THERE’S A SCANDAL brewing in California, and we are not talking about Arnold Schwarzenegger. We refer to the $43 billion high-speed rail project in that state, to which the Obama administration has pledged more than $3 billion in federal funding, even though study after authoritative study has cast serious doubt on its financial feasibility. The latest such report, issued May 10 by California’s nonpartisan Legislative Analyst’s Office (LAO), finds that the project’s current governance structure is “too weak” to manage the massive project and that its business plan does not adequately consider debt service costs that could gobble up $1 billion of the state’s budget per year through 2030.
Yet California’s High-Speed Rail Authority (HSRA) is bound and determined to start building the railroad before its long-term funding is clear, and to do so in a part of the state where hardly anyone will want to ride. The HSRA chose to start work in a forlorn stretch of the Central Valley this September because the Obama administration said it had to, or else it would lose $2.3 billion of the $3 billion in federal money. And why did the administration favor the Central Valley, instead of a likelier location such as the Bay Area or Los Angeles-Anaheim? Because it wanted environmental permitting done quickly — and that seemed likelier in part of state with fewer people around to shout “not in my back yard.” Cash-strapped as his state is, Gov. Jerry Brown (D) seeks $185 million, about half of it federal money, in his current budget plan to help prepare for construction. Much bigger contracts for actual construction would have to be signed next year.
In short, California may be about to spend a fortune to plan and build a stretch of high-speed track that would end up as a railroad to nowhere in the all-too-likely event that funding for the rest of the system never materializes. But the LAO, the state-level equivalent of the Congressional Budget Office, argues that the legislature should halt most further spending on the project and not start construction until the state can negotiate more flexible terms from the federal government and — crucially — relocate the first section to a route where a fast train would be economically viable even if the entire system never gets built.
There is a certain poignancy to the LAO’s plea for everyone to stop and think. The benefits of high-speed rail in California might indeed outweigh the costs, the LAO notes, but “at this time there is little reliable information to inform this decision.” Think about that for a minute: Fifteen years have passed, and millions of dollars have been spent on studies since the state first passed a law creating a high-speed rail program. Yet after all that, no one really knows whether it’s worth doing. If no one has come up with a convincing rationale by now, maybe there isn’t one.