August 1, 2014

Rail bonds ruling weakens accountability

By Rail bonds ruling weakens accountability

If you believe in checks, balances and transparency in the public sector, it’s NOT a day for fist-pumps and giddy shouts of woo-hoo!

A green light has been given for billions of dollars in California High Speed Rail bonds, without the kind of rigorous oversight that voters were promised and that the state Constitution demands for the spending of bond proceeds.

Reversing Sacramento Superior Court Judge Michael Kenny, a California appellate court has given its seal of approval to $8.6 billion in rail bonds.

Judge Kenny found he wasn’t given enough information to review the reasonableness of the bureaucracy’s decision to take the bonds to market, so he applied the brakes.

The Third District Court of Appeal held, in essence, that Kenny exceeded his authority: The “mere” decision on when it would be “necessary or desirable” to sell the bonds was not a “substantive” one, the appellate court ruled, so there was “little room for judicial intervention.”

The other major issue of oversight involves the state Constitution, and its requirement that bond money must be spent for the purposes promised to the voters who signed off on the bonds.

In PLF’s briefing opposing the bond validation, we pointed out that the state hasn’t shown that the current spending plans approved by the Legislature — including more than $1 billion for local “bookend” transportation projects in Los Angeles County and the Bay Area — are consistent with true “high speed rail,” as marketed to voters when Prop. 1A was on the ballot in 2008.

In other words, are taxpayers and voters being taken on a “bait and switch” express? We argued that this question must be answered before the bonds are validated and sold and taxpayers are put on the hook for repaying them, with interest, over decades.

Unfortunately, the appellate court held that challenges to the spending plans must come in other litigation, not in the bond-validation proceedings.

So, could the bonds end up being sold before the legality of the spending plans is finally determined?

This is hardly an inspiring way to run a railroad — especially when you’re talking about one of the most expensive public works projects in American history.

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