A new report says California’s proposed high-speed railroad could cost state taxpayers more than three times the official $43 billion cost projection.
This $138 billion estimate comes from a trio of Bay Area analysts who have followed the project, which was conceived to carry residents from San Francisco to Los Angeles in about 2½ hours.
The revised cost comes from new construction developments and lower-than-expected federal contributions, said coauthor and entrepreneur William Warren, who has a Masters in business from Stanford University.
The California High Speed Rail Authority, which oversees the project, expected to receive about $18 billion from the federal government. But in a new era of fiscal austerity, Warren thinks it’s unlikely the railway will receive more than the $3 billion it has already secured.
Meanwhile, cost estimates for the Fresno-to-Bakersfield segment were recently revised from $7 billion to between $10 million and $13.9 billion, an increase that Warren and colleagues say will cause construction costs to hit $66 billion.
The authority has secured $9 billion in state bond revenue, but Warren and his colleagues estimate that the state would have to borrow $4.6 billion a year for 30 years — resulting in a total cost of $138 billion.
“That’s a staggering figure,” said Warren, who compiled the report with Stanford management professor Alain Enthoven and former World Bank economist William Grindley. “That would double California’s current debt.”
Former authority board member Rod Diridon conceded that the true cost will be well more than the original $43 billion projection, but wouldn’t venture an exact forecast. However, he thought federal funding would open up for the project within four to five years, once the “fanaticism of the tea party” has worn off in Washington.
But Diridon said Warren and his colleagues aren’t qualified to make projections for the project.
“These folks have been against this project for years,” said Diridon. “They don’t have experience in high-speed rail planning and they’re incapable of delivering an objective report about the project.”
Authority spokesman Rachel Wall would not comment on the report’s $138 billion figure, but she said that costs will rise if the project is delayed. Still, the project will be less expensive than the infrastructure upgrades needed if there is no high-speed rail in the state, she said.
She added that high-speed rail “is proven around the world to be economically efficient and effective.”
Currently, the projected cost of the state’s high-speed rail project is $43 billion. Here is how a new report breaks down the spending.
- $66B Revised overall budget for project
- $3.3B Federal grant funding
- $9B State bond funding
- $5.3B Local government loans
- $48.2B Private sector loans
- $4.6B Annual payment for loans
- 30 years Duration of payback for loans
- $138B Total debt repayment of project