A new business plan laying out the inflation-adjusted costs of California's high speed rail system has given a lot of people sticker shock - it projects a total cost of nearly $100 billion to complete corridors between several major metro areas and through the Central Valley. While some officials are claiming that even minimal ridership would make tracks profitable, others are saying that the projected numbers required to make that happen are "in la la land." So what happened to this much-anticipated rail project?
Governor Edmund G. Brown recently appointed two new members to California’s high-speed rail authority and asked them to assess the viability of California’s high-speed rail proposal. They announced the project could work if built gradually in sections that operate independently, but the actual cost has ballooned to more than double the original estimate of $43 billion. That has some people questioning the viability of the entire system.
Rail authorities claim that the actual cost of building the high-speed rail corridor will only be $2 billion per year if it is built in phases, which seems manageable, especially if private funding supports the project. But do those numbers really add up? At that rate, California’s high-speed rail system won’t be complete for 50 years, by which time maintenance costs on the earliest built sections of the track could balloon and unforeseen circumstances could derail the whole thing.
The rail authority claims that the system would sustain a minimum net operating profit of $352 million per year, even if ridership is low, and that the average ticket price from San Francisco to Los Angeles would be $81, which seems like a price that would motivate many travelers to hop on board. President of the Howard Jarvis Taxpayers Association Jon Coupal, who already predicted the rise to $90 billion in costs, disagrees: “They would have to set a fare at about $300 a ticket and assume ridership levels that aren’t going to exist to assume a break-even level.”
So is the project sustainable and realistic? Will it replace $170 billion of otherwise needed infrastructure improvements to serve California’s growing population? We think that unfortunately only another report and study can uncover the answers to these questions, which will further delay the project and potentially cause it to lose billions in federal funding that hinge on construction beginning by fall of 2012. But when $100 billion is on the line, maybe it’s worth getting the numbers straight before moving forward. Governor Brown said in August that he supports the plan to link San Francisco with Los Angeles and Anaheim by 2020, but his Department of Finance will need to examine the proposal in detail before he signs off, and the legislature, which returns in January, will also need to give the plan the go ahead.
Via CBS News