Key Takeaways
President Biden gifted California another $3.1 billion in taxpayer money from the Infrastructure bill to pay for its High-Speed Rail project–a project that is vastly over budget and way behind schedule.
The train’s cost was estimated at $33 billion to connect Los Angeles and San Francisco by 2020, but will cost at least $100 billion, with first service now scheduled for 2030.
California is running a $68 billion deficit, so it is unlikely to be able to underwrite additional costs for the project, and Federal funds are insufficient to cover the cost overruns.
In Florida, which refused federal money, a new rail line is open between Miami and Orlando, all with private funding, with an expansion to Tampa in the works.
Last month, Biden awarded $3.1 billion to the California High-Speed Rail project, which was originally sold as a bullet train connecting San Francisco and Los Angeles in less than three hours. The project’s costs keep rising despite the state scaling back the plan. California voters authorized a $10 billion bond issue for the train in 2008 for a project whose construction costs were estimated at $33 billion. The cost has now increased to at least $100 billion. Service between San Francisco and Los Angeles in Phase I was to be completed by 2020. Eventually the plan was to extend it north to Sacramento and south to San Diego.
Within five years of the bond approval, costs had increased to the point that the California High-Speed Rail Authority had to adopt an emergency plan to contain them. It decided to have the trains share tracks with conventional commuter trains in parts of the San Francisco and Los Angeles leg, which would slow down the trains. That change reduced projected costs by billions of dollars, but the train was no longer “high speed.” In 2019, Gov. Gavin Newsom declared that the train would initially travel only down a 171-mile segment between Merced (a 130-mile drive from San Francisco) and Bakersfield (110 miles from Los Angeles). That segment was to cost $22.8 billion.
Then the California High-Speed Rail Peer Review Committee decided that the San Francisco to Los Angeles phase would take another 15 to 20 years to build, would cost three times as much as projected, and would be unable to meet legally mandated trip times. The California high-speed rail authority program plans to ultimately move travelers from San Francisco to the Los Angeles basin at speeds of 220 miles per hour. Service for the Merced to Bakersfield portion is now expected to begin by 2030. The next links are to be into the San Francisco Bay Area to be completed by 2033 and later into Los Angeles and Anaheim with no date for completion of the entire line.
The nonpartisan Legislative Analyst’s Office highlighted a $10 billion to $12 billion funding shortfall for the Merced-to-Bakersfield segment, despite the California High-Speed Rail Authority’s 2022 Business Plan indicating that “revenues would be roughly equivalent to costs.” The federal grant, funded by federal taxpayers, will pay for less than one-third of the year’s cost overrun.
Louis S. Thompson, chairman of the Peer Review Committee, put the Phase I funding gap at $93 billion to $103 billion and noted there is at least an $8 billion increase that has not been counted in the Southern California segment. The full San Francisco to Los Angeles project is estimated to cost up to $128 billion. Not only does the project need federal funding, but it also needs state or local funding. Since there is no existing federal program anywhere near the scale or sustaining level needed, additional State funding is needed. But the Legislative Analysts’ Office has announced a $68 billion deficit this year, taking state funding off the table. Further, future cost escalation seems likely on the San Francisco and Los Angeles legs due to massive tunneling through the Tehachapi Mountains toward Los Angeles and below the Coast Range toward San Francisco.
Biden Funds Las Vegas Rail Project
Biden’s Transportation Department has also awarded $3 billion from the $1 trillion 2021 infrastructure law for a $12 billion Las Vegas to Southern California high-speed rail project—a reduction from the $3.75 billion originally requested. The Las Vegas to Los Angeles project’s goal is to be completed before the 2028 Los Angeles Olympics. The 218-mile “Brightline West” project is expected to have speeds of at least 186 miles per hour, resulting in a proposed trip time of 2 hours and 10 minutes. The project planners estimate that it will remove 3 million cars annually from route I-15.
Other Rail Projects
Congress approved $66 billion for the country’s rail infrastructure, as part of the 2021 $1 trillion infrastructure bill, with Amtrak receiving $22 billion and $36 billion allocated for competitive grants. The Transportation Department also awarded $3.8 billion to help build a new railway tunnel between New York City and New Jersey. And, a new passenger rail route between Raleigh, North Carolina, and Richmond, Virginia, is expected to receive a $1 billion grant. In total, Biden’s Department of Transportation is awarding $16.4 billion to 25 projects along the Northeast Corridor.
Conclusion
California has requested and received additional funding for its high-speed rail project that has been in the works for over a decade and is still underwater with no end in sight as the $3.1 billion President Biden’s Transportation Department provided is even insufficient to cover the current cost overrun. The project needs state funding but the state is in arrears. The project planners are saying that the first segment will be completed by 2030, but there is no date for completion of the entire project, and the planners have been far from accurate in the past.
It seems like blue states cannot survive without taxpayers’ bailing out their projects. Florida, a red state, recently opened a new rail system between Orlando and Miami, (a 170-mile $6 billion project) with all private financing, and an extension to Tampa is in the works. Brightline, the only provider of higher-speed rail service in America, runs 32 trains daily with 16 daily departures from Miami and Orlando. Florida also has a state budget surplus.
