- State & Local
- California
- California Decides
The year is 1993. Bill Clinton has just entered office. Only one out of four homes has a PC, and virtually no home has internet. It’s in that same year, which now seems so long ago, that California establishes the California Intercity High-Speed Rail Commission to plan for high-speed rail (HSR). Thirty-three years later, California’s high-speed rail is woefully behind schedule and enormously over budget, reflecting decades of political and organizational failures.
Early fails doomed it from the beginning, and later fails would follow one promise after another of fresh starts and better decision-making—unkept promises that have now reached the point of incredulity.
The project’s fails continue. A report released earlier this month by High-Speed Rail’s inspector general documented that nearly 60 percent of California High-Speed Rail consultant travel expenses reimbursed by the state violated contracts and/or state rules, including visits to an escape room (whatever that is), nightclubs, and a tiki bar. The inspector general also warned that the project may run out of cash by December 2027, as the project still has yet to lay any track.
I have followed California high-speed rail for several years, including providing testimony about the project to the US House of Representatives. Below is a timeline listing some of the major problems that have plagued the project.
1999 – Take the long way out of LA. After being established in 1996, California’s High-Speed Rail Authority (CHSRA), identifies possible routes to connect Northern and Southern California. Engineers prefer a route along Interstate 5 and through the Tejon Pass corridor, but a longer, more expensive route through Palmdale is chosen, reflecting political horse-trading. Former High-Speed Rail Chair Michael Tennenbaum calls the longer route “Ridiculous and wasteful. . . . The desert route sacrificed travel time and increased the costs, and opened the door to a whole series of problems that have become only clearer as time has gone on.”
2008 — Another problematic route choice. A route through the Pacheco Pass is selected to connect the Central Valley with the Bay Area, but it involves tunneling through very difficult geological conditions and requires two tunnels to handle both directions of track. However, a French engineering firm with substantial high-speed rail experience prefers an alternative route through the Altamont Pass. Both routes involve significant seismic risks, which highlight the difficulties and uncertainties associated with the project. These issues appear to remain unresolved today, as the 2026 project business plan calls for continued geotechnical investigations of the Pacheco tunnels. After all these years, could this tunneling be done safely and without the cost of a moonshot? We may never know, because I don’t see the project ever getting that far and there is no dedicated funding for these investigations.
2008 — $9.95 billion bond passes, but without a legitimate business plan. In November, voters pass Proposition 1, the “Safe, Reliable High-Speed Passenger Train Bond Act,” by a 53/47 ratio. The proposition approves a $9.95 billion bond to begin a project that will cover eight hundred miles of track, and whose SF-to-LA route will cost $33 billion and be ready to ride in 2020. The bond funding is to provide seed money until federal and private investor support comes on board.
But “reliable” should never have been part of the ballot proposition title. The 2008 business plan missed its September 1 deadline and didn’t appear until shortly after the proposition vote. If the business plan had been released on time, I can’t realistically see how the proposition would have ever been approved: the business plan was not a business plan in any reasonable sense of the word. Instead, it showed just how much more work needed to be done before asking voters to fund what was more of a pipe dream than a realistic project at that time.
The nonpartisan Legislative Analyst’s Office (LAO) studied the plan and found that key information was missing, including “sources of funding and confidence in those sources,” “timeline for design and environmental clearance,” “identification of risks and risk mitigation,” “service levels by segment,” and “train capacity.” Even the operating break-even point was missing. Can you imagine anyone funding a business in which you don’t even know what’s needed to cover your operating expenses?
The LAO noted, “Lacking detailed information such as this, the Legislature really has no better sense than prior to the plan’s submission as to how the authority plans to accomplish its objective.”
2010 — Another incomplete business plan. Key problems remain in the 2009 business plan. The LAO finds inadequate risk mitigation, no numerical uncertainty assessments of key forecasts, and few concrete milestones to measure progress. The LAO also raises questions about whether procurement could finish before regulatory approval of the equipment. High-speed rail is still not ready for prime time, but $9.95 billion has already been committed, and voters remain clueless just how far south—figuratively—this project will go.
