The California High-Speed Rail Authority has failed to honor its earlier promises and is quickly losing the public's and the Legislation's trust, members of a state Senate subcommittee said Thursday during a contentious hearing on the rail project.
State Sen. Joe Simitian, D-Palo Alto, and State Sen. Alan Lowenthal, D-Long Beach, scheduled the meeting to discuss the authority's responses to a critical report that State Auditor Elaine Howle released in April and to a study from UC Berkeley's Institute of Transportation Studies that found the rail authority's ridership projections unreliable. They learned that the rail authority has addressed fewer than half of Howle's recommendations and is just now starting to address the scathing report from ITS.
"It's hard to express my frustration adequately in terms of where we are today on these issues," Simitian said, "It seems we were having the same conversation a year ago, if not two years ago."
Howle, who testified at the Thursday meeting, said her agency was disappointed in the authority's response to her audit. Most of the authority's responses are still "pending," she told the authority.
"We'd expect more progress in the six-month response," Howle told the senators.
Rail CEO Roelof van Ark told the two legislators and Howle that his agency's response has been severely hampered by the state's 100-day budget impasse, which was finally resolved in early October. The authority is now hiring new auditors and a new financial analyst to address Howle's concerns.
Van Ark also said that he just formed a new peer-review group to update the ridership projections. He also said the authority is preparing a new business plan.
"We can only start with some of this work when we get the budget," van Ark said.
Howle's audit -- titled "High-Speed Rail Authority: It Risks Delays or an Incomplete System Because of Inadequate Planning, Weak Oversight, and Lax Contract Management" -- found that the rail authority has failed to keep track of its contractors' work and has no plan in place for paying for funding the $43 billion project. Auditors reviewed 22 invoices and found errors or discrepancies in 20 of them.
Simitian acknowledged that the rail authority has a short staff, but noted that the agency "found a way to spend millions of dollars on other things." He also brought up the recent findings by the Legislative Counsel Bureau that two members of the rail authority's board of directors could be serving in violation of a state law that governs conflicts of interest and recent findings by the Los Angeles Times that rail authority board members had failed to properly document their trips abroad.
Van Ark did not address those issues Thursday, but provided the legislators with a Power Point presentation geared toward showing that high-speed rail could work in California -- a point that neither senator had ever disputed.
"I raised concerns about incompatible offices and about potential conflicts and your response is, 'Could we have more money sooner?'" Simitian told van Ark. "I am flabbergasted -- and it takes a lot to flabbergast me."
Simitian and Lowenthal have persistently called for more transparency and more robust business plans from the rail authority. On May 24, they inserted a provision in the state budget calling for the authority to return in February with an improved business plan. At that hearing, rail authority officials publicly pledged to honor the February deadline.
Simitian said he had spoken to van Ark after the May meeting and was assured by van Ark that the authority would not oppose this provision.
"Mr. van Ark looked me in the eye and said, 'I'm prepared to live with this budget language,'" Simitian said.
Simitian said he received a letter from van Ark on Oct. 7 stating that he is "no longer prepared to honor the language in the budget." The next day, Gov. Arnold Schwarzenegger vetoed the budget provision.
"I was advised by sources that this veto was a direct result of a request from folks at the High-Speed Rail Authority to veto the language that was openly committed to in a public hearing," Simitian said.
"At that point, it becomes that much harder to work on the basis of trust and expectation of good faith," he added.
Lowenthal also said he was disappointed with the rail authority's response and its changing projections. He noted that the project approved by California voters in 2008 carried a $33 billion estimate, which ballooned to $43 billion last year. The projections for a ticket price shot up from about $55 in the initial environmental documents to more than $100 in the most recent business plans.
"Numbers just change," Lowenthal told van Ark. "It just left us with a sinking feeling that we don't know what to trust and whom to trust."