California High-Speed Rail Boondoggle Cost Soars to $105 Billion

California High-Speed Rail Boondoggle Cost Soars to $105 Billion
In this aerial image looking towards downtown Fresno, the Cedar viaduct stands during construction of a high-speed rail project through the Central Valley in Fresno, Calif., on Aug. 26, 2021. Patrick T. Fallon/AFP via Getty Images
John Seiler
Updated:
Commentary

I’ll give California’s high-speed rail project one thing. For 14 years, it’s given me something to write about as an example of government waste.

From the beginning, when it was advanced as Proposition 1A in 2008, I have pointed out it existed only to spend billions, never to get near completion. The original cost was pegged at only $40 billion for the whole shebang, with $10 billion coming from the Prop. 1A bond, itself bankrolled from the state’s general fund.

On Tuesday, as required by law, the High-Speed Rail Authority released its biennial financial report for 2022. The main takeaway: the estimated cost rises another $5 billion, to $105 billion. That’s from the previous plan, just 10 months earlier, which was delayed because of the pandemic.
Basically, costs are rising at about 5 to 6 percent per year. The change from the previous plan was announced as:
The most significant development since the 2020 Business Plan is the re-emergence of the federal government as a funding partner to build the right kind of transportation infrastructure in this era of climate change. The end of 2021 saw the enactment of the “Bipartisan Infrastructure Law,” and this year, Congress will consider the “Build Back Better” bill, both of which provide billions of dollars in federal funding for passenger rail projects, including high-speed rail. In addition, in the first year of the Biden Administration, the Authority received nearly a billion dollars back to the program that the previous [Trump] administration proposed to rescind, and in November 2021, we received a federal RAISE grant of $24 million to advance construction in the City of Wasco.
That means the project is on life support from the federal government.

And note they didn’t mention President Trump’s actual name. Nor do they explain why he canceled the nearly $1 billion. It was because, as the Federal Railroad Administration announced in May 2019, the project “repeatedly failed to comply” with its agreement for the money under the Obama administration, “failed to make reasonable progress on the project” and had “abandoned its original vision of a high-speed passenger rail service connecting San Francisco and Los Angeles, which was essential to its applications for FRA grant funding.”

A high-speed rail viaduct is seen near Fresno, Calif., on Oct. 9, 2019. (Rich Pedroncelli/AP Photo)
A high-speed rail viaduct is seen near Fresno, Calif., on Oct. 9, 2019. Rich Pedroncelli/AP Photo

All those benefiting from the train-construction largesse—the contractors, the unions, the politicians—won’t give up on the project so long as the federal spigot is open. Of course, it helps that House Speaker Nancy Pelosi hails from the Bay Area, which is going to get the lion’s share of the new construction.

So does Sen. Dianne Feinstein, who sits on the powerful Appropriations Committee and its Subcommittee on Transportation, Housing and Urban Development and Related Agencies. Feinstein also is the second-ranking Democratic senator by seniority, after Sen. Patrick Leahy of Vermont, who is retiring. Next year she will be No. 1. She is 88 years old and has been in this office 29 years.

Promises, Promises

All this is a far cry from the promises made in 2008 by then-Gov. Arnold Schwarzenegger and others promoting the project. The ballot language voters read stipulated, “Establishes a clean, efficient 220 MPH transportation system … to establish high-speed train service linking Southern California counties, the Sacramento/San Joaquin Valley, and the San Francisco Bay Area.”
From the new 2022 plan, here’s all that’s offered now:
  • Deliver a two-track initial operating segment connecting Merced, Fresno and Bakersfield;
  • Invest statewide to advance engineering and design work as every project section is environmentally cleared;
  • Make targeted statewide investments in shared corridors that provide immediate benefits to existing operators and prepare these corridors for statewide high-speed rail service; and
  • Advance a longer-term funding strategy to extend high-speed rail beyond the Central Valley as soon as possible.
“A longer-term funding strategy” means they don’t have the money for the full project promised to the voters, and never will.

Newsom Flip-Flop

The new plan also notes Gov. Gavin Newsom’s proposed budget for fiscal year 2022-23, which begins on July 1, advances $15 billion for infrastructure, including for the high-speed rail. How things have changed from three years ago, when the state enjoyed no massive surpluses.
On Feb. 19, 2019, Newsom said in his State of the State address, “But let’s be real. The project, as currently planned, would cost too much and take too long. There’s been too little oversight and not enough transparency.” Donald Trump was president and was canceling the $1 billion in spending now being restored by President Biden.

Of course, all that new Biden administration deficit spending is a major reason we’re now suffering the 7 percent inflation. As the economists say, there’s too much money chasing too few goods.

Eventually, the party has to end. The Federal Reserve has to “remove the punch bowl” by cutting back on money creation and by raising interest rates, something it’s already started doing. Everybody knows the Fed won’t let the U.S. dollar fall into hyperinflation like the currencies of Zimbabwe and Venezuela.

A recession could hit. If that happens, as I’ve been warning in these pages, Silicon Valley’s profits could dry up, and along with them all those splendid state budget surpluses. The $40 billion deficits of previous recessions could return.

Then everyone will wish all those billions wasted on the high-speed rail were still available for education, health care, roads, and other programs that actually help Californians.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
John Seiler
John Seiler
Author
John Seiler is a veteran California opinion writer. Mr. Seiler has written editorials for The Orange County Register for almost 30 years. He is a U.S. Army veteran and former press secretary for California state Sen. John Moorlach. He blogs at JohnSeiler.Substack.com and his email is [email protected]
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