New report: CA high-speed rail faces 50 percent cost overruns

SACRAMENTO –  California’s ongoing “high-speed rail” project connecting Los Angeles with San Francisco continues to run up against the same, recurring problem since voters gave the plan initial bond funding in a 2008 statewide initiative. There’s a growing chasm between the promises supporters made to the state’s taxpayers – and reality.

In the latest bombshell, a confidential federal report points to cost overruns of at least 50 percent on the easiest, mountain-less leg of this complex infrastructure undertaking. The Federal Railroad Administration analysis, obtained by the Los Angeles Times last week, detailed a variety of other problems within the state’s rail administration, as well.

For instance, the project already is at least seven years behind schedule in building the first segment, which connects Merced in the northern part of the San Joaquin Valley to Shafter, a small town just north of Bakersfield in the southern part of the valley. That section was supposed to be completed this year, but isn’t slated for completion until 2024.

“The federal document outlines far-reaching management problems: significant delays in environmental planning, lags in processing invoices for federal grants and continuing failures to acquire needed property,” according to the Times. Rail officials said the numbers are just projections, but the newspaper described the assessment as “a troubling critique by an agency that has been a stalwart supporter and longtime financier of the nation’s largest infrastructure project.”

There’s a two-fold problem here. The project faces increasing cost overruns – and its supporters continue to rely on funding sources that are far from secure. “In its 2012 draft business plan, the Authority identifies the federal government as by far the largest potential funding source for the program, yet the plan provides few details indicating how the authority expects to secure this money,” explained the California State Auditor in a 2012 follow-up report.

That was a problem during the rail-friendly Obama administration, but is uncertain during a Donald Trump administration. Trump has made favorable comments about bullet trains in general, but congressional Republicans generally have been opposed to California’s high-speed-rail project. This recent report has caused some of them to step up their criticism – and promise oversight hearings and audits – of what they widely view as a boondoggle.

Rail backers seem to have based their plan on the expectation of federal funding that might never be forthcoming. But that’s not the only area where their promises were unrealistic. Former judge and state Sen. Quentin Kopp, the one-time head of the California High-Speed Rail Authority and co-author of the Proposition 1A initiative that brought the project to life, came out against it. “I want to kill this iteration of it because it betrays the representations to the voters in November 2008,” he told the Times’ Patt Morrison, in a 2013 interview.

A series of lawsuits focused on the disparity between the rail authority’s latest iteration of the project and the promises made to voters in 1A in an attempt to do what Kopp suggested and derail the project. To help make a $9.95 billion project palatable to voters, the rail system’s backers offered guarantees within the wording of the initiative. The rail system would, for instance, go from L.A. to San Francisco in a nonstop trip taking 2 hours and 40 minutes. There would be no government subsidies for the operation of the system. The measure promised private investment, low fares and optimistic ridership projections. Yet the current plan is unlikely to live up to its core promises.

A Sacramento County Superior Court judge in 2013 blocked the sale of rail bonds because of those disparities, but the decision was later overruled by an appeals court. Last month, rail officials announced the sale of construction bonds to finance the project, while project opponents filed another lawsuit to stop it. That suit argued that a new rail-related law passed last year to allow bond dollars to be spent on track-electrification also violated the terms of Prop. 1A and amounts to unconstitutional initiative revision that requires another vote of the people. There are other legal fights, also.

Rail authorities have made one substantive change after another. In its draft business plan released last year, the rail agency announced the train would first be routed to the San Jose area before heading over the formidable Tehachapi Mountains and into the Los Angeles basin. “The High Speed Rail Authority is desperate and wants to lay as much track as possible so that it becomes more difficult to stop the project,” said Board of Equalization Vice President George Runner, at the time.

Meanwhile, the agency’s reaction to the Federal Railroad Administration document suggests it is going to keep forging ahead, regardless of costs, in the hopes that a funding source will materialize to complete a project estimated at $64 billion before the latest projected cost overruns. Supporters are counting on revenues from the state’s cap-and-trade auctions and state funding to help keep the project moving ahead, but it remains far shy of full funding.

