High-Speed Rail Costs Soar to $98.1 Billion

Long-awaited business plan touts economic, environmental benefits, but comes with massive price tag.

After years without a viable business model, the California High-Speed Rail Authority today released a plan that would create 100,000 jobs in five years, generate another one million jobs beyond that, and reduce carbon emissions by three million tons, according to the Authority.

The new plan calls for a phased implementation of the sprawling statewide rail system, which would allow the Authority to make changes to the system design according to how much money they can raise.

The total cost for the system, which previously exceeded $60 billion, has now risen to nearly $100 billion, but the chairman of the Authority board insists it has developed a “fiscally sound project” that can attract private capital and generate a lot of cash for the state.

“We have carefully constructed a business plan that is mindful of the economic and budgetary constraints facing both the state and the nation,” said Authority Board Chairman Thomas J. Umberg. “It will deliver to California and Californians a cost-effective, efficient, and sensible alternative to more highways and increased airport congestion.”

The plan came under immediate attack by watchdog group Californians Advocating Responsible Rail Deisgn (CARRD), who said the most problematic element in the old plan—the ridership forecast—has not changed in the new one.

“The ridership model is the same one that was used in 2009,” said CARRD co-founder Nadia Naik. “If your model doesn’t work, it’s garbage in and garbage out. All they’ve done is put a fresh coat of paint on these numbers.”

In a statement released today, the Authority characterized the project has being vital to meeting the demands of California’s population growth, which is expected to nearly double by mid-century.

“It is estimated that without high speed rail California will need as much as $171 billion to meet its transportation needs,” according to the statement. “That means an additional 2,300 lane-miles of highways, 4 runways, and 115 airline gates will need to be built.“

The statement also cites environmental benefits, including reduction of carbon emissions by more than three tons annually, and 146 million hours of saved travel time each year.

A major change in the new plan is in how, and when, the project will be funded. The Authority had previously said that private investment would be critical to funding the construction of the project, but in the new plan says private funding will not come until the very end.

This presents a conundrum for state lawmakers, says Naik, who may be reluctant to trust the Authority given the numerous critical reports that tore apart its previous business plan, including , Berkeley's Institute for Transportation Studies, Stanford, the State Auditor, and the Legislative Analyst's Office.

“The legislature is going to have to give a thumbs up or thumbs down on this $100 billion project without having an independent review of the ridership numbers,” she said, “so it’s going to very much be a ‘trust us’ situation.”

California State Assemblyman Rich Gordon (D-Menlo Park) expressed support for the project's vision, but deep concern over its price tag.

“High-speed rail for California is a powerful vision and dream," he said. "I hope that we can eventually find the means to implement this vision. California remains in a fiscal crisis.  We do not have enough revenue to meet our expenses as is.  Until we address our structural fiscal problems, I do not see how California can afford additional debt from high-speed rail."

Governor Jerry Brown has made high-speed rail a legislative priority and pressured the legislature to back the project. Whether he can successfully convince lawmakers to agree to spend more money on a project that would pull money from the deeply cut General Fund, which pays for education and health care services, howoever, remains to be seen.

Ron Haley November 01, 2011 at 11:42 PM
Talk about a bridge to nowhere - how do you get around when you get to LA?


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