NCPA - National Center for Policy Analysis

California's High Speed Rail Project a Financial Disaster

September 11, 2014

California is plowing forward with its high speed rail plan, despite the fact that it lacks the funds to pay for the project, writes NCPA Senior Fellow Baruch Feigenbaum.

  • California voters authored $10 billion for the project in 2008, yet those dollars will not even cover the costs of constructing the rail line between Merced and Bakersfield, the first segment of the project.
  • The California legislature voted to use one-quarter of the state's revenue from its cap-and-trade program on the project -- still not enough money to pay for costs. Additionally, a number of lawsuits have been filed against the use of these funds for the rail line, contending that they violate provisions of the law.
  • The state hopes that private investors will cover a number of costs, but there is little interest in the private sector, as the state's High Speed Rail Authority has overestimated ridership by up to 77 percent.
  • California needs between $120 million and $370 million in taxpayer subsidies to pay for operating costs and losses.

These financial realities aside, Feigenbaum explains that the entire premise behind the rail project is flawed. Rail supporters argue that highways and airports cannot handle increased capacity, yet he notes that the use of larger planes and developments in air traffic control are both increasing air travel capacity, and the rail line will take far longer for passengers to reach their final destinations than air travel would. Moreover, automobiles still remain a far more flexible mode of transportation than rail which, in California, will often deposit riders at stations 20 or 30 miles from their final destinations.

Source: Baruch Feigenbaum, "The California High Speed Rail," NCPA Energy and Environment Blog, September 8, 2014. 


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