CA Bullet Train: No Plan, Little Money? No Problem.

Commentary

CA Bullet Train: No Plan, Little Money? No Problem.

As I wrote in an Op-Ed for the Orange County Register, despite lacking a realistic business plan, a realistic funding source and private sector financial support, the California High-Speed Rail Authority (CHSRA) is intending to begin construction on the initial 114-mile stretch of rail in the Central Valley.

The California rail line’s numerous problems have been documented in policy reports including here and here and in blog posts including here and here. In addition to the financial issues, several studies have indicated that the rail ridership numbers are inflated. A recent Reason Foundation study found the numbers were 65-77 percent too high.

CHSRA has argued California needs to build the line for several other reasons each of which falls apart under closer examination. If aviation demand increases, airlines are unlikely to add new routes between Southern California and the Bay Area. Instead they will upgrade their smaller planes to 737s. Highway demand is irrelevant as travelers choose for flexibility, something neither plane nor rail offer. Other countries built high-speed rail not for economic development but because conventional rail travel was overcrowded, something which is not a problem on current California Amtrak lines. Further, these countries have different spatial structures and land uses since places such as Paris and Tokyo developed around walking and transit while Los Angeles developed around the car.

The Op-ed begins below. The full Op-Ed is available here.

The California High-Speed Rail Authority just received the green light from the federal Surface Transportation Board to begin building a 114-mile stretch of the planned statewide high-speed rail project. And yet, with the project underway, the agency still doesn’t have a sensible business plan that shows from where the money to build and operate the system will come.

The $10 billion authorized by voters when Proposition 1A passed in 2008 won’t even cover the costs of constructing the initial segment, between Merced and Bakersfield. When Prop. 1A passed, California was counting on a lot more federal funding, which is extremely unlikely to arrive.

New House Majority Leader Kevin McCarthy, R-Bakersfield, has vowed to “do all that I can to ensure not one dollar of federal funding goes to boondoggles like [California’s] high-speed rail.”

Similarly, Rep. Jeff Denham, R-Modesto, told the Register, “Until I see a viable business plan for high-speed rail in California that is fiscally sound and supported by private dollars, I will continue to hold the rail authority accountable to the voters and ensure no additional federal tax dollars go to this project.”

As a result, the rail project will have to rely on state funds. Gov. Jerry Brown and the Legislature have agreed to send 25 percent of the state’s cap-and-trade revenue, money that businesses will have to pay to offset emissions, to support high-speed rail. However, that money won’t be nearly enough, and the plan has already prompted several lawsuits because those funds are supposed to go to projects that actually reduce greenhouse gases, something the high-speed rail line is unlikely to achieve for at least 20 years.

The California High-Speed Rail Authority is also counting on private investors to cover some of the construction costs. But there aren’t any private rail companies lining up to put billions of their own dollars on the line to build sections of the rail system themselves.

The rest of the Op-Ed is available here.

Baruch Feigenbaum is assistant director of transportation Policy at Reason Foundation a non-profit think tank advancing free minds and free markets.