The Train That’s Still Going Nowhere

The Train That’s Still Going Nowhere

The Legislative Analyst’s Office recently issued its Review of the Draft 2020 High-Speed Rail Business Plan. It’s not a ringing endorsement of the project. Three of the report’s five key oversight issues confirm what’s been known all along. California’s bullet train is a troubled enterprise.

  • First, says the LAO, “we point out that the near- and long-term schedules identified in the draft 2020 business plan appear ambitious.”
  • Next, “we identify some near- and long-term funding challenges confronting the project.”

The latest cost estimate “to complete Phase I is $80.3 billion, which is about $3 billion higher than the 2018 cost estimate. This cost estimate is about $1.3 billion higher than the 2019 cost estimate.”

At the same time, the California High-Speed Rail Authority “estimates available total project funding of between $20.6 billion and $23.4 billion through 2030.” While similar to the 2019 project update report estimate, it’s “lower than was assumed in 2018.”

  • Third, the system is likely to need taxpayers’ money before the first train leaves the station. The need for subsidies “does not appear to be consistent with the spirit of” Proposition 1A, which voters approved in 2008 to OK the bullet train. Under Prop 1A, passengers, “rather than the general public,” were expected to “pay for the full cost of its ongoing operations and maintenance.”

Yet “under HSRA’s proposed approach, the state (and general taxpayers) is anticipated to pay for whatever portion of the system’s operating costs that is not recovered from passenger fares — estimated at roughly $54 million annually.”

The fourth and fifth key oversight issues cover alternatives and “flexibility to change.”

According to the LAO, construction and completion schedules have also been miscalculated.

“Some activities,” says the LAO, “are anticipated to occur later than previously expected, including those related to project construction and interim operations, as well as environmental work. …

“Specifically, HSRA projects that trains will provide interim service from Merced to Bakersfield by 2029. In comparison, in the 2018 business plan, HSRA anticipated launching interim services on the ICS [initial construction segment] and the San Francisco-to-Gilroy segment by 2027, and the 2019 PUR [project update report] anticipated providing operating service between Merced and Bakersfield in 2029.”

The Valley-to-Valley line will be completed in 2031, two years later than the 2018 business plan and 2019 PUR had previously assumed.

The project as a whole is 13 years behind schedule, a likely foreshadowing of chronically late trains if the project is ever completed.

Seven years ago, after giving the project a poor review, the authors of the Reason Foundation’s analysis (“California High Speed Rail: An Updated Due Diligence Report”) said it was “not too late to save the California economy and taxpayers the enormous costs of the California high speed rail project.” Joe Vranich, a relocation specialist who has moved his business from California to Pennsylvania, believes it’s still not too late.

“If I had the time I’d do some research to find a leader who in the past made the best of a bad situation by shutting down a hopeless public project, cite the lessons learned from that person’s approach,” he told PRI, “and if that person is still alive, recommend that Gov. Newsom put that individual in charge of the California project — and shut it down.”

Officials need not let concerns about wasting funds that have already been spent cloud their judgment. It’s not out of the question that the private-sector could eventually make use of the construction that’s been completed, allowing taxpayers to recover the stranded costs. There is simply no compelling reason to force them to rescue the entire mess.

Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.