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Is California’s high-speed rail really a boondoggle?

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CALIFORNIA HIGH SPEED RAIL AUTHORITY Back in 2009, after Congress passed the stimulus bill — with $8 billion set aside for high-speed rail projects — there were plenty of headlines heralding a new age of fast passenger trains in the United States. Trundle forward a few years, and the situation looks quite different. Republican governors in Florida, Ohio, and Wisconsin all rejected high-speed rail money, while the House GOP now opposes any further federal funding.

So that left California, which in 2008 approved a $9.95 billion bond measure to kick-start a glitzy new high-speed line stretching from the Bay Area and Sacramento down to San Diego. The state has become the focal point for all big rail debates. And, earlier this week, a San Jose Mercury News story got a lot of attention for reporting that the price tag on the San Francisco-Anaheim portion has risen from its original $33 billion to $60 billion or $80 billion—or possibly more. “This is a national embarrassment,” noted National Review’s Reihan Salam. “Sacramento needs to pull the plug on this,” wrote Mother Jones blogger Kevin Drum. “We have way better uses for this dough.”

But is California’s project really doomed? Not necessarily. Or — perhaps a better way of putting it — not just yet.

It’s worth looking closely at why the price has shot up. Back in 2008, before voters approved the bond measure, the state estimated the project would cost $33 billion. In 2009, before receiving federal stimulus funds, California had to account for the cost in “year of expenditure” dollars — i.e., the cost when the money would actually be spent. So, adjusting for future inflation, the number rose to $42.9 billion. That wasn’t an overrun, it was an accounting switch. (That said, even in 2009, watchdog groups like Californians Advocating Responsible Rail Design were predicting still higher costs.)

Then, recently, the state issued an environmental impact report for the first leg of the project, the 300-kilometer route between Merced and Bakersfield. This was a more detailed engineering assessment that included subsequent community feedback. Towns like Chowchilla now want the line to bypass them entirely, while Fresno says it would like the trains to run through it on an elevated viaduct, and so on. Taking all that new information into account, the Bakersfield-Merced segment is now expected to cost $10 billion, rather than the $8 billion estimated in 2009. Extrapolating from that hike is how the Mercury News got its projection for the whole system.

That’s a much higher figure than Californians were given before they approved the bond measure. But is it inherently ludicrous? One way to gauge is to compare it to similar rail projects around the world. As transit blogger Alon Levy points out, the Bakersfield-Merced line is now projected to run about $30 million per kilometer. A comparable phase of the LGV Est in France is running at $24 million per kilometer, while estimates for a similar Belgian line are about $29 million per kilometer. So the Bakersfield-Merced line is about average by international standards. (That said, the final number remains to be seen, since bidding is still underway, which could raise prices, while the rail authority may opt for cheaper engineering options, such as ditching some of the viaducts.)

The optimistic view, then, is “California rail: oversold, yes, but hardly unreasonable.” On the other hand, Elizabeth Alexis, one of the co-founders of Californians Advocating Responsible Rail Design, which has been remarkably prescient in forecasting costs, predicts that there are yet more surprises in store. For example, the proposed route between Bakersfield and Los Angeles takes a detour through the Soledad Canyon and the city of Palmdale. There’s a simpler route along I-5 that might be much cheaper, which the rail authority is reconsidering. But, of course, Palmdale isn’t thrilled with being circumvented and is suing to stop the study. Alexis also argues that the proliferation of private contractors involved in the project could inflate the price further.

So what’s going to happen next? Right now, California has enough money on hand to build from Fresno to Bakersfield — the state has $6 billion from a combination of stimulus funds and money from the 2008 ballot initiative. And, if either private investors or foreign countries step in with funding (Japan, for one, has expressed interest), then, as Levy notes, that “should be enough to build an initial operable segment, though probably not to build from Los Angeles to San Francisco.” The project won’t totally fail, but it’s also difficult to see the full line materializing unless, say, Congress suddenly changes its mind about the virtues of high-speed rail and kicks in more federal money.

By the way, Kevin Drum’s point that there might be better uses for those billions is a fair one. But the rail authority, in its own defense, has argued that even scrapping the project altogether isn’t entirely cost-free: California’s population will keep swelling in the years ahead, and a successful rail system will allow the state to forego spending “$100 billion to build 3,000 miles of new freeway, 5 airport runways, and 90 departure gates.” Freeways can be boondoggles, too. But is California right about these avoided costs? It all depends on whether you believe the state’s ridership projections for the new rail system — and critics have been casting plenty of doubt on those numbers of late.

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