MENU

Reason.com

Free Minds & Free Markets

California’s Boondoggle Bullet Train About to Break the Bank

The money pit is turning into a black hole, as critics predicted.

Bullet trainGary Reyes/TNS/NewscomWill California's high-speed rail plan go bankrupt before the state even finishes building the first leg? Maybe, if we're lucky.

On Tuesday, the officials in charge of the massive $64 billion boondoggle were formally told what everybody with any lick of sense has been saying from the start: They had wildly underestimated the costs and woefully underbudgeted just the first stretch of train construction by billions.

The first 119-mile stretch of the bullet train project in the central part of the state is going to cost $10.7 billion, which is much higher than the original $6 billion budgeted. This is actually the second time the cost for just the first leg of the project has skyrocketed. In September, the cost of the initial leg of the project jumped $1.7 billion.

None of this is a shocker to anybody who has been remotely paying attention to this project. From the very beginning, critics who analyzed the state's bullet train plan warned that the projections were way off. And deliberately so: The ballot initiative authorizing the train's construction requires that it not demand additional operational state subsidies, so there was a pretty significant incentive for the project's proponents to insist that it would be built within specifications. In 2008, a decade ago, Reason Foundation analysis determined that the projections for the costs of both building and operating the train were off by billions.

They were right. So was the Federal Railroad Administration, which predicted a year ago that the cost of this first leg would rise to $10 billion.

And to be clear, right now there does not appear to be much real thought about how this train project can actually progress beyond this initial phase. Ralph Vartabedian of the Los Angeles Times politely understates:

It remains unclear how the Central Valley cost increases will affect the total program, which under the 2016 business plan is supposed to cost $64 billion. But the jump in the Central Valley — a 77% increase above the original estimate — suggests the authority and its consultants have vastly underestimated the difficulties of buying land, obtaining environmental approvals, navigating through complex litigation and much else.

Assuming the rest of the project saw the same budget increase, the whole project would skyrocket to more than $113 billion. And you probably shouldn't assume that the project's unexpected budget increases will scale at the same rate. The train's construction will get more challenging as it heads toward San Francisco and Los Angeles.

Or maybe "if it heads toward San Francisco and Los Angeles" is a better way to talk about the train's future. This boondoggle has been propped all along the way by Gov. Jerry Brown, who is entering into his final stretch as governor this year. He has been insistent in setting aside money to keep the project going even as more Democrats within the state have been increasingly concerned.

But as the Los Angeles Times notes, they may be a little shy about speaking too loudly. Vartabedian says Lt. Gov. Gavin Newsom, running to succeed Brown as governor, has declined for the past two years repeated requests to be interviewed about the high-speed train project's future.

Back in 2014, though, Newsom was more vocal and public when he reversed position. Like many institutional California Democrats, he supported the bullet train at first. But then once he recognized the costs growing out of control, he turned against it. He also said at the time that many Democrats felt the way he did, but few were saying so publicly.

That was before he announced he was running for governor, though. Newsom's acknowledgement tracks with observations by Reason's Matt Welch and former editor Virginia Postrel that the political class in California knew full well this was all a fancy boondoggle designed to appeal those who glamourized zipping across the Golden State landscape in a shiny, superfast train.

Does Newsom still oppose Brown's train project? Or, assuming he becomes California's next governor, will he dip into the $13.5 billion "rainy day" fund and the state's surplus to try to keep the boondoggle going and the pockets of the train project's crony beneficiaries lined?

Photo Credit: Gary Reyes/TNS/Newscom

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • Brian||

    I have a hard time believing I will see a bullet train in California.

  • The Knuckle||

    How can they call it a "bullet train"? Don't they know how dangerous and triggering that kind of violent label could be?

  • Aresen||

    $200,000,000,000 minimum. I predicted that years ago.

  • ||

    California has a surplus and a rainy day fund?

    Why aren't they using that rainy day fund to shore up their pension system?

  • Ted123||

    That expense will be passed to the Federal Government.

  • Ron||

    in the real world if a contractor gets that far off on say a house the contractor is fired and often the project is stopped but the state doesn't no when to say no just like Ansari's date

  • Headache||

    That will not happen because the Feinstein family always gets its cut.

  • chemjeff||

    Wait wait wait.

    A massive infrastructure project is over budget and full of cronytastic graft and corruption?

    No way!

  • Fist of Etiquette||

    They can't all break the bank.

