Looking to rail to reduce traffic.

Two significant problems affecting the economy and quality of life in California (specifically the Los Angeles region) could be resolved, or at least reduced by the same solution. The two problems I am referring to are traffic congestion and the loss of jobs and revenues, resulting from the quickly disappearing manufacturing industry. The solution is an expanded rail system together with a network of inland fulfillment and distribution centers.

On April 15, 2002, the Alameda Corridor ("Corridor") opened for business. The Corridor is a 20-mile freight rail expressway linking the ports of Los Angeles and Long Beach to the downtown rail yards and consists of a series of bridges, underpasses, overpasses and street improvements that separate freight trains from street traffic and passenger trains.

The Corridor has significantly enhanced port-related rail capacity by consolidating branch lines, eliminating 200 at-grade crossings and increasing average train speed from 20 mph to 40 mph. According to a "White Paper" released in February 2004 by METRANS Transportation Center and the USC Keston Institute for Infrastructure, approximately 38 trains per day were using the Corridor at that time. It has been estimated that each train replaces 250 trucks and that the Corridor has a capacity of 150 trains per day.

Thus the Corridor rails have the capacity to replace up to 37,500 trucks per day.

The cost of the Corridor was slightly over $2.4 billion and was financed from a unique mix of public and private sources consisting of revenue bonds issued by the Alameda Corridor Transportation Authority ("ACTA"), a loan from the U.S. Department of Transportation, grants from the MTA, contributions by the ports of Long Beach and Terminal Island and other private sources. Payment for the bonds and federal loans is being made solely from container based user fees paid by the railroads.

The Corridor project was intended to consolidate train traffic, improve the flow of cargo bound for and arriving from destinations outside of Southern California via rail (currently approximately 50 percent of the cargo containers handled by the Ports) and eliminate at-grade conflicts, which it did successfully. It was not however aimed at removing the truck traffic from the freeways. Since the other 50% of the cargo containers handled by the Ports are bound for or originate in the five county Southern California region and are transported by truck, this situation represents a significant contribution to the tremendous and almost constant traffic congestion on our freeways.

To make matters worse, U.S. international freight is forecasted to almost double in total tonnage over the next 15 years. We seriously need a project that will remove truck traffic from the freeways before the current intolerable condition worsens.

Such a project could consist of a rail shuttle system to a network of distribution centers in areas away from those where major congestion exists. Although the goods destined for the five county region would ultimately be trucked to their final destinations, the constant flow from the ports onto the freeways would be significantly curtailed. Since the grant and contribution, components (approximately 35%) of funding utilized for the Corridor may not be available for this new project, perhaps the drivers who are benefiting from the decreased traffic congestion would be willing to pay a fee for this quality of life enhancement.

There are approximately 6 million registered vehicles in Los Angeles County alone. For the price of two cups of Starbucks coffee per year per registered vehicle owner, we could service approximately $10 billion in bonded indebtedness.

Replacing jobs

Since our manufacturing industry is disappearing due to outsourcing, we need to replace the lost jobs. Although the theory advanced by certain economists is that we will all be better off because the displaced employees can be trained for more creative and higher paying jobs that are available, I believe that we must replace the lost unskilled and semi-skilled jobs with new jobs of a similar nature. It would seem very difficult, if not impossible, for most factory workers to be successfully trained to be creative designers or engineers. Since somewhere between 35% and 45% of all waterborne goods enter this country through the Ports of Los Angeles and Long Beach, the number of jobs that can be created by a new rail system and network of distribution centers can be tremendous.

With the proper modes of transportation, our Ports could increase their market share and California could become the fulfillment and distribution center for the majority of the United States. Thus manufacturing would be replaced by fulfillment and distribution with many similar level jobs. Additionally, the revenue derived by the state from these potentially huge industries could be significant.

The main legislation responsible for the Alameda Corridor was $440 introduced into the United States Senate by Senator John Warner of Virginia on February 16, 1995 as the "National Highway System Designation Act," which named the Corridor a "high priority corridor." Thereafter ACTA was able to issue $1.6 billion in bonds and to obtain a $400 million federal loan.

It is now time to urge our State and Federal Representatives to work together to develop a plan for an additional rail system, as described above, to make it a "high priority" under the National Highway System Designation Act and to initiate a referendum in the California Legislature to give the voters the option of a State Bond Issue.

I have selected the following "Job Killer" bill to profile this month:

SB 300: This bill increases the number of circumstances under which an employee is entitled to paid family leave under the California Family Rights Act and removes controls that require that the employee actually provides the care for which the leave has been taken. It establishes a rebuttable presumption that if the employee spends time with an ill family member, the employee is, in fact, caring for that person. The result is potentially significant increased costs to employers and a disincentive to provide jobs.

Status: Passed Senate 5/31/2005, currently in Assembly.

Valley Senators voting for bill: Alarcon, Kuehl (author).

Valley Senators voting against bill: Margett, McClintock, Runner.

Valley Senators absent, abstaining or not voting: Scott.

Gregory N. Lippe, CPA, is managing partner of the Woodland Hills-based CPA firm of Lippe, Hellie Hoffer & Allison LLP (LHHA) and a director and vice chair of the Valley Industry and Commerce Association.