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New cost estimate for California high-speed project puts it more in the red

When Gov. Gavin Newsom unveiled his scaled-down plan for California’s bullet train four years ago, he proposed building an initial 171-mile segment in the Central Valley that would start operating in 2030 and cost $22.8 billion.

Today, the plan is unraveling as costs now outpace future funding, an official estimate of future ridership has dropped by 25%, and the timeline to start moving people is falling behind schedule. It is raising new concerns about the future of the country’s largest infrastructure project.

New cost figures issued in a update report from the California High-Speed ​​Rail Authority show that the plan to build the initial 171-mile segment has ballooned to a maximum of $35 billion, exceeding secured funding by $10 billion.

The cost of that partial system is now higher than the estimated $33 billion for the entire 500-mile system from Los Angeles to San Francisco when voters approved a bond in 2008.

What’s worse, the total cost of the system is set at up to $128 billion in the update, leaving a total funding gap of more than $100 billion.

Ethan Elkind, who studies California’s transportation problems as director of the climate change program at UC Berkeley School of Law, said the growing problems cloud the future of the project.

“He’s in danger,” Elkind said. “It’s risky. There is no way forward for the complete system from Los Angeles to San Francisco. It’s important that they do something.”

The $128 billion price does not include cost updates for two separate segments between Palmdale and Anaheim, because the rail authority has in the past not updated costs until it completes environmental assessments. There could be additional tag impact jolts when those costs are added in the future.

“It is clear that additional funding will be needed to deliver the … operating system from Merced to Bakersfield for passenger service,” the report said.

Brian Kelly, chief executive of the rail authority, said in an interview that higher costs, which have hit projects across the country, present a “tougher challenge.”

“There has never been an easy time for this project,” he said. “Nothing has ever been easy here. This project has never had full funding.”

Kelly notes that the range of estimates for the Central Valley segment is from a high of $35 billion to $28 billion. The project’s reference price has grown since 2008, exceeding all previous cost ranges.

The current fight follows a period in which the bill enjoyed strong support from the Biden administration and Congress. But the Republican takeover of the House in the 2022 election could herald more difficult times.

House Speaker Kevin McCarthy, a Bakersfield native, has long called the project, which would serve his own district, a waste.

“In no way, shape, or form should the federal government allocate another dollar to California’s inept high-speed rail,” McCarthy said in a statement to CalMatters. “The California High Speed ​​Rail Authority has missed countless deadlines and has misled the public about costs, which are exorbitantly higher than originally estimated.”

Among nonpartisan state analysts, the reliability of the new cost estimates is likely to come under intense scrutiny, including from the state-appointed Peer Review Panel.

Bill Ibbs, a retired UC Berkeley civil engineer who is part of the group and has consulted on international high-speed rail projects, said he is concerned about the lack of attention to engineering risks.

“They don’t directly address the fundamental engineering issues,” Ibbs said, particularly the 38 miles of mountain tunnels that are planned for southern California alone. “What are the main engineering challenges ahead of you and why don’t you talk about them in this report?”

The report also indicates that the date to operate the 171-mile system could be extended to 2033 from 2030, which would delay public benefits and account for cost pressures.

And possibly more troubling is a 25% cut in projected future ridership, due to the fact that the COVID-19 pandemic has fundamentally reduced public transit use and expected California ridership. population growth has faded. A major justification for the bullet train from its inception was the expectation that population growth would necessitate a better passenger train. However, the report claims that the system’s passenger load would be comparable to Amtrak’s Northeast Corridor.

Those factors are beyond the rail authority’s ability to control, although it has wrestled with its own construction problems in the Central Valley for the past 10 years.

Over 1,000 change orders, originating from the rail authority or contractors, have been approved and account for much of the cost growth. They include costly elements, such as miscalculating the need for massive barriers to prevent freight trains on nearby tracks from derailing and crashing into a bullet train. Some 20 change orders for that item alone are over $500 million.

Construction has been halted due to utility relocation issues such as underground sewage, water lines, and gas pipelines. About half of the 2,800 projects to relocate underground utilities have not been completed, according to a separate status report issued by the railroad board’s finance and audit committee. Two dozen major structures, such as viaducts and bridges, have not even begun construction.

But those issues are being worked out and major disputes over the change orders are in the rear view mirror, according to the report. Of the 2,300 parcels of land needed for the railway line, only 92 remain to be acquired.

Newsom adopted his plan for an initial system in 2018, based on a strategy showing that an operational system in the Central Valley would generate public support for building the most expensive passageways through the coastal mountains to the Bay Area and South California.

That idea preceded a significant cost increase that outpaced funding, leaving Democrats in the Legislature increasingly nervous and Republicans calling for a full-blown withdrawal.

“He’s on life support now,” said Sen. Brian Jones, a San Diego County Republican and Senate Minority Leader. “The governor has not been able to keep any of his promises.”

At this point, Jones says, the project should be halted and existing structures in the Central Valley demolished if they cannot be reused.

Democratic leaders declined or did not respond to interview requests. Newsom’s office did not respond to a request for comment.

Kelly believes that there is a reasonable path to follow. The report, issued March 1, sets a goal for the rail authority to win $8 billion in federal grants under the bipartisan Infrastructure Act enacted by Congress last year.

The total railroad money reserve enacted in the law is $75 billion, so $8 billion would seem like a reasonable share for California. But the Biden administration and Congress were much more generous with the Amtrak system in law, allocating roughly $24 billion to its operations without reserving any guaranteed portion of the money for California. Also, there are other passenger rail systems in California, who may want a cut of any money headed to the Golden State.

Kelly acknowledges that the $8 billion goal is “aggressive and rightly so” because California is paying 84% of the cost so far.

“If the national government wants to get a cleaner, faster electrified national rail system, they have to do better than 16%. And so we are going to make that case,” he said.

“I think it’s a reasonable and prudent question.”

The state will know early next year if it will get the lifeline. Without it, the funding gap will be staggering. Before that, the Senate and Assembly will hold hearings next month.

“It certainly is a significant funding gap,” said Helen Kerstein, who covers the rail project at the nonpartisan Legislative Analyst’s Office. “In the absence of very significant additional federal funds, the state will need to contribute additional funds to complete that segment from Merced to Bakersfield.”

Kerstein noted that the project failed to get a funding boost from the general fund when the state was riddled with surplus revenue in recent years. Now the state is struggling with a deficit, with the likelihood of more to come. At the same time, there are other priorities.

Kerstein added: “It’s going to be hard.”

Elkind, a UC Berkeley law professor, said the state will ultimately have to go back to the voters and file for another bond issue if there is any hope of building the entire system.

“It’s going to be harder to go back to the voters and ask for more funding, but I think ultimately that’s what it’s going to take, which is why it’s so important that they finish this first segment,” he said.

“It’s unbelievably sad that it’s going to be two decades since the voters approved this just to get the top 25% of the system up and running, which is also the 25% of the system that serves the least amount of population. wise in California along the route.”

CalMatters.org is a non-profit, non-partisan media company that explains California policies and politics.