A recent state report alleging that high-speed rail consultants billed the agency $600,000 in improper travel and other expenses is, in the scheme of things, not the biggest deal for a $126 billion project. Not when Californians were once told the project could cost as little as $33 billion. The $93 billion price jump is the real scandal.
Even so, the report of cavalier spending is a slap in the face to Californians. Trips to a nightclub, cigar lounge, tiki bars, an escape room and first-class plane upgrades may be budgetary rounding errors, but the scandal is indicative of rail officials’ poor oversight and sense of entitlement.
“Investigators looked at travel expenses submitted by four consulting firms over a two-year period and found that most of the trips were unauthorized, poorly justified — at times at the agency’s top executives’ request — and that agency staff failed to sufficiently vet the requests before approving them,” CalMatters explained. The firms involved are KPMG LLP, Nossaman LLP, AECOM-Fluor Joint Venture and SYSTRA/TYPSA Joint Venture.
The Office of the Inspector General noted: The authority oversees “a technically complex endeavor for which it has reasonably hired consultants with needed expertise. Even so, as a state agency, the Authority has the responsibility to comply with state regulations, enforce the terms of its contracts, and safeguard public funds.” That’s on point, but who can be surprised given the history of the project?
State officials and the courts have allowed the rail authority to wantonly ignore the specific details of the Proposition 1A ballot initiative that voters approved in 2008, which authorized $9.95 billion in starter bonds. The measure made specific promises about funding, travel times, business plans, routes and costs, but the state has proceeded even after it morphed into something voters wouldn’t recognize.
The state’s response to this situation has been par for the course. Instead of firing the consultants, members of the board overseeing the California High-Speed Rail Project worried it would slow down an already delayed project. The board did however vote 7-to-2 to strip Chief Executive Ian Choudri of his sole authority to sign and approve contracts under $25 million. The rail authority’s lawyers will now have to approve contracts.
Most telling, the inspector general issued some modest recommendations for corrective action involving expense approvals, but the authority said it will only partially comply with them. That is indicative of the authority’s sense of invulnerability. No wonder a $33-billion project has ballooned to $126 billion and, by some estimates, may soar above $200 billion.
State officials need to see this report as a warning — and look closely at more significant bullet-train spending if they want to rebuild any semblance of public trust in the project. Or, better yet, they can stop trying to rationalize this boondoggle and terminate it once and for all.