Calif. gets $3B for high-speed rail that critics view as failure

(NewsNation) — “In summary, it hasn’t gone very well.”

That’s how Cato Institute policy analyst Marc Joffe would assess California’s high-speed rail project, which was recently the recipient of $3 billion in federal funding.

The grant, provided by the 2021 Bipartisan Infrastructure Law, is giving a much-needed boost to the project that’s 15 years in the making. The California High-Speed Rail Authority says headway is being made.

“We’re humbled by the expression of confidence and commitment from our federal partner, and we look forward to advancing the project, putting more Californians to work, and buying new, electrified high-speed trains, all made possible by this grant,” spokesman Micah Flores said in a statement.

In the 15 years since California voters greenlit the first high-speed railway in the country, the state says more than 12,000 union jobs have been created. But the cost has also ballooned, no tracks have been laid, and by the time it begins operating, it will have overshot its completion goal by at least a decade.

That’s why debate was renewed when the Biden administration announced in early December it was awarding $3 billion to help construct a portion of the railway: Will it be an economic boon, or is it wasteful government spending?

Funding

Approved in a voter referendum in 2008, the high-speed rail project aims to link Los Angeles in the south to San Francisco in the north, with stops in the Central Valley, running through cities including Bakersfield, Fresno and Merced. The latter three cities will be the first to be linked in an inaugural 171-mile segment.

But a New York Times expose in 2022 revealed how political decisions resulted in the ballooning cost of the project, which may now stand little chance of reaching its original goal.

One recurring challenge is the funding source for the railway.

When the initiative was approved, the entire line was to be completed by 2020 for around $33 billion — now the estimate for the initial segment alone. Proposition 1A, as it was known, was to provide $9.95 billion in bond money, with the rest coming from the federal government and private sector.

So far, there has been none from the private sector, though the Authority intends to pursue it.

“The Authority believes that private sector partners will invest in the construction and operation of the system once risks, returns and system operations are better understood and more advanced than where they are today,” the agency said in its 2023 Project Update Report.

Joffe is doubtful.

“No one in their right mind in the private sector is going to risk money on this,” he said.

The California High-Speed Rail Authority estimates that when all is said and done, the entire San Francisco-Los Angeles line could now cost between $88 billion on the low end and $128 billion on the high end. It attributes the higher cost estimates to inflation and supply chain issues, among other factors.

In the 2023 update, the Authority said its goal is to begin train testing on the first rail segment by 2028 and begin passenger service between Merced, Fresno and Bakersfield between 2030 and 2033. It sets no timeline for finishing the other 350 or so miles of envisioned track.

Even with the recent federal investment of $3 billion, the Authority is still $7 billion short of completing the initial segment, according to an analysis from the Eno Center for Transportation.

Flores, the Authority spokesman, noted that the project has never had a consistent, stable funding source.

“We will continue to aggressively pursue all available federal grants to advance work on the project, to construct the first operating segment and advance the work statewide,” Flores said.

The agency is awaiting a decision on two federal grants it has applied for and plans to submit more applications over the five years for grants that will be available under the Bipartisan Infrastructure Law. The agency is hoping to secure a total of $8 billion in federal funding.

Democrats, including California Gov. Gavin Newsom, hailed the recent federal investment as a needed step in getting tracks on the ground.

“California is delivering on the first 220-mph, electric high-speed rail project in the nation,” Newsom said in a statement. “This show of support from the Biden-Harris Administration is a vote of confidence in today’s vision and comes at a critical turning point, providing the project new momentum.”

The governor was unavailable for an interview, and his office directed NewsNation to his statement.

Republicans have called the grant wasted money.

“Again, might as well light the money on fire,” state Assemblyman James Gallagher said on X. “With all the terrible manag(e)ment and huge cost overruns they still throw even more billions at this boondoggle. It’s the Biden-Newsom way.”

David Ditch, a policy analyst at the Heritage Foundation, described the project as nothing more than a “boondoggle” influenced by politics.

“The No. 1 problem is that this is being operated by the government of the state of California,” he said. “Rather than that making it more efficient, because in theory the state of California should be incentivized to make the project go smoother, they bend over backwards to try to satisfy the stakeholder groups.”

Job creation

Proponents of the project point to its potential as a job creator and economy driver. Since ground broke, more than 12,000 union jobs have been created, mostly in the Central Valley.

The Authority projects that it will produce nearly 200,000 “job-years of employment” and $41 billion in economic activity, according to the 2023 report.

Flores touted the agency’s partnerships with local trade and labor groups and its partnership with area students in trade school programs.

“There are many ways our Central Valley neighbors see the benefits of the work,” he said.

Fresno Mayor Jerry Dyer said in a statement after the announcement of the federal grant award that the project would help a “rebirth” of the city’s core.

“Part of the money will go toward building our high-speed rail station — the nation’s first. This landmark building will make a statement to rail passengers and will be the centerpiece of our downtown revitalization efforts,” he said.

Likewise, Merced Mayor Matt Serratto said in a statement the entire project is an “investment for the city of Merced.”

“We are excited to look to the future and see what high-speed rail and the future Merced Station will bring to our growing city and the connections it will bring residents to the rest of the state,” he said.

Joffe argues the jobs have come at too high of a cost.

“It’s great for people to have jobs, but I think that the jobs should create something that’s going to be useful in our lifetime,” Joffe said. “I think that 11,000 jobs could have been created more inexpensively.”

Public sentiment, future outlook

The project still enjoys support from most Californians, according to a 2022 poll from the University of California, Berkeley. A total of 56% of respondents said they favor continuing to build the rail line, even when operating only from Bakersfield to Merced by 2030 and to the Bay Area by 2033.

Views about the project were highly partisan. Nearly three-quarters (73%) of Democrats favor it, compared to only 25% of Republicans. A slight majority (54%) of those with no party affiliation favor continuing construction.

The $3 billion federal grant will be used to design and procure six trainsets, design and build the Fresno station, acquire land for the Merced and Bakersfield extensions and construct track along the initial operating segment.

The Authority’s timeline sets trackwork construction to begin in 2024 and station construction in 2026. It eyes a 2028 completion date for the Merced and Bakersfield extensions as well as the first train delivery. In the following two years, stations would be completed and trains would be tested before service begins in 2030.

The entire line proposal calls for 15 stops in total, including five in the greater Los Angeles area.

Ditch views that as part of the problem.

“They want to add all these stops so people have a new train station, but it also dramatically increases the cost of the project as a whole,” he said. “There’s absolutely no scenario where it would actually come close to paying for itself.”

The Authority projects 6.6 million annual systemwide riders in 2030, including connecting intercity rail and bus services. A total of 2.3 million are projected to travel on the high-speed rail segment. Ridership is projected to increase to 6.9 million trips in 2040 and 7.2 million in 2050.

Enough to justify the cost? Joffe contends not.

“There is no scenario under which it could be said to be worth it if you’re looking at the numbers in an honest way,” he said.

If the full rail line is completed, ridership projection jumps to 31.3 million by 2040, which the Authority notes is 2.5 times higher than the pre-pandemic 12.5 million riders on the Northeast Corridor service in 2019.

“This shows that the system, as originally proposed to the voters,” Flores said, “still yields significant mobility benefits and reduced greenhouse gas emissions.”