  • creech||

    Libertarians need to get out and oppose these boondoggles when they are proposed. I'm attending such a meeting next week: idiots want to add nine miles to a rail line and claim it will cost only $110 million, though a three mile extension of an existing rail line is costing $190 million. All this for

  • creech||

  • My Dog Bites Better Than Yours||

    $580 per inch before cost "overruns". It better be some really fancy track.

  • C. Anacreon||

    Fancy track? Why yes, they're using Reardon Metal.

  • UnrepentantCurmudgeon||

    Valyrian steel

  • Jerryskids||

    the political class in California knew full well this was all a fancy boondoggle designed to appeal those who glamourized zipping across the Golden State landscape in a shiny, superfast train.

    How can you put a price on the fantasy of pretending you're a sophisticated European for a little while?

    You can't tell me there was a single person involved in this that wasn't banking on the sunk-cost fallacy to bail them out, they all knew damn well they were lying out their ass about the cost/benefit analysis but they also all knew once you get the hook set in the taxpayer that poor fishie ain't wiggling loose no matter how hard he flops around.

  • Kivlor||

    I think Reason has posted it before, or maybe I picked it up somewhere else, but there was a great analysis done on the cost and time of constructing massive infrastructure projects, like the Suez and Panama Canals or the Channel Tunnel from Britain to France, or other multi-billion dollar (in today's cash) projects. They are always drastically more expensive and always take more time than projected. They basically never pay off either.

  • Kivlor||

    I think a lot of the work was done in Bent Flyvbjerg's Megaprojects and Risk.

  • Scarecrow Repair & Chippering||

    If the part they've built looks like that, they should just auction it off. The location's not the greatest, but it's the Central Valley -- it's flat. Probably some nice views. Some developer could turn it into condos. All they'd need to add would be access ramps or even elevators. I bet developers could make a pretty penny from it. Away from the meth gangs, security built in. What's not to advertise your status above the hoi polloi?

  • DaveSs||

    If the Central Valley is flat, why the hell is it elevated?

  • DaveSs||

    Besides to increase the cost that is

  • GeneralWeygand||

    You win this thread. Well done.

  • Heddin_South||

    Sell it to Trump as a Wall demo.

  • cc2||

    I predict that even if they could come up with the cash, there will be endless NIMBY lawsuits such that it can never be built. If you can't even put in a powerline to a solar farm or an oil pipeline (which get burried) good luck with a bullet train.
    The numbers were never remotely realistic. There is not enough car/plane traffic between the cities to pay for the train even if everyone took the train. In the US trains are for freight and need not be fast. The bullet train in japan services multiple, close, huge metro areas with maybe 30 million people.

  • UnrepentantCurmudgeon||

    Exactly. But this is almost impossible in California where existing rail is so far from sophisticated enough to handle any kind of "bullet" travel the costs of putting that in place are inestimable.

  • Headache||

    4 miles of tunnels and 1 mile of a fancy bridge in Boston cost just slightly less than 26 miles of tunnel crossing the English channel.

  • markm23||

    Part of that cost was because the Boston project was in the middle of a dense city - they had to either buy and tear down high rise buildings or work around them, and were also cutting through a mass of plumbing, electrical, and communications cables. Other than hooking up the access roads to the existing road systems, the Chunnel had no impact on existing infrastructure.

  • UnrepentantCurmudgeon||

    At least we Californians can be proud that our "Bullet Train to Nowhere" puts Alaska's "Bridge to Nowhere" totally in the shade. I mean, totally.

    And consider this: if the money being plotted to be sunk into this broadening boondoggle were instead put to use fixing the state's infrastructure, that infamous 12c per gallon tax we just got stuck with would probably not have been even arguably necessary.

    At some point somebody in state government (almost certainly not Gavin Newsom) is going to have to take a stand against out-of-control state spending and propose serious budget austerity. Not at all popular I know, but it has to be done or California will flush itself down the well-known toilet. If it hasn't already

  • DrZ||

    As a Californian, I say this train is a good thing.

    Hundreds of Europeans will ride it each and they will marvel on how such a thing could have ever been built.

    As for me, I will take Southwest Air from SF to LA.

  • carrstone||

    It never was about a railway, was it?
    But whatever, just don't come knocking at my door for help with money to bridge the gap.

GET REASON MAGAZINE

Get Reason's print or digital edition before it’s posted online