Hey, a hundred billion here, a hundred billion there, and pretty soon you’re talking about real money. But apparently not real progress.
When I first started writing about California’s high-speed rail boondoggle thirteen years ago, its advocates claimed they could connect Los Angeles and San Francisco for $33 billion. After getting $3.5 billion from the Obama administration, the number grew to $42 billion, and even then critics put closer to nine figures. Despite calling the project a “train wreck,” the LA Times editorial board endorsed the project and a new state board that was supposed to exercise fiscal discipline and enforce construction deadlines.
By November 2011, the California High-Speed Rail Authority admitted that the projected cost had ballooned to $98 billion. The state and the federal government insisted on pursuing the train nonetheless and claimed it would provide massive financial and environmental benefits at some point. And they kept pouring money into the project.
Flash forward a dozen years ahead to today. With no tracks completed for even a portion of the route, the CHSRA now wants more funding to keep the project moving. And when I say “more,” I mean $100 billion more, and that may not be the end of the funding requests:
As the state faces economic headwinds, California’s mega high-speed rail project between San Francisco to Los Angeles also faces major funding hurdles, the project’s CEO Brian Kelly told state lawmakers Tuesday.
Kelly testified in front of the State Senate’s Transportation Committee on the High-Speed Rail Authority’s updated draft business plan. In Tuesday’s hearing, Kelly told lawmakers the project has $28 billion dollars on hand, but noted it was still a few billion dollars short to complete the Central Valley segment between Merced and Bakersfield. Depending on how long the segment takes to finish, it could cost between $32 Billion to $35 Billion. Kelly said the project is hoping to fill the gap with federal funds. That segment of the project is expected to be fully operational between 2030 and 2033, Kelly said.
Project leaders estimate it will still need an additional $100 billion to finish what voters were originally pitched in 2008: a bullet train that runs between San Francisco and Los Angeles. A timeline on its completion has not been set as the authority waits for environmental clearances for those segments.
“Economic headwinds” puts it rather mildly. The state already faces a massive budget deficit of $58 billion, and that’s just as of three weeks ago. A previous estimate had put it at $43 billion, and not long prior to that, Governor Gavin Newsom bragged that they had balanced the budget based on wildly inflated income expectations. And the state has done nothing to stop the bleeding, either; the Legislative Analyst’s Office warned in its most recent report that the problem was likely to be worse when the next estimate takes place in May.
California can’t meet its obligations now, let alone find another $100 billion for the $33.6 billion choo-choo that has yet to roll an inch for service. States can’t create deficits; they have to either raise taxes and fees, borrow money, or both to fund their annual or biannual spending plans. Bear in mind too that this deficit doesn’t include a looming pension crisis. In mid-2022, the unfunded liabilities from CalPERS totaled $1.5 trillion, thirty times the current state budget deficit, and 15 times larger than the CHSRA wants the legislature to find for the train system that is already four years past its initial delivery date.
That’s why the CHSRA wants to find a “solid federal partner” on this project. Translation: They want everyone in the US to shill out money for this boondoggle, even more than we already did during the Obama administration. As KCRA’s presenter notes later in the video, Donald Trump put a stop to federal subsidies for the Obama/Biden Choo Choo during his term, and Joe Biden has been apparently too focused on buying votes from student-loan debtors to notice that his boondoggle is failing badly. The CHRSA wants Newsom et al to pressure Biden into a massive infusion of capital into the project, regardless of the fact that the federal government now runs $2 trillion annual deficits too.
However, good luck getting a California bail-out past the GOP in the House. Given that the Golden State is already more like the Brownout State thanks to insufficient electricity production, hooking up a rail system that will need heavy subsidies to find ridership makes no fiscal sense. The fact that multiple airports on both ends of the proposed route deliver passengers on scale of demand every damn day already, the need for even an inexpensive high-speed rail system that relies on California’s failing electrical grid is non-existent. Congress wants to find ways to cut spending rather than expand it.
Even Biden may have decided to cut his losses on this project. In his SOTU speech last week, Biden didn’t mention high-speed rail at all. Biden never even mentioned “transportation” or Amtrak once in the speech. For that matter, Biden didn’t mention California by name at all either.
That should be a big, big hint to California. If they want to pursue fiscal insanity, then they can pay for it themselves. This project should have been shut down over a decade ago, but the Obama/Biden magical thinking and progressive wishcasting kept it alive. The bill is finally coming due, and with this demand, it obliterates any remaining impulse to indulge the sunk-cost fallacy any further. Or it should.
Read the full article here
