CA: California's Bullet Train Gamble Begins: $9 Billion Now on the Line

California's top leaders weighing the fate of the $45 billion high-speed train line will finally get the crucial details they need Tuesday to decide once and for all: Is it time to kill the project or empty the bank account to start building the sleek railroad with no guarantees there will be enough money to run a single bullet train?

Quitting now would force the state to return a massive federal grant if they scrap the rail line. But launching the project in the sparsely populated Central Valley, as is now planned, could mean spending an astonishing $9 billion in taxpayer funds to build only enough track to serve as a brief shortcut for a few thousand Amtrak riders.

And with a deadline looming to start construction by this time next year or lose $2.2 billion in federal funding, the stakes couldn't be higher.

"It's a very tough decision. If you go down this path (and build), you're committing the state to an unknown amount of money," said Elizabeth Alexis, a leading analyst on the project with Palo Alto-based Californians Advocating Responsible Rail Design.

In the works for two decades, high-speed rail will take center stage with the release of its final business plan Tuesday. It will feature new estimates on cost, funding sources, riders and just about everything else associated with the nation's biggest public works project. The plan's approval by the governor and Legislature would allow construction to start in the Central Valley by this time next year.

But the California High-Speed Rail Authority first will need to show it has a realistic shot at finding the money needed to complete the full voter-approved line, which would whisk passengers on the nation's fastest train from San Francisco along the Caltrain corridor en route to Los Angeles. Currently, the state has enough funding to build only a 130-mile section between Fresno and Bakersfield, too small to begin service.

Huge costs, little gain?

In a preview of the plan submitted earlier this month to lawmakers, planners said they hope the federal government gives California more funding, to be matched by state bonds, to extend the line to either San Jose or Southern California so train service can start.

But the federal spigot of high-speed rail funds was shut off this year and will drip only a minuscule amount of cash next year. If that trend continues and billions in federal funds don't arrive in the next several years, the rail authority says it would spend all its available money to finish the stretch of track in the Central Valley and then walk away from the bullet train project altogether — after a huge cost.

To build that first stretch of track, the state's beleaguered budget would be on the hook to repay $2.9 billion in bonds plus nearly as much in interest. The combined debt of $5.3 billion is more than the state's annual payment for both the University of California and California State University systems.

In addition, the debt-saddled federal government will have spent $3.5 billion — enough to run both the Drug Enforcement Agency and U.S. Marshals Service for a year.

In all, taxpayers would have paid out $8.8 billion to build the tracks, which would be used to provide a 45-minute shortcut for the 3,000 riders on Amtrak's San Joaquin line. Meanwhile, hundreds of properties lying in the way of the tracks, including farms that provide food throughout the state, would be wiped out.

"That's not what I bargained for when I voted for high-speed rail," said state Assemblyman Jerry Hill, of San Mateo, one of many Democrats who have been losing faith in the project along with Republicans who already oppose it. He said cutting health services and education to pay for those tracks would be like "abandoning a generation. It has to climb a major hurdle to justify the expenditure of more money."

But the rail authority still sees the first stretch of track as money well spent, adding it's not uncommon for major projects to get under way without the full funding in hand.

"It's not the perfect solution," said deputy director Lance Simmens. "But I can't stress enough how by proceeding like that, you are building something that has real value, has usefulness."

Killing project not easy

Yet it will be no easy task to cancel the project.

First, if costs stop rising and the funding materializes, the state's down payment to launch the project may prove to be a springboard to extend the first leg far enough to start service.

And perhaps most important to politicians: If California does not break ground on the rail line by this time next year, it will have to return more than $2.2 billion in federal stimulus grants, since the funds were tied to producing jobs quickly. For officials under fire to create jobs, turning back that much construction money would anger business and labor groups who have led the call to support the bullet train.

Scrapping the railroad would all but send $650 million down the drain, as the rail authority has spent that much planning the project since 1998.

Then there's the fact that voters already approved the project in 2008. But since then, the price tag has escalated by $12 billion, sources of funding have dried up, projected ticket prices have nearly doubled and expected rider counts have dwindled. In effect, the state isn't any closer to financing the project today than it was three years ago.

Contact Mike Rosenberg at 408-920-5705.

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