But as the Times’ Ralph Vartabedian explained, “(The state) Legislature already has balked at giving the rail authority the ability to borrow against future state revenues, saying it would have to make do with existing allocations. And that was before Gov. Jerry Brown warned … that California’s projected 2017-18 budget shows a $1.6-billion deficit.”

It’s already clear based on the rail authority’s own promises that the final project will not resemble the one promised to voters, especially given that the latest plan features a blended route by which bullet trains share tracks with commuter trains in the Los Angeles and San Francisco regions. The courts thus far have approved this disparity between promises and reality, but the increasingly obvious financial disparities might be the hardest ones for rail backers to overcome.

Steven Greenhut is Western region director for the R Street Institute. Write to him at [email protected]

12 comments

Write a comment
  1. Richard Rider
    Richard Rider 16 January, 2017, 16:04

    This is a bullshit story. No way our HSR will cost ONLY 50% more than projected. Not even close.

    Reply this comment
  2. Libi Uremovic
    Libi Uremovic 16 January, 2017, 16:08

    go baby go – blow that taxpayer money on the theory that nobody is going to pull those books and audit every one of you to prison… that’s going to happen, right…??

    fatten yourselves up like lambs to the sloughier … every penny of taxpayer dollar will be accounted for ..

    read about the others that thought crime would pay on beaumontgate.org …

    Reply this comment
  3. Richard Rider
    Richard Rider 16 January, 2017, 16:12

    Here’s a HSR promise most have since forgotten. When we voted on the HSR prop, the system was supposed to service San Diego. Since it passed those plans have been COMPLETELY dropped — no HSR service is planned south of LA.

    EVER.

    We So-So-Cal taxpayers can take solace in the fact that we still get to PAY for the HSR system, trains servicing other areas of the state.

    Indeed, it turns out that it’s San Diego taxpayers who are getting “serviced.”

    Good and hard.

    Reply this comment
  4. Spurwing Plover
    Spurwing Plover 17 January, 2017, 07:41

    PARDON ME MOONBEAM, THATS THATS A OVER EXPENSIVE CHOO CHOO,TRACK TO THE PORK,WAKE UP YOU DORK done to CHATTANOOGA CHOO CHOO

    Reply this comment
  5. Queeg
    Queeg 17 January, 2017, 09:43

    Who wants sorta high speed rail to filthy crime infested Sacramento…..why…..a third rate toilet loaded with useless XXXL purple T-shirt wearing government moochers who pay extortion to keep a job.

    SF is six shades of HELL……enough said.

    At least there is some sense cutting out HSR to the run down Brady Bunch tourist trap fraud San Diego…..your political Superman Mayor wants to raise the bed tax on tourists from 12% to 16% to fund pet progects and chronyism. SD has miserable surface roads and off ramps. Drive around that pot holed dump of Truman era airport… a real eye opener. No HSR for you- Even the Chargers know better to get away from a rotting city.

    California needs HSR to move Amazon deliveries that’s it…..no thinking human will ever ride it. A few may use the Groupons to enjoy the CVS wine and Ritz crackers. Who knows-

    Reply this comment
  6. gonzo
    gonzo 17 January, 2017, 09:45

    Those doggone Tehachapis, now where did they come from?

    Not getting a lot of ink presently, perhaps the single most expensive ticket item is boring through those mountains in multiple places! And near seismic fault lines no less.

    Personally, I wrote several feature online columns a few years back flailing away at the adverse, unmitigated environmental impacts as well. So it’s not just a fiscal but also ecological black hole, potentially jeopardizing both surface AND ground water quality.

    It’ll displace and disconnect significant acreage of high value habitat, if there’s a wreck, spilling fuel/contaminants, there go your streams, aquatics and aquifers.

