By law, California high speed rail may be doomed to fail

By |2018-12-04T17:13:06+00:00December 4th, 2018|Economy|0 Comments

It has been 10 years since passage of California Proposition 1A the High-Speed Rail Act that approved the $9.95 billion bond, a down payment on a high-speed rail project that was optimistically estimated by proponents at that time to cost $40 billion. Today, the California high-speed rail cost may approach $100 billion. Public enthusiasm is obviously dwindling.

Supporters of the Los Angeles-to-San Francisco high-speed rail line hope that erecting part of the line now will make future governors less likely to abandon the project. The entire 800-mile line is scheduled for completion by 2033. There is no shortage of obstacles to what even the project’s biggest boosters call an ambitious timetable, including the engineering challenge of tunneling through the Tehachapi Mountains, a seismically active barrier between the Central Valley and Los Angeles.

In addition to the continuous cost overruns and schedule delays, by law, the State will not operate the train, nor subsidize its operation. Once built, the State will seek an operator of the completed project, through competitive bidding. State law says that the system MUST OPERATE WITHOUT A TAXPAYER SUBSIDY, but according to a Reason Foundation study, there are more than 100 bullet trains worldwide and except for the one or two that operate profitably, all require subsidies, thus the end results for California’s high speed rail is that it will most likely necessitate taxpayer subsidies or higher fares per mile, or both.

Beginning construction without all of the financing in place represents a strategic gamble by the rail authority, and by Governor Brown, that once enough work is completed, future leaders may be intimidated to abandon the project and leave a landscape of unfinished pillars, viaducts, bridges and track beds. Faced with reduced resources, the authority has altered its plans, and is now focused on finishing a 119-mile stretch of track from Bakersfield to Madera by 2022.

The continued delays and rising costs have fueled criticism that California, perhaps the most prosperous state in the nation, is squandering money on a transportation project that critics describe as a prime example of big government waste in a state controlled by Democrats.

For all the construction, the project faces the ever-present threat that a future governor may decide that state resources would be better used dealing with, to name one example, the housing, homeless and poverty crisis. Governor Jerry Brown, a big proponent, is leaving office at the end of the year.

The coastal elites who support “going to green electricity” at all costs just don’t care that the working poor and struggling middle class living away from California’s coast are bearing the brunt of higher energy costs. “Clean electricity” doesn’t run the military, airports, cruise liners, supertankers, ports, and transportation industries, nor does electricity produce 6,000 products from petroleum that are used by every infrastructure, that are made from the chemicals and by-products that are manufactured from crude oil. The inconvenient truth about AB 32 the Global warming initiative, as well as Cap and Trade and its extension to 2030, is that we now have higher gasoline prices and higher electricity costs.

Since our state has the worst poverty rate in the nation where 1 out of 5 California families are barely hanging on, it’s hard to understand the time and effort being extended on the subject of the emissions crusade that is obviously negatively impacting our poverty and homeless populations.

Driving or flying from a multitude of airports can be done at virtually any time of day, but the inflexibility of how many train departure times would be available from a limited number of trains would impact the convenience factor offered by cars and planes and thus also adversely affect train ridership. The snowballing effect of lower ridership would be higher fares for those that do use the train as there would be no state subsidies available.  Lower ridership would further impact the ROI risks for invested capital.

Just like the land line phones that have become obsolete as a result of cell phone technologies, future travel needs may be impacted in the coming decades as a result of the ever growing virtual world for office workers and online classes for students.  There is also a rise of alternatives to both private automobiles and public transit, such as Uber and bicycling, and the coming evolution of driverless vehicles.

The latest business plan of completing a high speed rail between San Francisco and Los Angeles that cannot be subsidized by law is essentially a going-out-of-business plan that is discussed in a Reason Foundation Due Diligence Report.

However, once the high speed rail is ever operating, and the realization that subsidizing funds may be required to augment ridership income, future leaders will be loath to walk away from the $100 billion project and you can bet on it that Californians will be further burdened with subsidizing costs, or some form of greenhouse gas offsets paid for by businesses to pay for the trains operation!