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Jun 11

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All Not on Board the California Express

In November 2008 a slim majority of California voters (52.6%) thought it would be cool enough to have a high speed rail run from San Diego to Sacramento that they voted for it. Buyer’s remorse soon followed. The Los Angeles Times confirms this buyer’s remorse in its finding that the slim majority has morphed into a sizeable majority that now opposes the rail. According to the poll, 59% now say they would vote against funding the project should it reappear on the ballot. In Southern California, 67% say they would reject the proposal given another chance.

In boom times, it is unlikely that brave and bold California would back away from spending hordes of public funds on ambitious infrastructure. In a speech earlier this year, Governor Jerry Brown puzzled how the state that built the Golden Gate bridge is not courageous enough to build a train. Bill Clinton’s unofficial 1992 campaign slogan answers that quandary.

The smashing success stories of Silicon Valley start-ups that once dominated California and U.S. news have been devoured by massive state deficits (just revised upward 74% to $16 billion), staggering unemployment rates (still hovering around 11% almost five years after the recession began), and the prospect of having the country’s highest marginal tax rate.

And, of course, doubling the projected cost of the high speed rail doesn’t elicit much enthusiasm.

When the gravy train loses all its gravy, it has to make you wonder if we still need the train. Californians seem to be concluding we don’t.

About the author

Eric Madsen

Mr. Madsen is a Chartered Financial Analyst (CFA) charterholder and a Manager at Fulcrum Inquiry, a finance and economics consulting firm that performs economic damages analysis involving commercial litigation, financial investigations, business valuations, and forensic accounting. He also holds an MBA from the UCLA Anderson School of Management and a B.S. in Economics. He conducts expert analysis in finance and economics. Mr. Madsen may be contacted at 213.787.4122 or at emadsen@fulcrum.com.

Permanent link to this article: http://betweenthenumbers.net/2012/06/all-not-on-board-the-california-express/

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