California’s High-Speed Rail: Slow, Expensive, and Bound for Cancellation

In a thousand years, archaeologists will marvel at the engineering and effort that went into a 118-mile stretch of gravel, concrete, and steel in Central California, which had no discernible purpose, no evident reason for its beginning and end — a mystery as inscrutable as Peru’s Nazca Lines. If these future archaeologists surmise that the disused bones of California’s bullet train had some religious significance, they would not be far off.

California’s government-run train project is clinically dead. It presents the simulacrum of a viable public-works project only through Governor Jerry Brown’s heroic intervention. However, in less than two years, Governor Brown will be termed out and the California High-Speed Rail project will be officially dead, killed by a new governor moored more securely to cold fiscal reality than is Brown.

The latest evidence that the rail link from the San Francisco Bay region to Los Angeles is on life support comes from the Los Angeles Times. On January 13 the Times’ Ralph Vartabedian published a story detailing a confidential Federal Railroad Administration (FRA) report that warned that the train project was running 50 percent over budget. The excess expenditures came to $3.6 billion — and that was for a little more than a quarter of the 520-mile Phase I route, in the relatively flat and unchallenging Central Valley.

Representative Jeff Denham is a Republican who represents the Central Valley area centered around Modesto, east of San Jose. Denham has been a consistent critic of the state’s rail project. In light of the critical FRA report, he notes:

The costs associated with this project continue to skyrocket, and at this rate, taxpayers will be left holding the bag on a project that will be outdated before it’s even complete. Just a few months ago, we were assured that construction costs were under control, when that was clearly never the case.

Likely budget overruns projected out over the remainder of the route, from dense urban areas at the north and south termini to the soggy soils of the San Joaquin River region to the rugged mountains of Southern California, will likely be in the range of another $30 billion, pushing the project’s total cost past $100 billion.

If money were the sole object, the project might be salvaged through political will power alone. But time is another factor: The California High-Speed Rail Authority is seven years behind schedule on the easiest-to-build Central Valley segment. Delay is deadly to an expensive and over-budget effort, as it prevents a large public constituency from coalescing to support it, while scaring off elected officials. Federal authorities blame the delays on sluggish environmental approvals (Come on, this is California! They should have seen that one coming . . . ), not acquiring the needed rights-of-way in the richest farmland in America, and not quickly processing the paperwork to unlock federal money.

Audits show that the government entity lacks any management discipline at all, with frequent churn of leaders and staff and low organizational morale.

All in all, it sounds like a typically run large government project.

Adding to the FRA report’s gravity: The agency has been a consistent booster of the project since it was voted into existence via ballot initiative in 2008. And while FRA officials expressed confidence that the California High-Speed Rail Authority’s leadership could turn things around, audits have cast doubt, showing that the government entity lacks any management discipline at all, with frequent churn of leaders and staff and low organizational morale.

In Florida, an alternative vision of high-speed rail is unfolding using updated diesel-electric locomotives built by Siemens — ironically, in a Sacramento, Calif., facility. Unlike California’s all-government effort, Florida’s Brightline is a private venture, with executive leadership drawn from the hospitality industry. Brightline’s investors have raised $1 billion to use existing tracks to operate a train between Miami and West Palm Beach, reliably shaving 30 minutes off a 90-minute drive, with service starting this summer.

Brightline’s investors plan to raise an additional $1.5 billion to operate a line from Miami to Orlando. Their trains will travel at up to 125 mph on this route. By comparison, California’s vaporware electric train is supposed to hit a top speed of 220 mph in its San Jose–to–LA run, assuming political considerations would allow it to operate non-stop. It will operate at up to 125 mph in the 51 miles from San Francisco to San Jose.

California’s high-speed rail was expected to raise a significant amount of private money on its way to operation, but, eight years after being narrowly approved by voters with $10 billion in government bonds sold to start construction, the project is nowhere near completion and has not raised a penny of private money.

Further, boosters solemnly promised voters in 2008 that the project would require no tax increase to build, and no public operating subsidy. In fact, the opposite has occurred. California has borrowed $10.6 billion against 35 years of future revenue from the state’s ambitious carbon dioxide cap-and-trade tax program. Unfortunately for California taxpayers, the revenue from cap-and-trade auctions collapsed nine months ago, forcing California to raid about $1 billion from other accounts. No one with any credibility believes the train can operate without a heavy government subsidy.

Furthermore, with California now projected to have a $1.6 billion budget deficit in the 2017–18 fiscal year, pressure from lawmakers to abandon the costly project will grow. This will be compounded by the 2016 election results, which make it even more likely that federal support will dry up as well.

California’s High-Speed Rail project will be dead before a single passenger can ride it from San Francisco to Los Angeles.

— Chuck DeVore is the vice president of national initiatives at the Texas Public Policy Foundation and a former California legislator.