It’s one thing to blow your own money, but the country needn’t fund your fantasy projects.
As California Governor Gavin Newsom gave his State of the State address he made a surprising-to-most announcement that the famed California high-speed rail project was going to be curtailed. “Let’s be real,” said Newsom, from the state that normally resents reality. “The current project, as planned, would cost too much and, respectfully, take too long.” These are the very words critics have spoken in recent years, and opponents said at the start of the proposal.
During the speech, Newsom declared that he would not be returning the billions that the state of California received from the federal government for the project. This little nugget was picked up by President Trump, who responded that “California has been forced to cancel the massive bullet train project after having spent and wasted many billions of dollars. They owe the Federal Government three and a half billion dollars. We want that money back now. Whole project is a “green” disaster!”
With many across the country touting/questioning/shaking their head over/laughing uproariously at the Green New Deal one of the common refrains in response was to peer over to the Golden State. One of the most audacious proposals in the GND was to have rail lines crossing the entire country, saving energy and rendering airline travel obsolete. (Sorry residents of Hawaii, you’ll have to row to the mainland in 10 years.)
This unicorn dream of a cross-continental train system comes unraveled in seconds by the barest of introspection. How are trains more efficient than airlines, which use less energy per rider for state travel, and require a fraction of the infrastructure? Why would we rely upon a government to build a complex rail network when it has been fumbling Amtrak for generations? And, the most obvious question: how can anyone believe this fantasy after looking at the disaster that has become the CA HSR project?!
Here is a post-it history to this fiasco. This plan for creating the 800-mile rail corridor from LA to San Francisco – with some extension lines – began in planning stages in 1996. The actual movement on the project started in 2006, with the estimated cost at a staggering $35 billion, and the project being slated for completion in 2020. In just two years, the budget projection swelled to $45 billion. During this planning stage, President Obama granted $3.2 billion in federal funds towards the project.
This being California, you had all manner of governmental issues blocking a governmental project. Property rights, municipal litigations, and environmental impact studies stalled the work and drove up costs. They cut down the length of the line, and extended completion, and then divided the project into “Phases”. Phase 1 would be roughly a 500-mile segment and was pegged to cost over $100 billion.
As a few sane voices were heard, the entire project was reconfigured and, in 2012, a new budget was marked at $65 billion. Three years later they finally began to break ground – that is in 2015. The project estimated to take eight years to complete took almost 10 years to begin. Recall now, this is the same timeframe AOC’s GND has set for rails to be constructed across the ENTIRE NATION.
By 2016, the estimated cost for just the Phase 1 aspect was $77 billion. One additional route from Madera to Bakersfield of approximately 120 miles has been estimated to cost $5 billion, then over $7 billion, then up to $10 billion. Other extension routes were slated to reach Sacramento and San Diego.
Now, these are just the budgets for the construction. Annual operational costs have been projected to be $1 billion (surely under-estimated) and there were state bonds which raised $10 billion for the project, due to pay off $20 billion over a 30-year span. Then we can look at the ridership reality.
When the bonds were offered to the public, the state forecasted 70 million riders annually. The rail authority’s most recent business portfolio has the ridership estimate at 38 million – essentially half of projections — and that could be a generous figure. In 2008, projected ticket prices for the San Fran-LA ride of 2.5 hours was $75. For $20 more you could get a one-way plane ticket for a 90-minute flight.
You can see when faced with these figures why any sane person would yank the plug on this project. After $4 billion already spent, and tens of billions in outstanding debt, you can understand why Newsom has no interest in returning billions in federal grant money. But President Trump has a viable point in expecting a refund.
Phil Kerpen noted the terms of the federal grant stipulate that if the project fails to meet the terms of the agreement, then repayment of those funds can be expected.
— Phil Kerpen (@kerpen) February 12, 2019
Newsom cancelling the bulk of a project seems to fit the definition of “failing to make adequate progress”. In truth, that phrase has been the very definition of the California HSR project since its inception.