It only took 10 years after California voters narrowly approved $9.95 billion in bond seed money for what was then a $33 billion statewide high-speed rail network, but a governor is finally acknowledging the project’s major problems. Gavin Newsom used his first State of the State address to declare that while he supported completion of an under-construction route from Bakersfield to Merced, “there simply isn’t a path to get from Sacramento to San Diego, let alone from San Francisco to L.A.” Hallelujah. In his speech and a series of subsequent tweets, Newsom emphasized that he wasn’t abandoning high-speed rail, but he can’t walk his welcome criticism back.
Newsom crammed a lot into 43 minutes, about California Environmental Quality Act reforms, housing, homelessness, prescription drugs, water availability, rent stability and more, which state residents and this board will chew on in coming days and weeks. But by far the biggest news in his speech was his reality check on the state and the nation’s largest infrastructure project. “Let’s be real,” he said. It “would cost too much and take too long.”
As Ralph Vartabedian of the Los Angeles Times has reported, there’s at least a $50 billion gap in funding to build a now-$77 billion San Francisco-Los Angeles route, based on cost estimates from the unreliable California High-Speed Rail Authority. In November, Vartabedian also cited this fact: A project that was then 10 years old was 13 years behind schedule. How is such incompetence even possible?
Newsom’s candor was in sharp contrast with former Gov. Jerry Brown. He liked to ridicule project critics as “declinists” who were scared of the future — while never addressing the long list of concerns that began building about the bullet train just days after the passage of Proposition 1A in 2008. That’s when the California High-Speed Rail Authority released an overdue business plan that said the project was unlikely to attract private investors unless they received “both financial and political commitments from state officials that government would share the risks to their participation.” In other words, they would get subsidies if revenue forecasts fell short. But under Proposition 1A, such subsidies were illegal. The authority had this information in the spring of 2008 but never shared it with the public until after the measure passed — even as then-Gov. Arnold Schwarzenegger and other advocates told voters it would be easy to get the private investment necessary to finish the project.
This original sin has been compounded by years more of dishonesty from state rail officials, most notably the periodic claims that the large international firms which were interested in building and/or managing the project wanted to invest in it. No, they weren’t — not without the prospect of subsidies.
The authority’s credibility hit rock bottom in 2015. That’s when Vartabedian reported that the authority had refused to make public a 2013 analysis from Parsons Brinckerhoff, its main project contractor, that predicted a $9 billion cost overrun on the bullet train’s initial 300-mile segment. Not only did the authority continue to issue cost estimates that didn’t reflect this warning, its CEO — Jeff Morales — claimed he didn’t know about the report. If Newsom is serious about bringing transparency to the rail authority, he should remove every single senior official who countenanced this cover-up.
Despite Newsom’s talk of good jobs and investment, his decision to seek completion of the Merced-Bakersfield segment is baffling. That wouldn’t link Silicon Valley jobs with potentially cheap housing in the Central Valley, which he said last year was a great idea. It’s also hard to see how ridership could be adequate to cover the high cost of buying and maintaining bullet trains and upkeep of the high-speed rail line — remember, subsidies are illegal.
Whatever Newsom’s calculations, his decision to be honest about this sinkhole of a project deserves praise. Better late than never, to be honest about it.
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