A new independent assessment of California's high-speed rail project warns that the $43-billion effort — thought to be one of the nation's most developed — has inadequate management and a governing structure in need of sweeping reform.
In a report released Tuesday, the state Legislative Analyst's Office also said funding uncertainties and conditions attached to almost $3.5 billion in assistance from the Obama administration further threaten the proposal as it heads into its first phase of construction in the Central Valley.
The report recommended that the Legislature strip the nine-member California High-Speed Rail Authority board of its decision-making powers and that responsibility for the line's development be shifted to the California Department of Transportation.
Until the organizational issues and federal funding restrictions are resolved, analysts called on the Legislature to cut funding for the bullet train from $185 million to $7 million in the proposed 2011-2012 state budget.
"We have concluded that the current governance structure for the project is no longer appropriate and is too weak to ensure that this mega-project is coordinated and managed effectively," researchers said.
Although recommendations from the analyst's office are not binding, Sacramento lawmakers routinely look to them for nonpartisan advice on state financial matters.
But Assemblywoman Cathleen Galgiani (D-Tracy) defended the authority, saying that the researchers did not consult rail companies or agencies that have built high-speed train systems and that their report did not reflect the federal government's extensive work to justify supporting the Central Valley route.
Only this week, federal officials pushing to build high-speed transit systems across the nation sent California $300 million that had been turned down by Florida's Republican governor. In December, the state got $624 million that had been rejected by Ohio and Wisconsin.
"The LAO report is just an opinion, issued without a full knowledge and understanding of what it takes to plan and build a high-speed train system," said Galgiani, who wrote the high-speed rail ballot measure approved by voters in 2008. "There will always be some who will continue to slam the authority in the knees with a baseball bat and then ask them why they can't run any faster."
Eric Thronson, an analyst who worked on the report, said he believed that decision-making would be better given to a Caltrans division dedicated to high-speed rail and the California Transportation Commission, which allocates funds for state transportation projects. Both agencies, Thronson said, have decades of experience in building large projects.
The high-speed rail authority now operates with only a policy-setting board and a small bureaucracy to manage dozens of engineering, management and public relations contractors. Even the authority's own internal oversight panel has called the staff too small to handle such a large undertaking.
Roelof Van Ark, the rail authority's chief executive, vowed to work with the Legislature and said his agency would evaluate the analyst's report. But Van Ark defended the progress that had been made in developing a system that would link the Bay Area to Southern California with 220-mph trains.
So far, the authority has obtained about $3.5 billion in federal funding, including $400 million for the proposed Transbay Terminal in San Francisco. The authority is planning to begin construction in the Central Valley between the tiny towns of Borden and Corcoran with extensions to either Merced or Bakersfield.
That segment was mostly chosen so work could be done quickly enough to meet federal funding deadlines. But until more money is available, no high speed trains would operate on the route.
"I believe this project has been successful thus far because it has strived to operate more like a private business than a typical government bureaucracy," Van Ark said.
The analyst's report concluded that deadlines and requirements for spending federal funds need to be renegotiated and changed to provide legislators more time and greater flexibility to make the multibillion-dollar decisions they could soon face.
The researchers recommended negotiating with the federal government to modify a fall 2012 deadline for starting construction in the Central Valley and requirements that about $3 billion in federal funds be spent only on that segment.
State Sen. Alan Lowenthal (D-Long Beach), who chairs a select committee that oversees the high-speed rail proposal, said the project faces a big risk by building the Central Valley line first rather than a portion closer to a large population center that could sooner accommodate trains.
"What if there is no money? Is the valley the best place to start? Or should the line be built in usable segments in areas that have the most potential for success?" said Lowenthal, who has also proposed legislation to overhaul the authority board and shift day-to-day control of the project to the state Department of Building, Transportation and Housing.
The report "validates what we have been asking for," Lowenthal said. "We have to go much slower. We need to get more flexibility in terms of how we use these federal funds."
The legislative analyst questions whether the authority will be able to secure enough federal, state and local funding to complete the project.
Researchers say the assumptions in the project's business plan are optimistic and it is unclear whether state government, due to ongoing budget deficits, can afford debt payments on the $9.95 billion in bonds that voters authorized.