Re-evaluating High-Speed Rail in California

Report on the California High-Speed Rail Project

I. Senator John M. W. Moorlach Report on the California High-Speed Rail Project (PDF), March 11, 2019

Executive Summary: Reassessing High-Speed Rail

With a new governor calling the project into question in his January 12, 2019 State of the State address and new members of the California Legislature, early 2019 is a great time to reassess the California High-Speed Rail project.

The California High-Speed Rail project is currently projected to cost $77 billion, according to the project’s Draft 2018 Business Plan. Yet when voters passed Proposition 1A in 2008, authorizing the project, in the pamphlet mailed to voters the analysis by the Legislative Analyst found, “The authority estimated in 2006 that the total cost to develop and construct the entire high speed train system would be about $45 billion.” So the cost almost a decade later is 71 percent higher than what was sold to voters. Those numbers do not consider the other cost overruns as a result of delays, change orders, complicated land acquisitions and litigation.

The budget the Legislature passed and Governor Jerry Brown signed for fiscal year 2018-19, which began July 1, continued minimal funding. The governor’s enacted budget summary wrote, “The Budget anticipates expenditures of $1.1 billion, including $382.5 million from Proposition 1A (2008), and $749.5 million Greenhouse Gas Reduction Fund, and $750,000 High-Speed Rail Property Fund. Of this amount, $45.4 million is included in the Budget with the remainder provided by previous appropriations or the continuously appropriated Cap and Trade funds.”

On January 10, 2019, new Governor Gavin Newsom released his budget proposal for fiscal year 2019-20. It included high-speed rail expenditures of $1.73 billion for 2018-19 and $1.69 billion for 2019-20. These are numbers the Legislature will be grappling with as it works on the state budget before the June 15 constitutional deadline to pass it.

Yet in his State of the State address, the governor announced:

Next, let’s level about High-Speed Rail. I have nothing but respect for Governor Brown’s and Governor Schwarzenegger’s ambitious vision. I share it. And there’s no doubt that our state’s economy and quality of life depend on improving transportation.

But let’s be real. The project, as currently planned, would cost too much and take too long. There’s been too little oversight and not enough transparency.

Right now, there simply is not a path to get from Sacramento to San Diego, let alone from San Francisco to LA. I wish there were.

However, we do have the capacity to complete a high-speed rail link between Merced and Bakersfield.

I know that some critics will say this is a ‘train to nowhere.’ But that’s wrong and offensive. The people of the Central Valley endure the worst air pollution in America as well as some of the longest commutes. And they have suffered too many years of neglect from policymakers here in Sacramento. They deserve better.

High-Speed Rail is much more than a train project. It’s about economic transformation and unlocking the enormous potential of the Valley.

Abandoning high-speed rail entirely means we will have wasted billions of dollars with nothing but broken promises and lawsuits to show for it.

It’s important to note that Governor Newsom did not entirely call for ending the project, so this matter is very much alive – even for a limited 171 mile segment between Merced and Bakersfield – and concerns many billions more of taxpayer dollars that could be spent on other priorities.

This matter also arose at a January 17, 2019 meeting of the Senate Committee on Budget and Fiscal Review, on which I sit. Testifying was Vivek Viswanathan, Chief Deputy Director at the Department of Finance. When I asked about funding for high-speed rail, he responded:

The administration is obligated to put out a five-year infrastructure plan. It includes all of our infrastructure investments – whether they are in rail, transit – across all areas. They will be putting that out at some point later this year. And certainly the governor plans, he’s still deliberating for the future of that high-speed rail system, what will be in that plan. There is currently a continuous appropriation under the cap-and-trade expenditure plan. We have not weighed in on those continuous appropriations in this budget. But you will certainly hear from the governor and the administration about his thoughts on this later this year. [The video is here, beginning at 1:40]

As part of the governor’s call for a “fresh start,” I have produced this study. I am a trained Certified Public Accountant and I believe that it is time to look closely at where the money is going and what it is supposed to buy. In a state with so many pressing fiscal demands, including our aging utility infrastructure and ailing forests, rising pension costs and a severe homelessness crises, is building a high speed rail the best way to spend our money?

This report raises questions the governor, my fellow legislators and all California residents should be asking. These are matters to think about as we craft a new budget that will address our many infrastructure needs and where high-speed rail fits into our priorities.

II. Proposition 1A (2008), from the Secretary of State’s website, “Safe, Reliable High-Speed Passenger Train Bond Act

III. High-Speed Rail Business Plans

IV. Reports from the Legislative Analyst’s Office

V. Critiques of High-Speed Rail in California