California’s High-Speed Rail Plan Wildly Overestimates Ridership Numbers

Real costs of rail are downplayed

The California high-speed rail proposal destined for the November ballot may not even be finalized yet, but it is already turning into a money-grab for local governments and transportation authorities.

Officials in San Diego and Riverside counties, jealous of the fact that nearly all of the bond money would be dedicated to developing the Los Angeles-San Francisco route, viewed as the backbone of the network, are voicing their discontent with being cut out of the first round of funding. As State Sen. Denise Moreno Ducheny (D-San Diego) argues, “If we pass a statewide bond, there ought to be a statewide benefit.”

After an initial failure to remove the Los Angeles-San Francisco emphasis from the measure, some state lawmakers are planning to make another effort when the legislature returns from a break in August.

Proposition 1 calls for the issuance of $9.95 billion in bonds to fund just the first phase of the planned 800-mile high-speed rail system linking San Diego and Los Angeles to Sacramento and San Francisco. The estimated cost of the rail network is pegged at $45.4 billion, and that does not even include the cost of the Oakland-East Bay and Altamont Pass segment. This is already significantly higher than the $30.3 billion estimate for the entire system made in 1999 (all figures are in 2006 dollars). Officials hope that private-sector investment and federal matching funds will pay for the rest of the project, but these funding sources have not even been promised, much less procured. What will happen if California spends $10 billion on a partial rail network and the rest of the money never materializes? Will proponents come back to taxpayers with their hands out for another $10 billion, or $35 billion, or more?

If other large infrastructure projects such as Boston’s “Big Dig” and Los Angeles’s Blue Line light rail line are any indication, actual costs are likely to be significantly higher than official estimates. The Blue Line in L.A. ended up costing three times as much as promised. In Massachusetts in 1989, Gov. Michael Dukakis’ administration announced that the Central Artery/Tunnel Project, or Big Dig, as it has come to be known, would cost $4.43 billion, 90 percent of which was to be paid for by the federal government. Today, the cost of the project is pegged at $22 billion and Massachusetts has had to foot three-quarters of the bill, diverting money from other state and local transportation projects in the process.

Ridership estimates provided by the California High-Speed Rail Authority (CHSRA), which has spent $58 million over the last decade planning and marketing the high-speed rail network, are similarly suspect. The closest thing to the proposed California high-speed rail network in the United States is Amtrak’s Acela high-speed rail service, which runs from Washington, D.C. to New York to Boston. This Northeast Corridor route is shorter than the proposed California system and serves a larger, denser market, yet the CHSRA assumes that the California plan will generate significantly greater ridership numbers. The Acela service carries less than 3 million passengers a year, but the CHSRA assumes the California system will carry roughly 100 million a year by 2030.

To bolster its case, the CHSRA has pointed to high-speed rail systems in other parts of the world like Europe and Japan. These cases are even less applicable to California than the Amtrak Acela case. In addition to serving much larger markets than the planned California system (even if you accept the CHSRA’s projections), European and Japanese high-speed rail systems operate in denser urban areas and business districts that are closer together. Because of these factors, transit usage is much higher than in California, making the area more suitable for high-speed rail service. For example, transit usage rates in Tokyo and the Osaka-Kobe-Kyoto metropolitan areas are around 60 percent, compared to less than 4 percent in San Francisco, and less than 2 percent in Los Angeles and San Diego.

The simple fact is that, for long trips, high-speed rail in California is not price-competitive with bus travel, and not time-competitive or price-competitive with air travel. For shorter trips, it is not time- nor price-competitive with automobiles, especially considering that passengers would likely need expensive taxis or rental cars to get to and from train stations.

The high-speed rail plan suffers from other flaws as well. Effects on traffic congestion and greenhouse gas (carbon dioxide) levels would be negligible and inordinately expensive, as there are much more efficient ways of reducing both. Moreover, passenger security is not significantly addressed in the plan, and given the increasing focus on homeland security, the necessary security measures would likely add more time and hassle to high-speed rail travel, making it an even less attractive option.

The wildly exaggerated claims of high-speed rail proponents and the attempts by legislators from across the state to put their hands into the high-speed rail money pot should serve as warnings against providing a commercial service with political means. In the private sector, businesses must satisfy consumer demands and put their own investments at risk in order to survive. Politicians, by contrast, do not have to live by economic realities. They can support any idea that sounds good at the time and keep dipping into the taxpayer well to pay for it, regardless of whether or not it makes sense.

The California High-Speed Rail Authority is selling Californians on a bad idea. All indications are that ridership projections are wildly exaggerated, cost estimates are low-balled, and the project is simply not financially feasible, which is probably why the private sector hasn’t already built it and doesn’t seem to have any interest in building it.

Californians just authorized $42.7 billion in bonds in 2006, including $20 billion for transportation projects. At a time when the state is facing a $17 billion budget deficit, Democrats in the legislature are planning $8 billion in tax hikes, and taxpayers are suffering from a stagnant economy and the effects of the housing and credit crises, it is time California acceded to economic realities by re-examining its priorities, rather than wasting more money on another boondoggle.