High-Speed Passenger Train Bond Act.
Legislative Bond Act

THE QUESTION

Should the state of California be authorized to issue $9.95 billion of general obligation bonds to partially fund a high-speed passenger train system?

THE SITUATION

The California High-Speed Rail Authority, formed in 1996, is the state entity responsible for planning, constructing, and operating a high-speed train system serving the state’s major metropolitan areas. It has spent about $60 million so far on planning and development. The system could potentially carry over 100 million passengers annually by 2030. The Authority estimated in 2006 that the total cost of this system would be about $45 billion. The bonds from this proposition would provide part of the needed funding.

THE PROPOSAL

Proposition 1A would authorize California to issue $9.95 billion of general obligation bonds, to be repaid from the state’s General Fund, to partially fund this high-speed rail system. The measure requires a simple majority vote for approval.

The funds would be available when appropriated by the Legislature. $9 billion would initially be used, together with any other available funds, to construct the segment from San Francisco to Los Angeles and Anaheim. The funds could also be used to construct additional segments of the high-speed train system if that would not adversely affect the initial phase. The other $950 million would be available to fund improvements to other passenger rail systems. The measure limits the use of funds for planning activities and administrative expenses, creates an independent peer review group to review the Authority’s plans, and requires the State Auditor to audit use of the funds.

FISCAL EFFECT

If the bonds are sold at an interest rate of 5 percent and repaid over 30 years, the cost to the General Fund would total about $19.4 billion in principal ($9.95 billion) and interest ($9.5 billion), with an average payment of about $647 million per year. The completed train system will likely have operating costs of over $1 billion annually, which would be at least partially offset by passenger fares.

WHAT A YES or No VOTE MEANS

A YES vote would mean that California could sell $9.95 billion of general obligation bonds to partially fund a high-speed passenger train system.

A NO vote would mean that California could not sell the bonds.

SUPPORTERS SAY

• High-speed rail will be a convenient and affordable alternative to high gas costs, highway congestion, and expensive and declining airline service.
• Prop. 1A will create nearly 160,000 construction-related jobs and 450,000 permanent jobs in tourism and related sectors.
• High-speed rail will reduce our reliance on foreign oil and improve the environment by cutting greenhouse gases and using less energy.

OPPONENTS SAY

• Prop. 1A is a boondoggle that will cost taxpayers billions while adding to our bond debt at a time
  of budget crisis and cuts in services.
• Californians’ most important traffic problems involve getting to work, not travelling between major cities.
• There is no accountability as to how the bond proceeds will be spent, and no assurance that other funds will be available.

FOR MORE INFORMATION

Supporters: Californians for High Speed Rail
http://www.californiahighspeedtrains.com/

Opponents: Derail HSR
http://www.derailhsr.com/

For more information from the League of Women Voters and others, see Smart Voter on Proposition 1A.

The League of Women Voters of California is a nonpartisan organization committed to informed and active citizen participation in government. All citizens, men and women, of voting age are welcomed to join. The League has two roles, citizen education and advocacy. Our election services are carried out by the League of Women Voters of California Education Fund (LWVCEF) and exclude all advocacy.