What happens when California's various fiscal disasters collide? The state starts courting pension funds to invest in its $68 billion high-speed train in order to get it built. Bloomberg has the frightening details:
California is courting sovereign wealth funds, pensions and endowments for more than $50 billion to build Gov. Jerry Brown's proposed bullet train to link the state's largest cities, the most expensive public works project in U.S. history.
High-speed rail ventures such as California's, which has weathered management shake-ups and fluctuating cost estimates, pose attractive opportunities for such investors, who together have $6 trillion in assets, said Andy Kunz, president and CEO of the U.S. High Speed Rail Association, a non-profit advocacy group meeting this week in Los Angeles.
California is the only U.S. state working to lay tracks for trains running as fast as 220 mph. The $68.4 billion project, linking San Francisco with Los Angeles, is counting on $10 billion in bonds authorized by voters, $3.3 billion committed by the federal government and as much as $55.1 billion from private sources.
Bloomberg notes that the state's non-partisan Legislative Analyst's Office has labeled the high-speed train's funding model as "highly speculative." The office actually went even further than that, discouraging the legislature from approving any funding until details on how to pay for the train beyond the initial $10 billion in state bond money and federal stimulus dollars were hammered out.
Adrian Moore (of the Reason Foundation, which publishes this site), Wendell Cox, and Joseph Vranich wrote a list of reasons why the project shouldn't get any more money, as well as a report detailing the many flawed assumptions used by the California High-Speed Rail Authority to justify the train's construction. They predict that by 2030, the train would be losing $4.17 billion a year. It might not be the best place to let your money ride for the long-term.