2011 – Is California really more dysfunctional than Morocco? The French Railway firm SCNF, which has enormous experience building and operating HSR dating back to the 1970s, offered to help build the LA-SF route in 2010, but along the I-5 route. But by 2011, SCNF has left California, noting that it’s done with the state’s political dysfunction. SCNF takes its talents to Morocco, where it evidently finds less dysfunction.
2012 — Cost of LA to SF doubles, but funding is stagnant. HSR’s cost estimates rise substantially, with LA-SF pegged at $68 billion, and the entire system at $98 billion. The HSR authority requests additional funding from the Legislature, and the LAO examines that request. The LAO expresses reservations that major design and delivery changes are being rushed, sometimes developed in a matter of days, and raises concerns about interagency coordination and the management of contractors. Given these concerns and with only $9 billion in rail bonds and $3.5 billion in federal funding available, the LAO recommends against the additional funding.
2013 — Where’s the land? And where will the utilities be relocated? As political pressures rise and funding deadlines grow closer, steps are taken to begin construction in the Central Valley. The authority signs its first construction contract in August 2013 and authorizes work in October 2013, even though land acquisition is incomplete, it has not determined the relocation of public utilities, and it has not obtained agreements with external stakeholders. What would happen if you applied for a construction loan from a bank if you didn’t have all the land needed for the buildings and you hadn’t figured out how to provide electric, gas, and water? You wouldn’t even get a meeting with the lending officer.
2016 — “It’s like déjà vu all over again.” The 2016 business plan changes the initial operating segment from a southerly route, through the Central Valley, to a northerly route from the Central Valley to Silicon Valley because there isn’t enough funding to build the southerly route. The plan estimates ridership of between 2.2 and 4.1 million trips annually between the Central Valley and San Jose, beginning in 2025, with San Francisco to LA estimated to be good to go by 2029.
After the release of HSR’s 2016 draft business plan, Dan Walters, a leading nonpartisan California political columnist, remarks, “Those charged with building California’s north-south bullet train system have been more or less making it up as they go along.” A lawsuit to stop the project for violating the terms of the original ballot proposition is rejected, not because the challenge was unsubstantiated but because the project could not even be evaluated. The judge references HSR as “an ongoing, dynamic, changing project,” following a previous appellate court ruling that noted, “Because there is no final funding plan and the design of the project remains in flux . . . we simply cannot determine whether the project will comply with the specific requirements of the (2008) bond act.”
The LAO’s review of the 2016 business plan is reminiscent of its reviews of earlier business plans, noting uncertainty of funding, whether the new initial operating segment had standalone value, and that detailed information about costs, scope, and schedules were needed. As baseball great Yogi Berra famously quipped, “It’s like déjà vu all over again.”
2018 —California’s state auditor finds “flawed decision-making and poor contract management.” The state auditor reviews CHSR and finds it to be . . . well, the title of the audit—“Flawed decision-making and poor contract management”—pretty much says it all. Chapter One is titled “THE AUTHORITY’S DECISION TO BEGIN CONSTRUCTION BEFORE COMPLETING PROPER PLANNING LED TO COST OVERRUNS AND DELAYS.” Chapter Two is titled “THE AUTHORITY HAS NOT SUCCESSFULLY ENFORCED THE POLICIES IT IMPLEMENTED TO ADDRESS ONGOING DEFICIENCIES WITH ITS CONTRACT MANAGEMENT.” Chapter Three is titled “THE AUTHORITY CAN IMPROVE THE QUALITY AND TRANSPARENCY OF ITS MONITORING AND REPORTING FOR KEY GOALS.”
2019 — Full speed ahead with . . . Bakersfield-Merced? What about LA to SF? Governor Gavin Newsom acknowledges excessive costs, delays, and inadequate oversight of HSR in his first “State of the State” address after his November 2018 election. At this time, about $5.1 billion had been cumulatively spent and relatively little work completed. As a new governor with considerable political gravitas, Newsom is in a perfect position to change the direction of this project by going back to the drawing board and bringing back SCNF or another international firm with considerable HSR experience to rescue the project. Instead, Newsom announces that the project will focus on connecting Merced and Bakersfield, a route that likely has little local demand for HSR.
