California's $77 billion 'bullet train to nowhere' faces a murky future as political opposition ramps up

Key Points
  • California's next governor will likely decide the fate of the state's high-speed rail project, and two leading GOP candidates oppose it.
  • One of the two Democratic front-runners in the race also has real concerns.
  • A business plan shows the project's baseline cost is $77 billion, up 20 percent from two years ago. Its opening date has been delayed four years, too.
One of the elevated sections of the high-speed rail under construction in Fresno, Calif.
Rich Pedroncelli | AP

Although it has been dubbed a "bullet train to nowhere," California Gov. Jerry Brown has pushed forward over the years with the state's high-speed rail project. But now the day of reckoning may come sooner than expected for the state's most expensive infrastructure project.

A business plan released Friday by the California High-Speed Rail Authority shows its projected baseline cost is now $77 billion — up 20 percent from two years ago — and it indicated the cost could rise to as high as $98 billion. The opening date for the Los Angeles-to-San Francisco bullet train has also been delayed by at least four years, to 2033.

"It appears that they are finally bringing forth more realistic cost estimates and a more realistic schedule," said Stephen Levy, executive director and senior economist with the Center for Continuing Study of the California Economy, a Menlo Park-based research group. "The whole project remains in doubt as the costs increase and the funding gap increases."

Political uncertainty and opposition to the project have only increased over time. A decade ago, California voters approved Proposition 1A, authorizing nearly $10 billion in bond money for the construction of the high-speed rail system.

Since the 2008 vote, though, the project been plagued by delays and cost overruns, and polls show most California voters want the funds to go for something else other than high-speed rail.

Tunneling challenges

The bullet train line's 119-mile Central Valley segment under construction in the less populated area from Madera to north of Bakersfield is scheduled to open by 2022, and the partial route between San Francisco and Bakersfield isn't likely to be operational until 2029, according to the business plan. It said planning work has advanced on the 500-mile corridor between San Francisco and Los Angeles/Anaheim, but indicated the project remains short of financing to complete all the work.

In particular, there's cost and various other challenges posed by the tunneling through the Pacheco Pass, which the business plan termed "the critical link between the Silicon Valley and the Central Valley. This tunnels segment, required to connect San Francisco and Gilroy to the Central Valley, presents challenges in terms of environmental planning, cost, technical complexity, schedule and available funding to complete."

"It's crazy time with this thing," said Pat Bates, the Republican leader in the state Senate. "Every time we get a new report it's more money and more time. It's a boondoggle. At some point you have to pull the plug."

"It's a boondoggle. At some point you have to pull the plug."
Pat Bates
California state Senate GOP leader

Brown, a Democrat who is ineligible to run for re-election, will leave office in January 2019. Brown's spokesman, Gareth Lacy, said by email: "The governor made his support for high-speed rail very clear in his prepared State of the State address, and that hasn't changed."

In his State of the State address in January, Brown said: "Yes, it costs lots of money but it is still cheaper and more convenient than expanding airports and building new freeways to meet the growing demand. It will be fast, quiet and powered by renewable electricity and last for a hundred years."

In the end, policy experts say the state's next governor will likely decide the fate of the high-speed rail. The state's Democratic-led state legislature also will need to go along with it and overcome likely challenges by labor unions. The California Labor Federation's website touts the project and said the state "cannot afford to abandon high-speed rail now."

Construction jobs

According to state officials, the high-speed rail project has already created more than 1,500 construction jobs in the Central Valley, from building elevated track structures and performing rail trenching to adding bridge crossings. The labor group estimates there will be thousands of additional jobs created due to the project in future years.

But critics argue that the costs will outweigh the benefits.

"You can imagine a new governor with new priorities will just look at the trade-offs being too high," said Adrian Moore, a policy expert at the Reason Foundation, a Los Angeles-based free-market think tank. "How much are we not investing in the transportation system that people are actually using ... because we're shoveling all this money into high-speed rail. And that's just going to get worse in the coming years. Someone has to be willing to go with public opinion, instead of prevailing wisdom in Sacramento, and kill this thing."

A June 5 primary will decide which two gubernatorial candidates, regardless of party, advance to the general election Nov. 6.

Among the gubernatorial candidates, longtime front-runner Lt. Gov. Gavin Newsom was an early supporter of the 2008 rail bond issue to help finance construction, but the Democrat has since expressed real concerns on the proposed rail plan. A spokesperson for Newsom didn't respond when asked about the new rail authority's business plan.

However, Antonio Villaraigosa, a Democrat and former Los Angeles mayor who as of January was in a virtual tie in the race with Newsom, said in a statement he supports the rail project and claims "unlike others," his position has been consistent.

California Assemblyman Travis Allen and businessman John H. Cox, the two leading Republican candidates for governor, vowed in tweets last week to block the project if elected.

According to the high-speed rail authority, once the Los Angeles-to-San Francisco bullet train is completed it will allow people to travel in just under three hours on the route and at speeds reaching more than 200 miles per hour. Moreover, it said the plan is to eventually extend the system to Sacramento and San Diego, which will result in the high-speed rail system having a total of some 800 miles and as many as two dozen stations.

In the meantime, several executives have exited the California High-Speed Rail Authority in the past year. Jeff Morales, the authority's CEO, left in June, and others soon followed. Morales held the job for about five years.

Funding uncertainty

"In this draft plan, we show that our cost estimates have increased and we need greater certainty on funding in order to fully deliver the initial Silicon Valley to Central Valley Line," Brian Kelly, the high-speed rail authority's new CEO, said in a letter accompanying the 114-page business plan.

Kelly was unavailable for interviews for this story.

"Regardless of what this business plan said, the political and funding reality was that they don't really have enough money to build what they want to do — certainly not statewide," said Ethan Elkind, the climate program director at UC Berkeley School of Law and an expert on California transit and rail issues. "Basically they can complete this initial 119-mile segment in the Central Valley, but it will be a bit of a stranded asset until they can connect it at least to the [San Francisco] Bay area."

Added Elkind: "In the interim, they are sort of looking at a fallback option of just basically building a new rail right-of-way that Amtrak could use and benefit from and make some revenue on it. But it's certainly not high-speed rail and it's certainly not connecting the major parts of the state together."

Lack of private funds

In addition to the $10 billion in initial bond money state voters approved in 2008, California secured about $3.3 billion in federal stimulus funds in 2009 — and has already burned through about $2.5 billion of that money. Last summer, the state legislature voted to extend California's cap-and-trade program through 2030, but critics say revenue from the greenhouse gas-emissions reduction program still won't be enough to fund the high-speed rail project.

"It is a horrifically, poorly thought-out project from day one," said Jon Coupal, the president of the Howard Jarvis Taxpayers Association, a watchdog group. "The original proposal said a third of the money would come from the bonds, a third from the federal government, and a third from the private sector."

Coupal said the private-sector money "isn't there since no sane investor would ever put money into this thing, and the federal government cut off the spigot a long time ago. So Governor Brown is relying on the cap-and-trade revenue, although that isn't generating enough revenue to keep this thing going."

Similarly, economist Levy believes that, as the high-speed rail project's gap in funding gets bigger and the state moves into a time of more retirements and less job growth, it will become less likely that private funding sources would pick up costs for the bullet train.

That said, Levy thinks that the high-speed rail project has some potential benefits by connecting cheaper housing in the Bakersfield area to the L.A./San Fernando Valley areas as well as more affordable housing along the northern corridor of the system into Silicon Valley.

In fact, Levy believes even the major tech companies would pick up some of their employees' travel cost for using the high-speed rail since it "would be pocket change in terms of their commitment to housing and environment and getting a good workforce."