America's Most-Expensive Runaway Train: California High-Speed Rail


California's high speed train officials certified an environmental impact report Thursday, allowing for the start of land purchases along the first leg of their monstrous mother of all boondoggles. The California High-Speed Rail Authority (CHSRA) hopes to start construction on the 65-mile stretch from Fresno to Merced by the end of the year, attempting to get building before voters figure out a way to slap the money out of their hands.

The certification moves the $68 billion project into the well-known phase of California development where people with various agendas use any little issue with the environmental impact report to sue, sue, sue. These people could be property owners looking to block the project (or negotiate better compensation), union groups looking to secure labor agreements, environmental attorneys hoping to make a buck by challenging the science, or any number of folks with complaints of varying legitimacy.

The Los Angeles Times reports that farming interests in Merced and Madera counties may be planning suits over perceived defects with the environmental report and disruptions to their agricultural pursuits. If they press their concerns in the courts, they'll join quite a crowd of litigants already fighting various decisions about the train.

In other recent developments connected to the still-not-quite-embattled-enough-to-kill-it-dead project:

More Games with Numbers. CHSRA has faced plenty of criticism over inexplicable ridership projections that are accepted by absolutely nobody and funding methods that are essentially illegal. Now critics are focusing on its projected operational costs, which are absurdly low and would only add up if California's trains were the most economically efficient in the world.

Authors of a new study say operation costs for the train will actually be four times what CHSRA is projecting, necessitating annual subsidies to continue operations. That would be a problem because state law forbids subsidizing the train's operations. The Reason Foundation estimated in 2008 that the operations of the train would cost as much as $700 million more per year than what CHSRA projected. This new study (readable here at Community Coalition on High Speed Rail) projects the train will actually require as much as $2 billion in subsidies annually to stay in operation. California Watch spoke to Alan Bushnell, one of the report's authors, who said, "We showed that their (projected) operating costs and revenue costs per mile were significantly lower than what anybody anywhere in the world had ever been able to achieve."

CHSRA board member Mike Rossi responded by claiming the report used "wrong numbers" and incorrect data from a Spanish foundation study of high speed rail in Europe. But the report writers pointed out CHSRA used data from the same Spanish study. Bushell and his co-authors used the study specifically because it was footnoted in CHSRA's business plan.

Could We Be Any More Out of Money? The answer to that question is: yes. Also on Thursday, Gov. Jerry Brown, faced with even more budget shortfalls, announced he will be proposing "serious cuts" to the California budget in two weeks.

As Bloomberg Businessweek reports, the state's $9.2 billion deficit is not getting any relief from this year's revenues, which are already $3.1 billion less than expected. State income tax revenue is $2 billion less than predicted.

"I'm going to present a balanced budget proposal with serious cuts," he told a Bloomberg reporter at an event for low-cost pet spay-and-neuter programs in Los Angeles. He declined to provide any hints on his targets, saying much depended on the fate of his fall ballot measure, which would increase state income and sales taxes.

His reference to the tax measure is as good a hint as any. The revenues from the tax increase are earmarked for public schools and community colleges, so expect Brown to begin insisting he has no choice but to cut from those areas. Don't expect Brown to suddenly gain a measure of sanity on the train.

Or maybe Mark Zuckerberg will rescue the Golden State's bungling leadership. Bloomberg reports California is hungrily drooling at the income tax revenue the state will bring in if Facebook insiders exercise their options once the company goes public. The money could make up for this year's income tax shortfall.

A Private Investor! Er, Wait a Minute. A big, weird deal was made on Thursday out of a Madera businessman who reportedly came forth at hearings in Fresno with a commitment to add $1 billion to the project. The announcement seemed to be spun as evidence that the private market is gaining faith in the train.

In reality, Chowchilla developer Ed McIntyre is offering to invest $1 billion in the development of two sites as maintenance facilities. This is not "investing" in the train project any more than a private developer building a prison is "investing" in the justice system, nor any other private business offering to sell his or her services to a government agency. Once the trains are built and running, McIntyre becomes part of the operating costs experts fear the CHSRA has underestimated. He becomes one of the people the train will be losing money hand over fist to.

Reason Foundation Senior Policy Analyst Adam Summers offers more analysis of how the CHSRA's business plan is taking Californians for a ride.

More Reason on high speed rail.