The latest authoritative warning came last week from the California High-Speed Rail Peer Review Group, which called the program “an immense financial risk” for the state and refused to recommend that the state legislature sell $2.7 billion in bonds to start a 130-mile initial stretch of the system.
Thanks to federal policy, if California does not start work on the rail line by Sept. 30, it will lose an additional $3.3 billion in federal money — possibly dooming the system.
But the Catch-22 is that, if California does start building without securing future funding, it could end up with a $6 billion track to nowhere. As the Peer Review Group (PRG) explains, that’s because, for economic-stimulus reasons, Washington insisted that California build the initial stretch between two outposts in the lightly populated San Joaquin Valley.
“[M]oving ahead . . . without credible sources of adequate funding, without a definitive business model, without a strategy to maximize the independent utility and value to the State, and without the appropriate management resources, represents an immense financial risk on the part of the State of California,” concluded the PRG, an independent body established by the 2008 referendum that authorized $9 billion in high-speed rail bonds.
And that’s not to mention the risk to U.S. taxpayers, most of whom do not live in California.
The report, published Jan. 3, was consistent with previous takes from California’s nonpartisan Legislative Analysis Office and the PRG itself.
The PRG’s caution seems amply justified, given that the project’s costs are already mounting far beyond what voters were originally told. The 2008 referendum assumed a $33 billion price tag for a system stretching from Sacramento to San Diego. But more recent estimates have reached $98 billion.
But, to Brown, the warnings lose validity through repetition. The PRG report “does not appear to add any arguments that are new or compelling enough to suggest a change of course,” his spokesman said.
Transportation Secretary Ray LaHood, who has declared that “we will not be dissuaded by the naysayers and the critics,” told me to discount the PRG report. He said its lead author, former California governor Arnold Schwarzenegger’s (R) erstwhile transportation chief Will Kempton, used to support building a high-speed line in the San Joaquin Valley — until he “switched allegiances” and became CEO of transportation for Orange County. Kempton denies it.
One could just as easily say the California High-Speed Rail Authority angrily rebutted the PRG report because two of the authority’s board members are officials of construction unions that stand to benefit from the project. Or that LaHood’s views reflect the president’s political interests.
But enough of the inevitable pork-barrel politics. On the merits, high-speed rail would be a questionable investment even if California could afford to build it.
LaHood and other boosters marvel at bullet trains in Europe and Japan, insisting simplistically that we need them, too.
But the sprawling, decentralized cities of the United States do not make convenient destinations for train travelers. International experience shows that high-speed rail entails expensive debt service and large operating subsidies. This would likely be the case here as well, since, for better or worse, rail must compete with well-established air and car options. Business travel is one ostensible purpose of bullet trains in California, but increasingly people meet via video conference.
For these and other reasons, high-speed rail in the United States would lower carbon emissions and reduce traffic far less cost-effectively than would alternative solutions.
It’s especially odd for a Democratic president and governor to saddle California with the cost of bullet trains when the state is facing chronic deficits, tax increases and social spending cuts. Maybe this is why polls show that a majority of Californians have turned against the project. It’s still not too late to hit the brakes.