Out of Control Policy Blog

California's High-Speed Rail System Shouldn't Get More Taxpayer Money

As Joseph Vranich and Wendell Cox and I have a new piece on the California high-speed rail system:

Despite California’s budget deficit rising to $16 billion recently, Gov. Jerry Brown is asking state legislators for $6 billion in bonds to launch construction on the proposed high-speed rail system. Voters approved a $9.95 billion bond package for the “bullet train” in 2008, but just about everything about the rail system has changed since then. 

The California High-Speed Rail Authority (HSRA) issued a revised business plan in April that calls for a 130-mile segment running from Bakersfield to Madera in the state’s Central Valley. If the Central Valley leg is built, the plan says the system would eventually share tracks with commuter trains in the Bay Area and Los Angeles, in what it is calling a “blended” approach. Not exactly the bullet train from San Diego to Los Angeles to the Bay Area and Sacramento that voters were sold back in 2008. 

The last thing California should do right now is add billions more in bond debt. Beyond the most obvious – the state simply cannot afford it – there are at least five major reasons California shouldn’t move forward on this rail project. 

1. Broken Proposition 1A Promises: The Costs Look Nothing Like What Voters Approved 

The text of Proposition 1A asking California voters to approve $9.95 billion in bonds for the project in 2008 said: “The total cost to develop and construct the entire high-speed train system would be about $45 billion.” 

Now the High-Speed Rail Authority says the price tag for a scaled down system will be $68.4 billion. Last year, the HSRA actually estimated the costs would be over $98 billion but to lower the sticker shock by $30 billion they’ve shifted to a “blended” plan that uses slower, existing rail tracks instead of building the exclusive tracks capable of handling high-speed trains that they originally planned on. 

The official proponent's argument in the Proposition 1A ballot pamphlet also promised voters that ticket prices would be “about $50 a person.” Now, they are saying tickets would cost an average of $81 each way, with “express” tickets for the fastest trips costing $123 one-way. 

The costs have changed so much from what voters were promised that funding should be halted until the HSRA fulfills its 2008 promises to voters, or until voters get to approve the changes. Several groups, including popular KFI radio talk show hosts John and Ken in Los Angeles, are starting to get the signatures needed to put a re-vote of the high-speed rail initiative on the ballot. 

2. There’s Still No Legitimate Funding Plan 

The California High-Speed Rail Authority says it will need $53 to $62 billion to build the Phase 1 Blended System, which would run from Los Angeles to San Francisco. Sacramento and San Diego appear to have been dropped from the plan. The state currently has the $9.95 billion in taxpayer-backed bonds originally approved by Proposition 1A plus an additional $3.5 billion in federal grants. But where is the remaining $40-$50 billion going to come from? 

In April, the nonpartisan Legislative Analyst’s Office wrote, “We find that HSRA has not provided sufficient detail and justification to the Legislature regarding its plan to build a high–speed train system. Specifically, funding for the project remains highly speculative and important details have not been sorted out. We recommend the Legislature not approve the Governor's various budget proposals to provide additional funding for the project.” 

If the state starts building a high-speed train system somewhere between Bakersfield and Fresno it will run out of money well before the system is finished. That’s okay with many train advocates, who figure once construction begins the government will be forced to find the rest of the money to avoid having a partially built $10 billion train to nowhere sitting in the Central Valley. But the legislature can’t afford to be so fiscally reckless. It needs to demand a detailed plan showing how the full rail system will be funded before approving the bond money to start construction. 

Read the rest here.

Adrian Moore is Vice President, Policy


« Innovators in Action: Indianapolis’ Parking… | Main | DC Should Use PPPs for… »




Out of Control Policy Archives