Californians Being Taken for a Ride on High-Speed Rail

Why California's latest high-speed rail plan lacks merit

Well, it’s another year, another business plan for the California High-Speed Rail Authority (CHSRA). And, as the state’s nonpartisan Legislative Analyst’s Office (LAO) concludes in its recent review of the new plan, this one is no more realistic or feasible than any of the previous ones.

The newest incarnation of the CHSRA’s business plan calls for the sharing of rails with commuter trains in Los Angeles and the San Francisco Bay Area in order to reduce the price, which now stands at an estimated $68.4 billion. Previous plans included advertised price tags of $33 billion, $45 billion, and $98.5 billion, respectively. In short, the state’s high-speed rail plans have changed as much as a politician’s promises-and have been every bit as vacuous.

The LAO said it best in its analysis:

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.

As with every other attempt at a plan, the latest effort from the CHSRA lacks any basis in reality. Once again, most of the funding is to come from unidentified federal and private-sector sources that almost certainly will not materialize. In fact, 83.2 percent of the project’s proposed funding is unaccounted for, including $38.6 billion the CHSRA hopes to receive in federal funds (in addition to the approximately $3.5 billion in federal stimulus and transportation funds that has already been allocated), $13.1 billion expected from private investors, and $5.2 billion to come from other sources such as local governments.

In response to such criticisms, CHSRA Chairman Dan Richards argued that it is simply common practice for transportation projects to go forward without knowing from where the money will come. “I spent 12 years on the [Bay Area Rapid Transit] board in the transit world; we never knew where all of the money was coming from,” Richards said. “Our colleagues in Southern California just adopted a $540 billion regional transportation plan for the Southland, for the next 20 years, same time period we’re talking about here. They don’t know where all of the money is coming from.” Added Richards, “It is just part and parcel of the transportation world that people don’t know these things now.”

If ever there was a window into the mindset of a government central planner, this is it. So the excuse for such irresponsibility and carelessness with scarce taxpayer dollars is the notion that “Everyone else (in government) is doing it!” Besides, who needs to know minor details like how something is going to be paid for when your state faces yearly multi-billion-dollar deficits?

Since Congress, particularly the House of Representatives’ Republican cohort, has indicated that it has no appetite for throwing away more money for high-speed rail in California at a time when the federal government has its own continued record deficits, the newest high-speed rail plan includes a backup option to replace federal funds with revenues from the state’s forthcoming cap-and-trade auctions. Under the Global Warming Solutions Act (also known as AB 32), the state is to place a cap on the amount of greenhouse gases (GHGs) emitted by the state’s major GHG producers. The California Air Resources Board will issue and sell carbon allowances, which may be purchased or resold by these entities.

The problem with this, as the LAO noted, is that this is likely illegal and would not make much sense since the high-speed rail project would not effectively advance the goals of AB 32. First, AB 32 seeks to reduce the state’s GHG emissions back to 1990 levels by 2020. But the high-speed rail project’s Initial Operating Segment, which would run from Merced to the San Fernando Valley, is not scheduled to be complete until 2021. And the entire “Phase I” from Los Angeles to San Francisco is not expected to be finished until 2028. In addition, the LAO observes, the construction and operation of the high-speed rail project would result in a net increase in GHG emissions for decades (a reduction in GHG emissions is possible only in the very long run) and, in any case, there are other much cheaper and more effective ways to reduce GHGs if that is truly the state’s goal.

From the beginning, there have been concerns about the high-speed rail project’s design; funding; assumptions of cost, ridership, and revenues; management; and even its necessity. These criticisms have come not only from concerned citizens groups (see here and here) and think tanks such as Reason Foundation, but also from the LAO (see here, here, and here), the Bureau of State Audits, UC Berkeley Institute for Transportation Studies, and the CHSRA’s own Peer Review Group. Thus, it should have come as no surprise when Congressman Darrell Issa (R-CA), chairman of the House Committee on Oversight and Government Reform, recently announced that the Committee is investigating the CHSRA’s planned use of funds, project oversight, and potential conflicts of interest between rail officials and contractors.

In response to such criticisms, the CHSRA has continually showed nothing but disdain for the homeowners, farmers, business owners, and communities that will be negatively affected by the project. It has chosen, instead, to repeatedly throw unjustified cost, ridership, and other numbers up on the wall, hoping that some of them would stick.

The CHSRA and many advocates of high-speed rail have demonstrated that they are beyond reason, despite all the facts that contradict their hopes and assumptions. High-speed rail advocacy has become more of a religious crusade than a policy position. Avoiding the facts stacking against this project is how cost estimates can triple, then be reduced by one-third. It’s how ridership estimates can magically plummet to one-third of their original estimates (see this CalWatchdog article for a good summary on the project’s changing assumptions). It’s how major decisions such as changing from dedicated high-speed rail tracks to tracks shared with slower commuter trains on both ends of the system can be made. And yet with all these arbitrary changes, high-speed rail acolytes have not batted an eye or even questioned how the plan can still be considered feasible, much less profitable.

The project was never going to live up to the lofty promises (some would call them lies) made by the CHSRA and its advocates since 2008. But the latest version of the plan crystalizes the fact that it is nothing like the bill of goods originally sold to voters.

The California high-speed rail project should be killed on its merits, or lack thereof. But if the CHSRA and the advocates of high-speed rail in the legislature have any fidelity to taxpayers at all, they should at the very least require that voters approve this new plan-a plan that is vastly different from the one they voted on three and a half years ago.