Fresno Explores Lawsuit As High-Speed Rail Eyes Local Taxes

Only days after the High-Speed Rail Authority board approved a business plan that eyes local tax dollars to help fund the project, the city of Fresno authorized its attorney to take steps to sue— if necessary.

On Thursday, June 4, Fresno City Attorney Andrew Janz announced out of closed session that in a 4-0 vote, he’d been given the authority to “pursue all legal avenues” against the state of California and High-Speed Rail if any state agency claimed rights to local tax money.

Fresno City Council President Nelson Esparza told GV Wire that if the state did so, it would violate the California Constitution.

“I appreciate the creativity in trying to find different funding mechanisms,” Esparza said. “But talking about doing a tax-increment financing mechanism and effectively trading off what would have been funding for local coffers is going to be devastating to our city finances.”

‘An Idea for Future Discussion,’ Says HSRA’s Perea

Authority boardmembers, however, said during a June 1 meeting that the agency would collaborate with cities and counties on tax financing.

Authority board member Henry R. Perea, a Fresno resident and former county supervisor, said the agency’s lack of communication created mistrust.

“There’s no activity, zero activity other than that it was an idea for future discussion with cities,” Perea said.

Councilmember Annalisa Perea, who is the daughter of Henry R. Perea, abstained from the vote. Councilmembers Mike Karbassi and Tyler Maxwell were absent.

The move comes after organizations such as the League of California Cities and the California State Association of Counties opposed the authority from potentially laying claim to local taxes that would otherwise go to police, fire, and other uses.

If HSR Drives Growth, Should it Have Access to Tax Dollars?

Special tax districts use revenue to fund areas or projects. For example, downtown Fresno’s tax district collected more $1 million in fiscal year 2025 to help fund development in the area.

The HSRA sees potential in accessing those revenues.

Its latest business plan outlines a $86.8 billion shortfall to finish the project from San Francisco to Los Angeles.

On June 1, the authority board approved its 2026 Business Plan. It details a strategy called “value capture” to help fund the rail project.

In a statement to GV Wire, an authority spokesperson said they are continuing conversations with jurisdictions and stakeholders about potential tools to support station infrastructure. Discussions surround whether the authority would have access to local tax revenue as high-speed rail drives growth, the spokesperson said.

“Value capture is only one of many concepts being discussed, and the authority  is not proposing any policy — particularly not one that would override local land-use or tax authority,” the spokesperson said.

Newly appointed board member Jason Elliott, in the authority’s June 1 meeting, asked whether project available capital assumes having tax increment financing available. The answer from the authority was “no.”

“I think there is a real fear and expectation of the worst among our local partners about this,” Elliott said. “So, I’m glad to have the clarity that we’re not anticipating or taking for granted tax increment financing revenue.”

California Cities, Counties Oppose HSR Tax Plan

A draft version of the business plan circulating earlier this year called for more direct control of local tax dollars through tax increment financing, according to a report from the California State Association of Counties.

“The proposal to divert local tax increment to a state entity appears inconsistent with multiple provisions of the California Constitution,” a letter to HSR CEO Ian Choudri from the association stated. “Local sales tax revenues are expressly protected for local governmental purposes, and the legislature is prohibited from reallocating or transferring those revenues.”

The League of California Cities, Urban Counties, the California Special Districts Association, and the Rural County Representatives of California all signed onto the letter.

HSR Isn’t Communicating Well: Caballero

State Sen. Anna Caballero, D-Merced, and Henry R. Perea said at the June 1 meeting that the authority has not been communicative with cities and counties, especially when it comes to tax-increment financing.

“Just the discussion of taking local tax revenue, during a year when we started off in January looking like we were going to have to make some fairly significant cuts to the budget, had everybody a little paranoid,” said Caballero, an ex-officio board member.

Caballero also said that the city of Merced wasn’t included in a decision to move the planned HSR station there outside the urban core.

She said small businesses located near the tracks benefit from ridership.

“Moving it outside of the city limits on the opposite side of the tracks and the freeway, that becomes a real issue,” Caballero said.

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