize all of California's high-speed rail projects, where do the matching dollars come from? If they could use the $9.95 billion, it is still not enough money. So if California can't come up with the Federal

match, what are the teeth that the Federal Government has to be able to hold California up to that Federal obligation?

We have some real questions that are going to be coming out tomorrow. The FRA has altered its approach. Once they realized that they couldn't do a 50/50 match, they went to a tapered match. That means that the Federal Government is going to come in with their money first, and then, hopefully, someday the State will come up with its matching dollars in a tapered manner. That tapered manner is coming through April 1. That is when that first $180 million is obligated.

But I think the real question is, Who is making these decisions? Did this go all the way up to the President? Was the past Department of Transportation Secretary or the new Department of Transportation Secretary involved in this decision? And if California can't come up with this tapered match, will they, once again, adjust this outside of Congress a second time?

So we have some real questions on what those legalities are. The next question would be the contingencies. What are the contingencies for the Federal Government to recoup its taxpayer dollars if California defaults on its obligations?

We have some real priorities in California. And as the Central Valley continues to suffer with a drought, as our schools continue to lag behind, as our public safety dollars continue to get robbed, is this the best use of our money? And should we be investing in something that, unlike Texas and Florida, has no private investors, has no State match, has a lot of funding questions that need to be answered before we move forward?