Agency accused of hiding cost overruns and accounting information from lawmakers
SACRAMENTO – A group of Republican lawmakers today sent a letter to Assembly Speaker Toni Atkins urging her to subpoena the California High Speed Rail Authority (CHSRA) to produce all accounting documents regarding cost estimates for the first phase of the high speed rail project. The investigation will confirm if the Authority intentionally misled the Legislature.
The letter also requests the creation of a special committee to receive sworn testimony, under penalty of perjury, from CHSRA officials.
“If a company in the private sector keeps two sets of books - one for themselves and one for the regulators, they would go to prison. The state agency that oversees this project is guilty of exactly that and instead of filing charges, they were given more money,” said Assembly Republican Leader Kristin Olsen (R - Riverbank). “The agency leaders who attempted to thwart legislative oversight of their project must be held accountable.”
“The California High-Speed Rail is the largest public works project in history,” said Assemblyman Jim Patterson, (R-Fresno). “The Legislature has the right and the duty to oversee this project and keep the authority accountable.”
"The California High Speed Rail Authority was caught playing hide and seek with taxpayer dollars,” Said Assemblyman Scott Wilk (R-Santa Clarita). “The biggest public works project in mankind deserves oversight and we are committed to using the full power of the Legislature to hold them accountable.”
A recent article from the Los Angeles Times revealed the existence of a confidential internal document that estimates the cost of completing the first phase of the High-Speed Rail project at $9 billion more than the estimate presented to the Legislature four months later. The subpoena requests a copy of these confidential reports and any internal communications discussing them.
In effect, the documents revealed by the Los Angeles Times appear to show that CHSRA was keeping two sets of books and presented the less costly numbers to the Legislature. The subpoena seeks to clarify what information CHSRA leadership knew internally as opposed to the information it has released to the public.
The full text of the letter can be found below:
October 28, 2015
Honorable Toni G. Atkins, Speaker
California State Assembly
State Capitol, Room 219
Sacramento, California 95814
Dear Speaker Atkins:
Pursuant to Joint Rule 35.5, we are writing to request a subpoena to compel the California High-Speed Rail Authority to produce records, as described below.
On October 24, the Los Angeles Times revealed the existence of a confidential internal document, which “estimated that the cost of building the first phase from Burbank to Merced had risen 31 percent, to $40 billion.” The Authority’s project management team “briefed state officials on the estimate in October 2013, according to the document obtained by The Times. But the state used a lower cost estimate when it issued its 2014 business plan four months later.”
The business plan is a document submitted to the Legislature every two years, and the law requires it to contain “the estimated capital costs for each segment or combination of segments.” The 2014 business plan was released on February 7, 2014, and estimated the capital cost for the Burbank to Merced segment as $31.2 billion. There is a $9 billion discrepancy between the Authority’s internal cost estimates, and the numbers it provided to the public and the Legislature four months later.
The business plan, which we now know to be the lower of two estimates, was used as the basis for the Legislature’s decision to continuously appropriate 25 percent of Cap-and-Trade revenue for High-Speed Rail. The Authority continued to mislead the Legislature in two subsequent project update reports, and has yet to publicly disclose this $9 billion cost increase.
The internal Authority document says that state officials were briefed on the higher estimate, but both project update reports to the Legislature were reviewed and signed by Authority CEO Jeff Morales, and Secretary of Transportation Brian Kelly. If these officials were briefed on the cost increase, then they approved these reports in an attempt to misrepresent facts and mislead the Legislature.
Construction of High-Speed Rail is the largest state public works project in the nation’s history. The Legislature must play a critical role in exercising oversight, and ensuring the responsible use of public funds. These efforts are undermined when the Authority withholds material facts, and intentionally provides the Legislature with false information. A subpoena is necessary to investigate these troubling claims, and uncover the truth behind this $9 billion deception.
We therefore request that Assembly Rules Committee issue a subpoena to the High-Speed Rail Authority for the following papers, books, accounts, reports, documents, and records:
- A copy of the confidential report described in the Los Angeles Times article referenced above.
- A list of state officials briefed on the content of this report.
- All internal electronic and paper documents discussing the content of this report.
- All internal electronic and paper documents discussing preparation of the 2014 Business Plan, as well as the November 15, 2014 and March 1, 2015 Project Update Reports to the Legislature.
Additionally, we request that the Legislature create a special committee to have officials sworn in under oath under penalty of perjury in order to determine whether High-Speed Rail Authority officials acted to intentionally mislead the Legislature and the people of California.
Thank you for your prompt consideration of this matter.
Assembly Republican Leader Kristin Olsen (R – Riverbank)
Assemblyman Tom Lackey (R- Palmdale)
Assemblyman Jim Patterson, (R-Fresno)
Assemblyman Scott Wilk (R-Santa Clarita)