Under a little-noticed item in Gov. Jerry Brown's proposed budget, the state would lend California's bullet train agency $29 million to keep the project moving ahead amid increased uncertainty about the availability of future funding for the massive project.
The proposed loan follows a similar $26-million advance last year from general government revenues that prompted some lawmakers to voice concern about the possibility that such lending would take money away from other high-priority projects.
At a state Senate hearing last year, rail officials gave lawmakers assurances the state would prevail against legal challenges to the project and be able to repay the loan from $9 billion in voter-approved bonds designated specifically for the Los Angeles-to-San Francisco rail line.
But access to that money was recently blocked by a Sacramento judge who found the state High-Speed Rail Authority failed to comply with legal restrictions on the bonds. In addition to the new $29-million loan, which would come from state transportation project accounts, the governor is asking for approval to direct $250 million from levies on greenhouse gases generated by businesses to the rail project.
A key project supporter, state Senate President Pro Tem Darrell Steinberg (D-Sacramento), has raised questions about the governor's bullet train financing proposal and hasn't indicated whether he will back the latest proposed loan. The state rail agency declined to comment on the loan and how it would be used.
Rail officials hope to break ground on the first 29-mile segment of track in the Central Valley this summer.
As a result of recent rulings by Sacramento County Superior Court Judge Michael Kenny, rail officials have been forced to rely heavily on federal grants for the project. In a pair of key decisions, Kenny refused to validate the sale of high-speed rail bonds and separately ruled that the state's bullet train funding plan did not meet requirements to identify sources of all the money needed to finish the first usable segment of the line.
Under agreements with federal agencies, the state must begin contributing matching dollars to the project April 1, according to a congressional attorney who testified at a recent House hearing.
State rail officials have said they expect to persuade the court to free up the state bond money. But they have not indicated how they intend to do that, or where the state money will come from for the April 1 contribution. The Legislature typically doesn't approve a state budget until June or later in the summer.
Elizabeth Alexis, a co-founder of a Bay Area group that has criticized the current project plan, said the governor's proposed loan is risky because the state's ability to repay it is uncertain. "They are doubling down on their bet," Alexis said.