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

Adrian Moore, Ph.D., is vice president of policy at Reason Foundation, a non-profit think tank advancing free minds and free markets. Moore leads Reason's policy implementation efforts and conducts his own research on topics such as privatization, government and regulatory reform, air quality, transportation and urban growth, prisons and utilities.

Moore, who has testified before Congress on several occasions, regularly advises federal, state and local officials on ways to streamline government and reduce costs.

In 2008 and 2009, Moore served on Congress' National Surface Transportation Infrastructure Financing Commission. The commission offered "specific recommendations for increasing investment in transportation infrastructure while at the same time moving the Federal Government away from reliance on motor fuel taxes toward more direct fees charged to transportation infrastructure users." Since 2009 he has served on California's Public Infrastructure Advisory Commission.

Mr. Moore is co-author of the book Mobility First: A New Vision for Transportation in a Globally Competitive 21st Century (Rowman & Littlefield, 2008). Texas Gov. Rick Perry said, "Speaking from our experiences in Texas, Sam Staley and Adrian Moore get it right in Mobility First." World Bank urban planner Alain Bartaud called it "a must read for urban managers of large cities in the United States and around the world."

Moore is also co-author of Curb Rights: A Foundation for Free Enterprise in Urban Transit, published in 1997 by the Brookings Institution Press, as well as dozens of policy studies. His work has been published in the Wall Street Journal, Los Angeles Times, Boston Globe, Houston Chronicle, Atlanta Journal-Constitution, Orange County Register, as well as in, Public Policy and Management, Transportation Research Part A, Urban Affairs Review, Economic Affairs, and numerous other publications.

In 2002, Moore was awarded a World Outsourcing Achievement Award by PricewaterhouseCoopers and Michael F. Corbett & Associates Ltd. for his work showing governments how to use public-private partnerships and the private sector to save taxpayer money and improve the efficiency of their agencies.

Prior to joining Reason, Moore served 10 years in the Army on active duty and reserves. As an noncommissioned officer he was accepted to Officers Candidate School and commissioned as an Infantry officer. He served in posts in the United States and Germany and left the military as a Captain after commanding a Heavy Material Supply company.

Mr. Moore earned a Ph.D. in Economics from the University of California, Irvine. He holds a Master's in Economics from the University of California, Irvine and a Master's in History from California State University, Chico.