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Recent Research and Commentary

ANALYSIS: Is Managed Competition Dead in San Diego?

Subsection of Annual Privatization Report 2013: Local Government Privatization
May 6, 2013

Adam Summers

This subsection of Reason Foundation's Annual Privatization Report 2013: Local Government Privatization reviews San Diego's efforts to implement a managed competition program.

ANALYSIS: San Diego, San Jose Lead the Way in Local Pension Reform

Subsection of Annual Privatization Report 2013: Local Government Privatization
May 6, 2013

Adam Summers

This subsection of Reason Foundation's Annual Privatization Report 2013: Local Government Privatization reviews San Diego and San Jose's efforts to implement pension reform.

The GAO Didn't Endorse the California High-Speed Rail Project

GAO says "there is increased risk of such things as cost overruns, missed deadlines, and unmet performance targets"
April 11, 2013

Wendell Cox, Joseph Vranich

The Government Accountability Office (GAO) recently issued its congressionally-requested report on the California high-speed rail project. The rail project’s promoters have gone out of their way to characterize the GAO analysis as giving the California plan a "clean bill of health and the California High-Speed Rail Authority (CHSRA) claims GAO gave the project "high marks." 

The GAO report, California High-Speed Passenger Rail: Project Estimates Could Be Improved to Better Inform Future Decisions, however, does not represent the endorsement suggested by proponents. 

California High-Speed Rail: An Updated Due Diligence Report

The California high-speed rail project cannot be delivered at the cost promised to taxpayers, is based upon a business plan incapable of delivering on its legal requirements and is justified by proponents based upon unachievable benefits
April 11, 2013

Joseph Vranich, Wendell Cox, Adrian Moore

Reason Foundation’s 2008 report, The California High Speed Rail Proposal: A Due Diligence Report, warned that plans by the California High-Speed Rail Authority (CHSRA or Authority) issued prior to and during 2008 were inaccurate, misleading and not in compliance with California statutes. As well, it found that the Authority’s financing plan overstated projected revenues and private financing, and understated capital requirements and operating subsidies needed from taxpayers. Subsequent independent studies and new Authority documentation have proven virtually every characterization in Reason’s 2008 Due Diligence Report to be accurate or understated.

This report updates Reason’s 2008 Due Diligence Report by addressing and evaluating numerous changes in California’s plan to build a high speed rail (HSR) system between San Francisco and Los Angeles via the San Joaquin Valley. This Due Diligence Update addresses the Authority’s revised documentation, business plans and public statements issued between 2008 and late-2012, which are found to be similarly inaccurate, misleading and in violation of the laws guiding the project. Additional analysis is warranted to respond to the Authority’s newer yet illusory capital cost reductions, likely capital cost escalations, need for operating subsidies, slower train schedules, high ridership projections, and the inability to meet the statutory requirement to link Los Angeles and San Francisco in 2 hours and 40 minutes or less.

The primary focus of this Due Diligence Update is the CHSRA’s Draft Revised Business Plan issued in April 2012 that outlines how high speed trains will operate on the same tracks as local commuter trains (“blended systems”) into San Francisco and Los Angeles, which now are called the “bookends” of the system. The blended system replaced the cost-prohibitive Full Phase 1 system that had new rail lines dedicated exclusively to high speed trains into San Francisco and Los Angeles. Despite the characteristics of the blended system that slow train-speed and shorten lines, which makes the system less high-speed and less competitive, CHSRA continues to use the ridership and train-speed data from the Full Phase I system in its original plan in its analysis of the blended plan’s viability. 

Current plans are now identified as “Phase 1 Blended,” which the CHSRA estimates will cost as much as $63.2 billion in 2011 inflation-adjusted dollars ($78.0 billion in year-of-expenditure dollars) with the only sources of funding being $9 billion in California Proposition 1A general obligation bonds and $3.5 billion in federal grants. Further funding is highly speculative if not outright non-existent for the remaining capital needed, which may exceed $50 billion.

As will be shown in this Due Diligence Update, the CHSRA April 2012 Business Plan is so deficient that it is inconceivable that policymakers would continue to rely on its assertions to evaluate the program. This report is not alone in identifying shortcomings in CHSRA’s plans and documentation, and will include findings from other state agencies and independent reviewers.

Leave It to California

Furloughs Lead to Higher Leave Payouts to State Workers
April 9, 2013

Adam Summers

Most full-time workers receive vacation time and other leave benefits. But California’s state government workers are cashing in on these benefits like few others.  A new report from the nonpartisan Legislative Analyst’s Office sheds light on how California state workers are abusing vacation benefits and pushing the state’s leave balances to "unusually high levels.”

Reform California’s Tax System to Boost Economy

February 13, 2013, 6:26pm

Adam Summers

It is time policymakers in California realize the more taxes and more regulations are not getting the job done. If they truly want to jump-start the state's economy and "create jobs," they should reverse the many years of failed policies by reducing the high taxes and voluminous red tape that are strangling the state's economy. A good place to start would be to level the playing field by getting rid of special tax breaks for politically-favored industries and cutting business taxes across the board.

California Must Reform Tax Code to Spur Economic Growth

State Should Eliminate Special-Interest Tax Breaks, Lower Business Taxes for All
February 11, 2013

Adam Summers, Jon Coupal

Eliminating the special tax breaks in the state's tax code would allow California to significantly lower its burdensome business taxes, which would increase competition, business investment and economic activity.

Gov. Jerry Brown's Budget Breaches Prop. 30 Promise

California uses budgetary gimmicks and trickery to move money around
February 4, 2013

Adrian Moore

"We have wrought in just two years a solid and enduring budget," Gov. Jerry Brown declared in his State of the State address, Jan. 24. "Against those who take pleasure, singing of our demise, California did the impossible."

Not really.

In reality, Gov. Brown's budget increases unsustainable spending by relying on revenue that is unlikely to materialize and by simply ignoring most of the state's debt. It also violates promises Gov. Brown made to voters leading up to the November 2012 election.

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