When California voters in 2008 approved $9.95 billion in bonds to create the start of the state’s High Speed Rail system, they were offered a list of promises — few of which have come to pass. One was that this bullet train “will not require operating subsidy.” Yet the project is dependent now on taxpayer subsidies, with the Legislature last year guaranteeing $1 billion in annual funding from the cap-and-trade system for the next 20 years.
The train was supposed to cost $33 billion and zoom riders from Los Angeles to San Francisco in under three hours. Estimated costs are triple that number — and the current route would go from Merced to Bakersfield. It was supposed to be completed five years ago, but the project has seen limited progress. A key initial supporter, former Sen. Quentin Kopp of San Francisco, says the project is off the rails.
The feds have stripped $4 billion in funding, but instead of taking the hint California officials are making new promises. Last month, the California High-Speed Rail Authority’s CEO Ian Choudri touted the possibility of major private investors. He told the Fresno Bee “an investment group could use its own money to build a segment of the railway and then operate and maintain it” and then secure repayment “from ticket sales and other revenues from the operation of the train and its properties.”
That sounds promising until one realizes this entire house of cards is built upon ever-increasing taxpayer subsidies. The private investment only is possible because the state is guaranteeing $20 billion in additional payments. Choudri is seeking even more money from the Legislature next year. “If instead of $20 billion, we have a $60 billion state commitment, then the game changes,” he told the Bee. That’s a lot of additional money for a project to jump start a project that was supposed to cost $33 billion all in.
Choudri also needs the Legislature to change a law (Senate Bill 198) that limits public spending outside of the current Central Valley route. And that’s needed because the rail authority also wants to change the route to go from Gilroy to Bakersfield. In fairness, that route makes more sense as it originates closer to the San Francisco Bay Area, but it’s rather absurd to dramatically change the train’s basic alignment this late in the game.
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There’s no cost-effective solution at this point, but lawmakers shouldn’t fall for the latest hype that a few more route tweaks, billions more in subsidies and some new private-investment promises will save it.
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