Capitol Alert

Newsom claims ‘retribution’ after Trump administration demands high-speed rail funds back

The Trump administration, stepping up its fight with California over the state’s struggling high-speed rail project, said Tuesday it plans to rescind a $928 million federal grant.

The action could imperil the first phase of the project, connecting the major cities of the San Joaquin Valley, which is dependent on federal funding.

The Federal Railroad Administration, in a letter to the California High-Speed Rail Authority, said it intends to terminate the grant effective March 5, saying state officials had failed to comply with the terms of the funding. Congress appropriated the money in 2010.

Among other things, the federal agency said Gov. Gavin Newsom’s plans to downsize the project represent “a significant retreat from the state’s initial vision and commitment and frustrates the purpose for which federal funding was awarded.”

Newsom, in a prepared statement, said “it’s no coincidence that the administration’s threat comes 24 hours after California led 16 states in challenging the president’s farcical ‘national emergency (seeking funding for a border wall).’ The president even tied the two issues together in a tweet this morning. This is clear political retribution by President Trump, and we won’t sit idly by. This is California’s money, and we are going to fight for it.”

The move came a week after Newsom, in his State of the State address, said he wants to scale back the rail project, which is billions of dollars over budget, and focus on completing a stretch between Merced and Bakersfield. However, the Democratic governor insisted he isn’t killing the rest of the project altogether and said the state will explore ways of financing a project that links the Bay Area with Southern California.

President Donald Trump jubilantly tweeted a day later that the project was a “green disaster” and that California owes the federal government $3.5 billion that had been committed to the rail project. “We want that money back now,” the president tweeted.

Newsom said in the State of the State that he had no intention of returning any funds to the federal government.

The initial San Joaquin Valley segment of the project, which has been under construction since 2015, is counting on more than $3 billion in federal funding, including the $928 million appropriated in 2010 and more than $2 billion in economic stimulus dollars approved by Congress the year before. The Valley segment is expected to cost a total of more than $10 billion.

Linking the Bay Area with Southern California is estimated to cost $77 billion, more than double the initial estimate. That figure includes the cost of the Valley segment.

Newsom administration officials last week said they are working on a “project update” report to be published some time this spring, and are expected to include a new financial analysis.

Besides pouncing on Newsom’s decision to scale back the scope of the project, the Railroad Administration said the California project has missed several deadlines that were tied to the $928 million appropriation, and has no chance of finishing the first phase of the project by the 2022 deadline.

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In addition, the rail authority “has failed to provide FRA with timely and satisfactory financial reports and other related deliverables. Without these deliverables, CHSRA has not demonstrated that it is making reasonable progress or effectively managing the project,” the railroad administration said.

The federal announcement elicited mixed reactions from Central Valley leaders.

Democratic Assemblyman Joaquin Arambula, who represents the Fresno area and sits as an ex officio member on the High Speed Rail Board, said he believes the state will be able to show the federal government it is “satisfying its commitments and obligations and is making reasonable progress.”

He said the project is already creating thousands of jobs, and he lauded Newsom’s idea of focusing on the Merced-to-Bakersfield segment first, then ultimately connecting the whole state.

“Unfortunately, President Trump is playing politics with California’s jobs, infrastructure, and economy,” he said in an emailed statement.

But Republican Assemblyman Jim Patterson, who represents Fresno, lashed out at the state’s High Speed Rail Authority, calling it a rogue agency that has mismanaged the project and has torn up Fresno during construction without apparently having the money to finish.

“This is just one calamity after another,” he said. “I am very concerned that we are going to be left scarred from one end of the city to the other. They have to make us whole. You can’t rip us up and leave.”

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Dale Kasler covers climate change, the environment, economics and the convoluted world of California water. He also covers major enterprise stories for McClatchy’s Western newspapers. He joined The Bee in 1996 from the Des Moines Register and graduated from Northwestern University.