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California High Speed Rail Slammed In New Government Report, Defunding Project Recommended

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An artists rendering of the proposed California high speed rail train in action.
An artists rendering of the proposed California high speed rail train in action.

Despite a revamped plan that's expected to shave $30 billion off the overall cost of the project, high speed rail in California still faces stiff opposition in its goal of connecting the northern and southern portions of the state with the nation's first ever dedicated bullet train.

A report issued earlier this week by the state's non-partisan Legislative Analyst's Office came out strongly against the new plan, recommending the legislature not approve the $2.6 billion in state bond funds requested by the High Speed Rail Authority to get the project off the ground:

...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. However, we do recommend that some minimal funding be provided to continue planning efforts that are currently underway.

Approval of the bond money is crucial because it, in turn, triggers the release of $3.3 billion in federal funds. If the authority receives the combined state-federal funding in the near future, it can begin laying track as soon as the beginning of next year.

The revised plan, which was approved by the High Speed Rail Authority earlier this month, scales down the original scope of the project by integrating the route's bookends (the zone between San Jose and San Francisco as well the area surrounding Los Angeles) with long-established regional transit systems. Having high speed rail run on existing lines for a portion of the voyage instead of constructing an entirely new track slashed the overall cost of the project by about one-third.

Even with this much thriftier plan, some of the problems that have long plagued high speed rail remain.

In its report, the LAO primarily worried about the issue of funding. The current plan assumes the project will ultimately receive around $18 billion from the federal government. However, only $3.6 billion has been pledged so far and $400 million of that is being diverted toward the construction of San Francisco's Transbay Terminal.

Without significantly more money from Washington's spigot than what's currently being promised, the project is a good as dead.

"Given the federal government’s current financial situation and the current focus in Washington on reducing federal spending, it is uncertain if any further funding for the high-speed rail program will become available," said the report. "In contrast to the interstate highway system, which was constructed with the dedication of funding from the federal excise tax on gasoline, federal funding for high-speed rail is not supported by a dedicated revenue stream and therefore must compete with other annual federal funding priorities."

The report also questioned the viability of other planned funding sources, such as the up to $17 billion local government are expected to pitch in, and worried that both the cost of servicing debt on the bond as well the operating subsidies that could be required if the project's revenue projections don't quite pan out would be additional pressure on California's General Fund, which is already strained to the breaking point.

While High Speed Rail Authority chief Dan Richard agreed with the LAO's recommendation that the authority should be more open in its communication with the legislature, he took issue with some of its findings. "[The] LAO recommendations overlook the significant environmental and economic benefits of reducing freeway pollution, improving transportation and creating jobs," Richard said in a statement to the Associated Press. "This project is important for California and it would be a mistake to delay this project and lose billions of dollars in critical federal funds."

Other state lawmakers had similarly harsh words for the report. "The statements by the LAO indicate that they are unqualified to provide a comprehensive analysis of this complex project which the state has been working on for 15 years," said Democratic Stockton Assemblywoman Cathleen Galgiani in a statement. "They either haven't read or do not comprehend the California High Speed Rail Bond Act, the federal ARRA funding criteria, or the Peer Review Committee report. Proposition 1A designated a highly qualified Peer Review Committee as the appropriate and qualified body to assess California’s High Speed Rail project as it progresses. The Peer Review committee, not the LAO, was authorized by the legislature and the voters for that purpose."

Not everyone in Sacramento was so hostile to the LAO's suggestions. "I think [the LAO report] reinforces the need to take a little time and get it right," Palo Alto State Senator Joe Simitian told the San Jose Mercury News. "It's a new plan and I think both the public and the legislature are going to need some time to understand the implications of the plan, and frankly get the answers to some questions that have been hanging out there for the last three years."

Almost 15 years ago, California voters passed Proposition 1A, which allowed the state to sell nearly $10 billion in bonds to pay for the construction of the 800-mile train system. However, in the years since, the cost of the project spiraled to nearly $100 billion--before the price tag's considerable recent shrinkage--as criticism grew both from fiscal conservatives weary of its cost and from residents with homes and businesses located along the route who hoped that the train would whiz by someone else's backyard.

If all goes according to plan, the high speed rail system will stretch from San Francisco to Burbank by 2028.

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