California High Speed Rail Project to Cost U.S. Taxpayers $42 Billion, GAO Says

December 28, 2012 - 5:01 PM


California High Speed Rail Project

(Photo: California High Speed Rail Project)

(CNSNews.com) -- The California High-Speed Rail project is supposed to run from San Francisco to Los Angeles and be completed in 2028 at a cost of $65 billion, but only $11.5 billion in funds have already been secured for the project from state, local and private investment.

That means U.S. taxpayers will be called on to make up 61 percent of the estimated $57 billion that the project currently lacks in funding – or $42 billion --  according to congressional testimony from the Government Accountability Office (GAO.)

The project’s four phases of construction depend on a majority of funding to come from congressional appropriations, in addition to the California state government and private investment.

While $11.7 billion in state and federal funds have been guaranteed for the project, it is unclear if California will receive the additional $57 billion needed for completion.

As of Dec. 6, the California High Speed Rail Project has received the most funding of any initiative from the Federal Railroad Administration’s (FRA) High Speed Intercity Passenger Rail (HSIPR) program ($3.5 billion) and has also received money from the 2009 Stimulus bill.

The GAO found that of the $11.5 billion in secured funds for the project, $8.2 billion comes from “high speed rail bonds” in California and $3.3 billion is from the federal government.

“One of the biggest challenges facing California’s high-speed rail project is securing funding beyond the first construction segment. While the [High-Speed Rail] Authority has secured $11.5 billion from federal and state sources for project construction, almost $57 billion in funding remains unsecured,” said Susan A. Fleming, the GAO director of Physical Infrastructure Issues, in her written testimony on Dec. 6th to the House Committee on Transportation and Infrastructure.

The GAO estimates that 81 percent, or $55 billion, of the project’s total funding will come from government entities -- of that $55 billion, $42 billion (61 percent) will be provided by the federal government.

Out of the $55 billion the California High-Speed Rail Authority is counting on from the state and federal governments, only $11.5 billion has been guaranteed for the project and $37.5 billion in federal funds remains uncommitted.

“However, given that the HSIPR [High Speed Inner City Passenger Rail] grant program has not received funding for the last 2 fiscal years and that future funding proposals will likely be met with continued concern about federal spending, the largest block of expected funds is uncertain,” Fleming said.

The California High-Speed Rail Authority plans to use revenues from California’s cap and trade emissions program in case federal funding does not arrive, but the amount of revenues generated from cap and trade has yet to be determined.

The GAO also found that Authority cost estimates exhibited several weaknesses.

Although costs for construction were well documented, estimates for operating costs as well as adapting foreign technology from other high speed systems were unclear.

Cost estimates for “stations and trains” had little or no supporting documentation at all, the GAO said.

“In many cases, the methodologies used to derive the construction cost estimates were well documented, but in other cases the documentation was more limited,” said Fleming. “For example, while track infrastructure costs were thoroughly documented, costs for other elements, such as stations and trains, were supported with little detail or no documentation.”

The Authority has also experienced difficulty gauging ridership and revenue turnout once the project is completed. Previous forecasts were based on survey data from 2005, but the Authority is expected to release a new ridership forecast with updated data in December 2012.

Other challenges to the project include legal challenges on environmental grounds, along with timely right-of way acquisition to reserve property for the project’s construction.

“Environmental concerns have been the subject of legal challenges. For example, a lawsuit was filed in October 2010 against the Authority challenging the decision to approve the Bay Area to Central Valley segment based on an EIR [Environmental Impact Report] alleged to be inadequate. Several lawsuits have been filed and these cases are still pending,” said Fleming.

The California High Speed Rail line will be 520 miles long, spanning from San Francisco to Los Angeles. The line’s anticipated completion date is 2028U.S. taxpayers to