The Little Engine That Couldn’t: California’s High-Speed Rail Costs Rise To $200 Million Per Mile

August 18, 2022 By Stephen Frank

At a cost of over $200 billion, if ever completed, there are not enough riders, nor money to run this massive scam on the California public.  Guv Arnold said this would cost around $33 billion and be finished by 2020.  Now they hope to have it finished by 2045—and no idea where they get the money.

“Back in 2008, California voters approved about $10 billion in bond funds to partially finance a HSR system that would stretch across the state, from the south to north, and from the valleys to the coast, promising travel from San Francisco to Los Angeles in just two and one-half hours, with trains traveling at 220 miles per hour. The system was to be operational by 2020, for a cost of about $34 billion. Too date, the cost has escalated to about $105 billion, just for the 520-mile Los Angeles–San Francisco leg. And now that we are in 2022, the only certainty is that costs that will rise further, and that a completion date—“completion” meaning whatever bits and pieces of the system ultimately are finished—will stretch further into the future.

Sadly, the only part that might open—after spending close to $200 billion, is a line from Bakersfield to Merced—and they refuse to predict the number of riders.  We know the answer to that—almost none.  The winners?  Politicians getting donations, unions and corporations giving the donations, This project has made slums out of portions of Fresno.

California’s high-speed rail (HSR) pencils out to around $200 million per mile for the San Francisco–Los Angeles route. And this cost is almost certainly too low if the main attraction of the project is ever built. 

By: Lee Ohanian, Hoover Institute,  8/16/22     

California’s high-speed rail (HSR) pencils out to around $200 million per mile for the San Francisco–Los Angeles route. And this cost is almost certainly too low if the main attraction of the project is ever built. To give you an idea of just how much costs have increased, the LA–SF route cost estimate is nearly three times as high as the original total cost of the entire system. Welcome to the surreal world of how California’s state government spends with effectively no foresight, no hindsight, no accountability, no plan, and no regard for taxpayers in California or those in the other 49 states who are indirectly helping fund this albatross through federal transportation spending.

Back in 2008, California voters approved about $10 billion in bond funds to partially finance a HSR system that would stretch across the state, from the south to north, and from the valleys to the coast, promising travel from San Francisco to Los Angeles in just two and one-half hours, with trains traveling at 220 miles per hour. The system was to be operational by 2020, for a cost of about $34 billion. Too date, the cost has escalated to about $105 billion, just for the 520-mile Los Angeles–San Francisco leg. And now that we are in 2022, the only certainty is that costs that will rise further, and that a completion date—“completion” meaning whatever bits and pieces of the system ultimately are finished—will stretch further into the future.

What happened? A better question is, What didn’t happen? It begins with gross mismanagement and continues with a long list of blunders, one after another, each one bigger than the last. This includes building on land that had never been acquired; starting construction on routes that may never be built; choosing one contractor with faulty plans and paying hundreds of millions in cost overruns for their miscalculations; relying on politically savvy railway consultants who funded much of the 2008 bond campaign, and who have been responsible for nearly all planning, management, and oversight; facing a veritable mountain of lawsuits, filed by plaintiffs ranging from the Burbank-Hollywood airport and the Northern California city of Millbrae to private citizens who woke up one day to find their land being dug up without their knowledge. The list goes on, but you get the picture.

The project sounded like a winner back in 2008, but it was never anything more than a pipe dream. Once upon a time, California could build big and create infrastructure that made fiscal sense and that enhanced economic well-being. Not anymore. The skill and competence of the state’s Democratic political leadership is not close to being up to the task, and the state’s environmental laws are being used to litigate anything and everything, blocking and delaying projects, driving up costs, and effectively taking dollars from the pockets of taxpayers and putting them into the pockets of those who benefit from environmental litigation.

California has weaponized transportation against its own population

Isn’t there a gatekeeper? Some committee who has oversight of this project? One oversight agency is the state’s Senate Transportation Committee. And herein lies the problem. After 14 years of gross mismanagement, cost overruns, and delays, you would think this committee would be skeptical and demand to see a plan that leads to success. After all, the committee members’ responsibility is representing their constituents’ fiduciary interests and ensuring that transportation spending be held accountable.

So just how seriously is the committee taking its responsibility to represent taxpayers’ best interests? Well, the last memo the committee chose to write about the project is from 2016. What is perhaps the worst-managed and most expensive transportation project in the state’s history hasn’t received written attention from the committee in six years.

In response to this lack of oversight, State Senator Brian Dahle (R, First District), who is a committee member, and his Senate Republican colleagues have produced a fact sheet about HSR. The fact sheet highlights some of the project’s most egregious failures and why continuing the project makes no sense.

It points out that the one of the original selling points of the project—attracting private investors—has been a total failure. After 14 years, no private money has been invested, and certainly none will be invested now, given the project’s dysfunctional track record. The fact sheet also suggests that without subsidies, the cost of HSR travel will rise to levels that are unaffordable for many, and that HSR travel costs may be uncompetitive with other transportation modes. It shows that the carbon reduction benefits of HSR are almost certainly way overstated, given that gas-powered car sales will be outlawed in California perhaps before HSR is ever completed. And it shows that the cost of those super-fast trains is no longer included in the plan. I bet you didn’t expect that one. I didn’t.

I doubt there is anything that would lead the committee’s Democratic majority to even question the project. Senator Dahle provided a forceful critique of HSR during a recent committee meeting, arguing that further investments in HSR are taking funding away from valuable projects that are doable and cost effective. Yet his Democratic colleagues will not listen to this obvious economic logic. “We’ve already spent too much to give up now” and “We must do HSR to combat climate change” are the rote responses when the leadership is questioned about HSR. Yet throwing good money after bad has never been a winning proposition, nor is being wed to unrealistic beliefs, such as thinking that California’s HSR represents a cost-effective approach to addressing environmental issues.

If you really want to see just what is wrong with California HSR, look at the business plans that the HSR state agency is required to file every two years.  Every report is reactive, trying to turn this sow’s ear into a silk purse by papering over problems, in part by using buzzwords and hackneyed phrases such as “our guiding principles,” “our core values,” “risk mitigation,” and “gaining certainty.” You will be hard pressed to find statistics on accomplishments, because there are so few.

The new CEO of the HSR seems to like quotes. He begins the 2020 report quoting Nelson Mandela: “It always seems impossible until it is done.”  In the 2022 report, he quotes Einstein: “In the middle of difficulty lies opportunity.”  By the time the 2024 report comes out, perhaps the most appropriate quote for HSR will be, “Insanity is doing the same thing over and over again and expecting different results.”