California’s high-speed rail project faces new shortfall

California’s long-beleaguered high-speed rail project needs another $10 billion just to get the bullet train through farm country, much less reach Silicon Valley and Los Angeles, according to a new report that outlines yet another dramatic funding shortfall for the Golden State’s most expensive and contentious transit project.

The massive funding gap leaves the project’s initial 171-mile Central Valley link — connecting Bakersfield to Merced — in jeopardy as Gov. Gavin Newsom is mum on spending increasingly scarce taxpayer dollars and political capital on the project while Republicans continue their calls to abandon the bullet train. Now, the California High-Speed Rail Authority is turning to Washington, hoping to secure a massive $8 billion funding package to keep the initial link on track.

“The Central Valley was supposed to be the easy part,” said Louis Thompson, head of the rail authority’s peer review group. “In this case, it’s become apparent, they cannot complete it with the money available.”

In 2019, Newsom rallied state lawmakers to build the bullet train across almond orchards and ranchland to “get something down, once and for all,” despite critics dubbing the segment a “train to nowhere.”

But now the project faces a 38% cost increase for the Central Valley segment, pushing costs to $35.3 billion along with nosediving ridership projections.

High-speed rail has been allocated $25.2 billion, mostly through voterapproved bond funds and the state’s cap-and-trade program, which tacks on about 23 cents to every gallon of gasoline.

The report released last week by the High-Speed Rail Authority brought a new upper-range cost estimate to the state’s entire bullet train project, spanning San Francisco to Los Angeles. At $128 billion, it would be by far the country’s most expensive single transit project, though boosters insist it is still cheaper than building an equivalent six-lane highway and airport to move the same number of people.

Behind the Central Valley cost increase are multibillion-dollar asks from city officials and lawmakers that the project include two elevated train stations in downtown Bakersfield and Merced and expanded rail tracks, along with inflationary pressures hitting projects around the country.

“What the Legislature said was, ‘How about we do this right the first time’ rather than come back and have to spend more money,” said Jim Patrick, a spokesperson for the High-Speed Rail Authority.

This segment was supposed to be fully funded and serve as a pareddown high-speed rail route that, once running around 2030, would inspire lawmakers to back the entire vision: a 500mile line allowing travel between San Francisco and Los Angeles in under three hours. As recently as last year, Newsom pushed the legislature to release $4.2 billion in bond money for high-speed rail, vowing to “finish the Central Valley component.”

On Wednesday the governor’s office declined to answer specific questions on whether Newsom would seek additional state funding. The state faces a looming budget shortfall, and in a statement the governor’s office pointed to Washington for a high-speed rail life raft.

“While this news is difficult, the (Newsom) administration continues to review all available options, including ongoing efforts to receive additional federal dollars,” said Daniel Lopez, the governor’s deputy communications director.

The High-Speed Rail Authority is also staking the future of California’s rail project on the Biden administration, but these pots of money are highly competitive. The authority took a hit recently when the U.S. Department of Transportation rejected a $1.3 billion grant request for the bullet train, saying the proposal was not cost effective.

“I think there is just a lot of uncertainty,” said Helen Kerstein, a highspeed rail expert at the nonpartisan Legislative Analyst’s Office. “There is a significant risk that they will not get the $8 billion.”

Republican control of the House of Representatives also lessens hopes of any new federal funding arising for high-speed rail. House Speaker Kevin McCarthy is a noted critic of the program even though a bullet train would run through his district. He called the project “inept” in a statement to the nonprofit journalism website CalMatters.

“The Central Valley was promised one thing, and a nightmare has materialized,” said Assemblymember Vince Fong, a Bakersfield Republican and vice chairperson of the budget committee. “More and more legislators are also losing faith in this project.”

Thompson, with the peer review group, said state lawmakers need to make a sober decision that ends high-speed rail’s perpetual limbo of cost increases outstripping the money available. If the decision is “bag it, then bag it,” he said. “If it’s ‘let’s build it,’ then we need to pay for it and make sure it gets done.”

Boris Lipkin, the Northern California regional director for the High-Speed Rail Authority, said he is optimistic Biden’s historic federal funding package can deliver a Central Valley train within the next decade. “Part of the goal for California (on federal funding) should be to do better than our population share. Our big competition isn’t other projects in California; our big competition is other states,” he said.

In the meantime, highspeed rail construction is well underway in the Central Valley. About 1,000 workers staff the project every day helping build a 6,330-foot viaduct near Hanford and a freeway underpass in downtown Fresno that would allow trains to eventually pass overhead.

Voters approved highspeed rail in 2008, giving the project $9.95 billion toward the bullet train’s initial price tag of $45 billion. Since then, the project has been mired in a cycle of cost overruns, political gamesmanship and delays.

“This (latest) report is a sober assessment of the good, the bad and the ugly,” said Lipkin. “There’s been lots of challenges. But there’s also been real progress.”

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