Just days after California Gov. Jerry Brown warned that the state was slipping back into deficit spending ($1.6 billion by next summer), the Los Angeles Times got its hands on a confidential internal report from the Federal Railroad Administration that points the fingers right back at the governor when it comes to wasteful spending.
Even the feds believe the state is drastically understating the costs of it's massive high-speed rail project, approved by voters years ago but with only a small portion of the project funded. Just the first leg of the $70 billion project could cost billions more than budgeted, $10 billion instead of $6.4 billion. And the project is already way behind schedule. The report predicts the first stretch of track (in the center of the state) won't be completed until 2024, seven years behind schedule.
The California High-Speed Rail Authority (CHSRA) has responded by complaining that this risk analysis contains merely "hypotheticals" (though the CHRSA's chief executive called them "estimates and projections" in the Times story, which is slightly different). On Facebook CHSRA dismissed the story as "misleading" and instead invited readers to look at two government reports that praise the government spending money on infrastructure. One of them, they say, calls the train project one of the "top proposed infrastructure projects of major economic significance." Hilariously, the report they want us to read instead says right in the beginning that "all project costs and benefits are based on assumptions and methodologies established by the authors." Meaning that any praise of the benefits of building the train are also based on estimates and projections (as they have been all along—remarkably foolish projections of demand and ridership).
Beyond that, the CHRSA's message is simply yelling "JOBS!" as loudly as possible, pointing out that all this spending is putting people to work and noting as some sort of evidence that Fresno unemployment dropped from 18 percent in 2011 to 9 percent in 2016. That's not a terribly compelling argument because the unemployment rate has dropped in similar numbers all across California, even in areas that aren't building a massive government boondoggle. Why should we believe those folks wouldn't be working on something else if they weren't working on this stupid train?
It's a truly frustrating issue, because we see very little evidence that this train can pay for itself after its built and will require subsidies in order to keep operating (despite their insistence otherwise). So the actual consequence of creating all these jobs is that all these people are spending billions of tax dollars to build something that is going to continue to cost money after the construction is done. Using the "Broken Windows" economic fallacy metaphor, it's like the government hiring the people to break the windows and then offering a subsidy for the cost to reglaze them. What would this money be doing in California if it weren't tied up in this train?
Reason editors current and former, Matt Welch and Virginia Postrel, took note in June how the people involved in this train project and in the media knew full well what a boondoggle it was and promoted it anyway. The Reason Foundation has been warning for years that this was going to happen.
And irony of ironies, Californians seem to hate that Donald Trump was elected president, but Trump loves exactly these kinds of terrible infrastructure boondoggles and is on the record complaining about the fact that China has high-speed rail and we don't. God help us all, but Trump could be the president Brown and the state's powerful labor interests need to keep the dollars rolling in for this mess. At some point we may be grateful Trump is so thin-skinned if he shuts down federal spending requests for the train because of the silly secession movement gaining attention after his election.
As a reminder, the train project also hurts people, taking land away from farmers to install this train in a place that truly doesn't need it. Watch ReasonTV on who is losing out on this project (besides taxpayers in general):