Conservative group calls for halt to federal funding of California high-speed rail

A new report from the conservative advocacy group Unleash Prosperity calls for an end to federal funding for California's high-speed rail project and for the project's scope to be truncated to protect taxpayers.

The report notes the initial plan for a high-speed rail line from Los Angeles to San Francisco began in 1996 and was estimated to cost $20 billion by 1999. California voters approved a state referendum in 2008 that provided additional funding for Phase I of the project from San Francisco to Los Angeles and Anaheim at a cost of $33 billion, while the plan also called for a Phase 2 going to Riverside-San Bernardino, San Diego and Sacramento.

Fifteen years after the referendum, construction is ongoing on the first segment of the project in California's Central Valley between Bakersfield and Merced. It is not slated to open until 2033. The entirety of the Phase I project now has a funding gap of up to $100 billion with potential further cost increases, and it has no estimated completion date due to a lack of funding.

"It's been a 25-year boondoggle now and the cost of this was supposed to be roughly $30 billion when the voters approved a referendum for this in California," Steve Moore, economist and co-founder of Unleash Prosperity, told FOX Business in an interview. "The latest estimates are now well over $100 billion, so that's a more than tripling of the cost of this big rail project." 

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Some of the issues related to cost escalation are due to the topography of the areas where the high-speed rail line would have to go through the California Coast Ranges to reach the Los Angeles and San Francisco areas, which would make tunneling difficult.

"The other obvious problem is that the whole idea of the high-speed rail was to go from Los Angeles to San Francisco, two huge metropolitan areas with huge populations. Well, because of a lot of geographical problems with getting through the mountains, they can't do that, so it's not going to start or end in San Francisco. So the ridership, if it ever gets built, is going to be multiples lower than what it was supposed to be when the whole thing was first designed," Moore added.

"It's a good idea, right? If you live in Los Angeles, that's a six-hour drive, maybe more depending on traffic. So you could do that in, say, three hours on the train," he explained. However, Moore noted that while Amtrak's routes in the Northeast include Manhattan and Capitol Hill, the California high-speed rail project being unable to reach its major metro areas – and sources of ridership – could leave it "a huge rolling white elephant."

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The analysis notes that California's Peer Review Group (PRG) for the project reported in 2023 that while the Central Valley was "supposed to be the 'easy' part, it adds that contracts have overrun by 97 percent so far." The PRG added that the "unbid part of the project, especially tunneling and electrification, is likely to be the hardest and most technically challenging part of the project."

PRG Chair Louis Thompson said in legislative testimony that "completing the full Phase I system poses a growing financial challenge for the State because the gap is already large, and costs have been increasing faster than identifiable potential financing while forecast ridership has fallen." 

"Even with a realistic share of new federal funding, the project cannot get outside the Central Valley without added state or local funding," he added.

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Unleash Prosperity's report recommends that there should be no more federal funding for the California high-speed rail project, and at a higher level, the federal government should refrain from funding projects that don't have comprehensive funding programs.

It said the project should be curtailed to simply completing construction on the 119-mile segment from Madera to Shafter, while discontinuing the 52 miles of extensions to Merced and Bakersfield. The report also calls for a halt to public spending on Phase I extensions from the Central Valley to the San Francisco Bay Area and the Los Angeles region, as well as Phase II extensions to Sacramento, Riverside-San Bernardino and San Diego.

"Our point is, some costs are sunk. Don't keep throwing good money after bad," Moore said. "Especially the fact that California has a massive budget deficit already, they can't pay their bills. The last thing they need to do is put tens of billions of dollars of additional debt on their books."

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"Trump should just say, if you guys want to build this thing, have at it, but we're not going to keep pouring federal transportation money into a project that shows no glimmers of hope right now," he said.

The California governor's office and the California High Speed Rail Authority did not respond to a request for comment by deadline.