    Why couldn’t it have been sectioned? One line from south Bakersfield going north, one in the Santa Clarita area connecting to San Diego? Does that make too much sense?

    Shuttling across the Grapevine would have been far less invasive, cheaper, let alone hazardous both during and after construction.

    Tunnels of this monolithic size are crazy. Just like what appears to be a senile, out-of-touch Governor.

    Reply this comment
  7. gonzo
    gonzo 17 January, 2017, 12:22

    For those who think I’m exaggerating the ecological disconnection/permanent disruption, consider all of construction then post-construction maintenance roads required, hard surfaced to support heavy equipment/traffic.

    Biologists know that 40-50 ft. swaths of impervious sever migrational and foraging corridors, can strand populations, create ecosystem islands.

    So it’s NOT very environmentally correct either!

    Reply this comment
  8. michael
    michael 17 January, 2017, 12:48

    Do not fear. The not so HSR is already DOA.

    Friday will be a wonderful day for those conservative of us in California. Hopefully “the Donald” will put the screws to sanctuary “Kalifornia” and put a bullet in this browndoggle.

    For the rest of you idiots that approve bond measures here in California, this is a prime example of why not to vote yes on any bonds or taxes.

    Reply this comment
    • gonzo
      gonzo 17 January, 2017, 13:22

      Michael:
      Regarding Bonds/Initiatives, they’re not all bad,

      In the case of water, some either have, are or will fund major regional water quality & supply projects, good ones that unless you live nearby you’re unaware of.

      Some are based upon matching fed/state funds, but invoking a water joke, don’t throw the baby out with the bath water.

      That said, I partially agree with you, perhaps a clock needs to be imposed: If you can’t get a certified EIR/EIS, break ground with a completion schedule (similar to a Performance Bond in construction) within 5 years? NO DICE.

      The incompetence and ineptitude of this HSR was revealed within the 1st 5 years—It should have been scrapped, sent to the back of the line, requiring a new vote in light of emerging information.

      Moreover, CEQA & NEPA mandate re-openers if new, post EIR/EIS info conflicts or supersedes original data. Truly a pig-in-a-poke.

      Reply this comment
      • michael
        michael 17 January, 2017, 13:57

        While I admit that the may be worthy projects this state government is incompetent and dishonest. The intent of these bonds is to pass taxpayer money to union and private interests rather than serve the good of the people of the state of California. Things will only change when we force it to happen.

        Reply this comment
  9. joe
    joe 17 January, 2017, 14:17

    Ah come on, it’s the gummyment…what could possibly go wrong?

    50% overrun…5000% overrun…makes no never mind because in the Moonbeamverse taxpayer money is limitless…so get back to work tax suckers….cause Jerry will make you pay up one way or other.

    Reply this comment
  10. sjordan7617
    sjordan7617 31 January, 2017, 16:21

    I think we should abandon the High Speed Rail line. We have Amtrak. Make a few express runs on Amtrak from Sac to LA . Let’s see if the ridership is interested. Let’s cut our losses and run.

    Reply this comment

Write a Comment

Your e-mail address will not be published.
Required fields are marked*



Steven Greenhut

Steven Greenhut

Steven Greenhut is CalWatchdog’s contributing editor. Greenhut was deputy editor and columnist for The Orange County Register for 11 years. He is author of the new book, “Plunder! How Public Employee Unions are Raiding Treasuries, Controlling Our Lives and Bankrupting the Nation.”

Related Articles

Assessing Gov. Brown before next year’s election

As he lays the groundwork for a likely re-election bid next year, Gov. Jerry Brown is upbeat. “California is back,”

Harkey’s lawsuit unites capitol foes

Few Capitol battles are as heated as the ongoing feud between the trial lawyers and advocates for tort reform. Yet,

Environmental Views: Gray Davis vs. Pete Wilson

Town Hall Los Angeles hosted a discussion between former California governors Pete Wilson and Gray Davis yesterday with the two