Los Angeles Business Journal

Time to Stop California's Plan for High-Speed Rail

Where will $30 billion come from?

High-speed rail seems to be all the rage with government planners, but taxpayers should be wary of the promises made by rail advocates.

In November 2008, voters will be asked to consider a $9.95 billion bond to pay for a 700-mile high-speed rail system that would run from San Diego to Sacramento and the San Francisco Bay Area. The proposed system would have six stops in Los Angeles County – Palmdale, Sylmar, Burbank, downtown L.A. (Union Station), Industry, and Norwalk. Other Southern California stations would include Anaheim, Irvine, San Diego, Riverside, and the Ontario Airport.

But wait. The bonds would cover only about one-quarter of the estimated $40 billion total cost. Officials have yet to identify where the other $30 billion will come from.

If the high-speed rail system is anything like other major infrastructure projects, we can expect actual costs to be two or three times the estimated costs and ridership to be half that of the projections. Boston's "Big Dig" project and Los Angeles County's Blue Line light rail from downtown L.A. to Long Beach both ended up costing three times more than promised. Will taxpayers be fooled again with low-balled cost estimates and inflated promised benefits?

Amtrak's high-speed Acela Express, which serves the popular Northeast Corridor from Washington, D.C. to New York to Boston, has ridership of fewer than 3 million passengers per year. It serves a larger market than the planned California system, yet proponents ask us to believe that California's high-speed trains will carry over 100 million passengers a year by 2030.

In addition, the Los Angeles-San Francisco market is expected to be the system's largest revenue generator. The trip is expected to take about two and a half hours by high-speed rail, yet you can get a cheaper ticket on Southwest Airlines and the trip takes only about an hour.

Debt problem

A high-speed rail system might be a cool thing to have, but is it really wise? The state's fiscal condition is steadily deteriorating. According to State Treasurer Bill Lockyer, California currently has more than $135 billion of general debt authorized, including over $42 billion in bonds approved by voters just last year. Now we are being asked for $10 billion more, which is merely a down payment on the tens of billions the high-speed train system will actually cost.

When costs inevitably skyrocket and revenues aren't meeting projections, rail advocates assume taxpayers will be "in for a penny, in for a pound," and the government will keep dipping into our wallets for years to come. At a time when the state's recently passed budget already is projected to rack up a deficit of between $6 billion and $10 billion by June, Californians must re-examine state spending priorities and avoid such boondoggles.

That same $40 billion (or $80 billion, as the case may be) would build an awful lot of roads to help relieve California's considerable traffic congestion problem. From 1977 to 2006, the state's population increased over 55 percent and the number of vehicle-miles traveled on state highways increased over 128 percent, yet the number of lane-miles built has increased only about 7 percent. No wonder congestion has increased so dramatically.

This is simple supply and demand. States like Texas that actually have expanded their road capacity have, not surprisingly, been successful at reducing congestion.

In an op-ed published by the Fresno Bee in May, Gov. Arnold Schwarzenegger asserted, "Californians need and deserve a diverse array of transportation options." However, since money is not an infinite resource (despite our legislators' apparent views to the contrary), we must determine how our money will best be put to use. Having more transportation options just for the sake of having more options is not good enough. California could develop a new, innovative rickshaw network to provide travelers another transportation option, but that does not mean it would be a good idea.

If demand truly exists for a high-speed rail system in California, by all means, let the free market provide it. If a private company sees an opportunity and is willing to invest the time and money to try to make it work, it should be encouraged to do so without being bogged down by a lot of government red tape. If passengers are willing to pay the costs of such a system, that's great, but taxpayers should not have to pay for train welfare to subsidize others' travel expenses.

Adam Summers is Senior Policy Analyst





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