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Costing Out Governor’s Tunnel Vision

Wednesday August 24th, 2016   •   Posted by K. Lloyd Billingsley at 3:49pm PDT   •  

37727744 - determined businessman gets out of the tunnelAs we noted, California’s vaunted high-speed rail project will require 35 miles of tunnels through the mountains north of Los Angeles. Governor Jerry Brown, a backer of the bullet train, also has tunnel vision for the Sacramento-San Joaquin Delta. Brown wants to dig 35 miles of tunnels to convey water to the State Water Project and Central Valley Project. The tunnels are officially known as the California WaterFix, and as Dale Kasler notes in the Sacramento Bee, a 2013 state cost-benefit study concluded that the project “makes financial sense.” On the other hand, according to Jeffrey Michael, director of the Center for Business and Policy Research at the University of the Pacific, the tunnels are a financial bust.

In the new study, Benefit-Cost Analysis of The California WaterFix, Michael argues that the project “is not economically justified under both the base and optimistic scenarios.” According to his estimate, Waterfix will provide “only 23 cents of benefits for each dollar of cost.” Construction costs, estimated at $16 billion, “are still more than 2.5 times larger than benefits.” The project could only be justified “if its construction and mitigation costs were below $2 billion or if its water yield could be increased from an annual average of 225,000 acre feet per year to about 2 million acre feet per year without negatively impacting the environment or causing any additional harm to other water users.”

As Michael’s study emerges, Gov. Brown is seeking approval for WaterFix from two federal agencies. As Kasler explains, state officials “believe it’s crucial to get those approvals before President Barack Obama leaves office next January, or risk losing momentum on the entire project.”

Gov. Brown appears undisturbed by the financial, environmental and safety concerns, and his brand of tunnel vision can’t reverse itself. The governor prefers to focus on the joys of spending and a glowing legacy down the road. Long after he leaves office, California taxpayers, and their children, will be stuck with the costs.

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August 2016