By Joel B. Pollak, Feb 13, 2019

President Donald Trump demanded Wednesday evening that the State of California return $3.5 billion in federal funds after Gov. Gavin Newsom canceled most of the state’s high-speed rail project, saying it was too expensive.
“California has been forced to cancel the massive bullet train project after having spent and wasted many billions of dollars,” the president tweeted. “They owe the Federal Government three and a half billion dollars. We want that money back now. Whole project is a “green” disaster!”

Newsom devoted the opening portion of his first “State of the State” address Tuesday to attacking Trump and his policies on the border. Yet he then bowed to conservative criticism — and, arguably, to fiscal reality — by canceling the high-speed rail project championed by his predecessors.

The governor added that while the bullet train would no longer connect San Francisco and Los Angeles, as first envisioned, the state would still continue “phase one” of the project between the rural towns of Bakersfield and Merced. “I know that some critics will say this is a ‘train to nowhere,'” he said. “But that’s wrong and offensive.”

Newsom added that the state had to continue the project if it wanted to keep the federal funds it had taken: “I am not interested in sending $3.5 billion in federal funding that was allocated to this project back to Donald Trump.”

The money was granted to California as part of President Barack Obama’s stimulus, which set aside “$8 billion in federal stimulus money to create 13 high-speed rail corridors,” the New York Times reported at the time.

Obama pressured states to take the cash — which Democrat-governed states eagerly did. But the Republican wave of 2010 brought new governors to office, and several rejected their state’s high-speed rail plans as costly and unnecessary.

California has already spent over $5 billion on the high-speed rail project — roughly the same amount that Trump had requested for the border wall.

https://www.breitbart.com/politics/2019/...ifornias-money/

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By JEREMY B. WHITE and DEBRA KAHN, 02/13/2019

Donald Trump seized on Gov. Gavin Newsom’s decision to refocus California’s high-speed rail away from a promised San Francisco-to-Los Angeles leg, falsely trumpeting Wednesday night that California had been “forced to cancel” the project.

The Twitter broadside from Trump illuminated the political peril of conceding, as Newsom did bluntly during his State of the State address, that the full train route has been rendered unfeasible by spiraling costs and logistical challenges.

It also suggested that the fate of high-speed rail — a project long assailed by conservatives as an example of liberal profligacy — will become another flash point between Sacramento and Washington as Newsom contrasts his ascendant governorship with Trump’s agenda.

In his tweet, Trump claimed California officials “owe the Federal Government three and a half billion dollars. We want that money back now.”

That demand seems unlikely to find much traction from Newsom, who opened his State of the State address by lambasting Trump’s immigration policies and later said he was “not interested in sending $3.5 billion in federal funding that was allocated to this project back to Donald Trump.”

Within minutes of Trump’s tweet Newsom blasted back that Trump’s tweet was “fake news,” saying California was forging ahead and reiterating that California would not be returning any funds.

“The train is leaving the station — better get on board!” Newsom tweeted. “(Also, desperately searching for some wall $$??)”

The state received $2.6 billion in 2010 through the American Recovery and Reinvestment Act and received an additional $929 million the following year, for a total of $3.5 billion.

Under the terms of the Recovery Act grant, the state originally had to finish Central Valley construction by September 2017, but received an extension to December 2022. A California auditor’s report last year warned that missing the deadline could mean forfeiting federal money.

Sacramento was abuzz Tuesday over Newsom’s acknowledgment of the vulnerabilities of high-speed rail — a departure from his predecessor, former Gov. Jerry Brown, a strenuous advocate for the project who tended to downplay or dismiss warnings about the mounting cost, legal hurdles and engineering problems.

A scathing November 2018 audit by the State Auditor said that the state could have to pay the entire $3.5 billion back if the project misses the deadline. Auditor Elaine Howle cited a Government Accountability Office legal opinion that found the federal government could demand the $2.6 billion to be returned and could recover the funds by offsetting other federal payments to the state. The $2.6 billion has already been spent, she noted.

"If the Authority does not complete the construction by the federal government's December 2022 deadline, it may need to repay $3.5 billion," Howle wrote. The Authority said in its response to the audit that it would develop a contingency plan by May for responding to a scenario in which it has to repay the money.

In his State of the State speech, Newsom said it was time to “be real” and acknowledge that the swift train as currently planned “would cost too much and take too long.”

“There’s been too little oversight and not enough transparency,” Newsom said. “Right now, there simply isn’t a path to get from Sacramento to San Diego, let alone from San Francisco to LA.”

His office was quick to try and knock down reports that Newsom had canceled or suspended the train, saying he was emphasizing an already-under-construction leg in California’s rural Central Valley and still wanted to see the project to fruition.

But national Republicans pointed to Newsom’s comments as an affirmation of the project’s failure. House Minority Leader and Bakersfield Republican Kevin McCarthy reacted by crowing on Twitter that “the train to nowhere is finally stopped.”

“I look forward to working w/ Governor Newsom and federal officials in the coming weeks to best mitigate what has already been wasted on high-speed rail due to the previous Administration,” McCarthy said.

Voters passed a bond measure to fund the train in 2008. The project drew vocal support from Republican Gov. Arnold Schwarzenegger, who lauded federal outlay in 2010 as "fantastic news for job creation in California," and from Brown, who pushed for a dedicated funding stream from California’s cap-and-trade program.

It has become a prime target for California Republicans, many of whom — including John Cox, the Republican gubernatorial candidate who lost to Newsom in November — have called for halting the project. Conservative backers of an unsuccessful ballot initiative to repeal California’s gas tax have since begun gathering signatures for a separate ballot measure that would nix high-speed rail.

But some Democrats have also expressed frustration with the project’s stumbles. Rep. Mark DeSaulnier, a Bay Area Democrat who voted against the initial bond outlay while in the Legislature, told POLITICO that Newsom’s redirection was a concession to “the reality of the project.”

“What they’ve pivoted to is a lot more realistic,” DeSaulnier said, adding that the initial promises made to voters were “not accurate.”

https://www.politico.com/states/californ...il-money-854318