How much will Prop. 1A cost taxpayers?

Every major infrastructure project costs more than expected, and every major U.S. passenger train system loses money. Will this be any different? Moore and Tempelis conclude their discussion on Proposition 1A and high-speed rail.

A rail plan based on wildly optimistic numbers
Point: Adrian Moore

California needs to make major infrastructure investments. Hard economic times bring home the reality that the most important thing government can do to ensure economic growth is to adequately invest in the infrastructure backbone and make it easy for private investment in infrastructure to occur. California needs major improvements in transportation, water, wastewater, flood control, electricity and telecommunications.

Given these needs, we can’t afford to waste resources -- public or private -- on any part of the system that doesn’t add up. We have to focus first on the most important needs; in transportation, our top priorities are our roads, urban transit systems, sea ports and airports. Even in the rosiest scenario, a high-speed rail system would carry a tiny fraction of all travelers. The most optimistic estimates of ridership predict the high-speed rail system in 2030 will carry 65 million to 95 million passengers a year, but by that year Californians will be making nearly 100 million trips per day.

There are several reasons why high-speed rail does not stack up as the best infrastructure investment we can make today. Let’s start with ridership. When high-speed rail systems were built in Europe and Asia, they served corridors that were already very dense and where a large share of travel was already by train -- and there was still no reduction in overall air travel in those corridors. Most riders of high-speed rail were already train riders. The California High-Speed Rail Authority’s estimates for the state show that riders will not come from existing trains (there are very few of those) or much from the airlines. Rather, their plan rests on getting people to ride the train rather than drive. Given the more modest gas prices here, the lower density and car culture, to predict that the California high-speed train will get far more riders than systems in Europe and Japan is ridiculously optimistic.

And if the ridership predictions don’t come true, the other predictions offered by the rail authority crumble. It says that once the train is built, the system will need no public subsidy. This despite that fact that every other high-speed rail line in the world, all with many advantages over a California system, are subsidized. If we don’t achieve the wildly optimistic ridership projections, California’s trains will need to be subsidized by taxpayers. If the system is not able to achieve operating costs 40% to 70% below other high-speed train systems, it will need subsidies. If it wants to offer fares 50% lower than similar trains in other countries, it will need subsidies. In other words, there is no doubt that the high-speed train will need to be subsidized; the Reason Foundation’s middling estimate is that it will require about $3 billion per year.

If that long-run prospect is not bleak enough, the immediate prospect is bleaker. In 1999, the rail authority estimated that the entire system would be built for $30.3 billion. By 2005, the estimate had climbed to $40.5 billion, and by 2008 the projection had risen to $45.4 billion for only part of the system; the whole system would cost about $50.2 billion (this is all in 2006 dollars). A detailed report published in the Journal of the American Planning Assn. looked at 258 public transportation projects built between 1927 and 1998 and found that rail projects had the highest cost overruns, costing taxpayers 45% more than projected. Taxpayers should expect the final bill for this train system to be closer to $80 billion.

In tough financial times, we have to raise the bar for projects in which we might invest scarce public and private resources. The law that put Proposition 1A on the ballot required the rail authority to produce a business plan and present it to the Legislature by Sept. 1 of this year. The plan would have answered all the questions I have raised, laid out how the financing was going to work and what the high-speed rail system would realistically achieve, and would have been the basis for voters judging Proposition 1A. The rail authority didn’t produce the plan.

So we are not voting on a bond to fund a plan, we are voting on a bond to fund the rhetoric of the rail authority. It says it doesn’t have the money to do the plan, and I say that shows the rail authority isn’t managing its money well.

This is the wrong plan for high-speed rail in California, and this is the wrong time for us to use scarce resources on a shaky and optimistic proposal. We have more important things to do with our money.

Adrian Moore is vice president of research at the Reason Foundation.

A single solution for all economic challenges
Counterpoint: Dan Tempelis

California is facing critical challenges as our population grows toward 50 million people. Our freeways and airports are clogged, costing us billions of dollars in wasted time (72 hours a year per commuter in Los Angeles County) and fuel each year. California cities have some of the dirtiest air in the country, and we continue to be heavily dependent on imported oil. Our economy is struggling mightily, with California’s unemployment rate rising past 7%.

The high-speed train proposal on the November ballot -- Proposition 1A -- is one solution for all of these challenges. It is a smart, forward-thinking investment in California’s future that will combat congestion by smoothing the critical flow of people and commerce, reduce greenhouse gas emissions that contribute to global warming, save millions of barrels of oil per year and create hundreds of thousands of needed high-paying jobs as our economy get back on its feet.

The high-speed train has been under careful study in California for more than a decade. Routes, engineering, equipment, ridership forecasts and much more have been studied and peer-reviewed by experts from the U.S. and countries where high-speed trains have been safely in use for nearly 50 years. Their experience in operating high-speed train systems will be adapted to California.

Public funds should always be spent carefully, and Proposition 1A takes several steps to both maximize the impact of each state bond dollar while protecting taxpayers.

The high-speed train system will be funded by a partnership of state bond, federal grant and private dollars. Proposition 1A authorizes $9.95 billion for the state bond portion. Under the partnership, every state bond dollar for construction will bring in at least two added dollars of federal and private money. In fact, President Bush just signed a rail authorization law making federal money available for high-speed rail.

If complete financing for the system is not raised through matching contributions, taxpayers are protected because the law prohibits the state bond money from being spent.

Proposition 1A smartly looks at California’s transportation needs as a system integrating both high-speed rail with local transportation networks at each stop. Additionally, funding will be available to make critical improvements in existing rail lines that will connect to the high-speed trains, making all systems both safer and more efficient. For example, more than 600 railroad crossings statewide will be grade-separated from surface streets.

California’s economy has led the world through smart long-term investment and innovation. A sharply debated but prudent long-term investment half a century ago -- the California Water Project -- helped make the Golden State a global economic leader. Innovation that started in some local garages grew into the technology revolution of the Silicon Valley, a transformation that is directly traceable to our state’s investment in a model university system.

Today, the high-speed train is California’s opportunity to lead again. It is arriving in right on time to fight congestion, ease pollution and our dependence on oil and create jobs. Vote yes on Proposition 1A.

Dan Tempelis is a professional engineer who is project manager of the Los Angeles to Palmdale segment of the proposed high-speed train system.