Newsom doesn’t make a commitment regarding the marquee LA-SF route or any other part of the system. In 2020, the cost for Bakersfield-Merced will be estimated at around $20 billion, but it since has risen to about $36.8 billion per the requirements of 2022 legislation. Imagine the vote on 2008’s Proposition 1 if it had been advertised as: “We might build Bakersfield to Merced for $36.8 billion, and it might be ready in twenty-five years. And it might be built out to a bigger system at some later date, but we really don’t know what that would be, or when it would be finished.” SCNF would ultimately be brought back to HSR, but it would take seven more years for that to happen.
2023 — Costs rise sharply . . . again; completion dates extended . . . again. The LAO reports Phase 1 base estimates rising from $94.2 billion to $107.6 billion, Merced–Bakersfield budget rising to $35.3 billion, and facing a $10 billion funding gap, while the San Francisco–LA system faces an $80 billion gap. It also expresses concerns due to declining projected ridership, which fell 38 percent for a San Francisco–Bakersfield line, and to completion dates extending further into the future. These findings lead the LAO to conclude that state legislators should reconsider the project’s funding, scope, and further commitments beyond Merced–Bakersfield.
2023 – Better late than never? An inspector general’s office is created by the Legislature to improve oversight over HSR. An excellent decision. It should have been made fifteen years earlier.
2024 — A strategy reset that will ultimately cost $4 billion. The authority postpones procurement of trainsets while reconsidering its strategy. However, this turns out to be a critical mistake. Satisfying this contractual deadline was a requirement of about $4 billion in federal funding. While this might have not been an issue had Kamala Harris defeated Donald Trump in the 2024 presidential election, Trump’s Department of Transportation decides to cancel $4 billion in funding the following year.
2025 — More bad news, this time from the inspector general. The IG’s 2025 report notes completion will likely be delayed by problems in funding, construction, and unresolved third-party disagreements. The internal target has already shifted from 2030 to 2031. Procurement changes, funding uncertainty, construction delays, and unresolved third-party disagreements threaten the remaining schedule margin. The IG also notes that key risk analysis hasn’t been completed. Seventeen years after the bond was approved, it’s still not ready for prime time.
2025 — Trump’s railway agency cancels $4 billion in federal funding. The federal railway agency concludes that California can’t deliver the first operating segment by 2033 with available financing. Immediately after the funding cancellation, California sues to have the funding returned. A few months later, California dismisses its own lawsuit, stating that the federal government is not a reliable partner. But with $4 billion hanging in the balance, one could imagine that the state’s case for restoring the funding is weak, and this is why the suit is withdrawn.
Today — Will funding run out by 2027? The IG’s midyear report estimates that the project could run out of funding by the end of 2027, and also notes that the business plan still lacks transparency on key items.
Expectations about the state’s population and economy were remarkably different when the state started planning HSR. At that time, there was a view that California would be much larger than it is today, with a population of perhaps forty-five million. And along with those additional fifteen million people who never appeared there was a view that our highways and airports would be hopelessly congested, and that HSR would provide a cost-effective addition to California’s transportation infrastructure. There was also the view that HSR would reduce greenhouse-gas emissions and help combat climate change.
But with California’s population seemingly stuck around thirty million people, the state’s major airports, which have benefited from expanded capacity and much-needed renovations and modernizations, are handling air travel much better than what was once envisioned (I can find one-way fares from SFO to LAX for as little as $19). And as far as climate change goes, greenhouse-gas emissions are a global phenomenon, and California is responsible for less than 1 percent of the global total.
Put differently, even if California could somehow eliminate all greenhouse-gas emissions, it wouldn’t move the global needle.
Epilogue
The IG’s latest report about the tiki bar brings back memories from more than forty years ago, when I visited the famous Tonga Room in San Francisco’s Fairmont Hotel. It was summer, and both my date and I were college students, enjoying a night out in what was perhaps the greatest city on the planet. As newly minted twenty-one-year-olds, we marveled at the lights of the city, the cable cars, the Transamerica Pyramid, and the sweet mai tais that the bartender brought to us with a wink. I remember that neither of us had a care. After all, we were living in the greatest state in the greatest country in the world, where it seemed that anything and everything was possible. Work hard, be creative, and the California dream was yours.
Sadly, that seems so long ago. And one reason is that our public sectors no longer deliver what they could and should, and there is perhaps no better illustration of this than the debacle of high-speed rail.
