On The Money: Derailing The Bullet Train?

Will Voters Get a Re-do on High Speed Rail?

The cost of California’s bullet train is now projected to cost $100 billion – or more.

Some California lawmakers say California voters should get a re-do on High Speed Rail, after approving $9 billion in bonds four years ago.

But can the High Speed Rail Authority get the train back on track?

The new chairman of the Authority, Dan Richard, is optimistic he can turn things around.

“High Speed Rail is going to be a very important part of California’s future, “Richard told CBS 13. He added, “And yes it’s immensely difficult. Right now there are a lot of questions and a lot of critiques. Many of the criticisms are quite valid. But we still believe fundamentally that this is the right thing to do for the future of our state. “

To many High Speed Rail supporters, it’s all about jobs – as many as 100,000 new jobs they say in the next five years – with plenty of those in the Central Valley.

“It will help all the construction workers and put the economy back on track,” said Charles Bynum, an operating engineer from Sacramento.

But opponents want to de-rail the bullet train.

“It’s never going to get built,” warned Dan Logue, a Republican Assemblyman from Chico.

Critics call it a boondoggle because the cost of High Speed Rail has tripled since voters first approved the concept in 2008.

“The voters didn’t get the real story,” scoffed Doug LaMalfa, a Republican Senator from Butte, California. LaMalfa wants a re-vote because costs have skyrocketed from $33 billion to nearly $100 billion.

“The ridership was overly optimistic,” LaMalfa told On The Money. The Senator added, “There’s less people that are going to use it. The cost of a ticket is going to be at least double, maybe triple of what they were told.”

“It’s not at all true,” said High Speed Rail Chair Dan Richard.

The governor’s new appointee to the authority says he was put on board to build the train better, faster and cheaper.

“And so this is not some massive government program,” Richard insisted. “This is basically a true public-private partnership and the notion is that private sector companies that will come in and invest capital and operate the system.”

“So what’s your business model in terms of what the private sector would contribute to the project?” On The Money asked the Chairman.

”We think the private sector could contribute up to $20 billion dollars for the cost of the project,” he stated.

The business model calls for pricing the train fares at 17% less than a discounted plane ticket. The premise is that direct competition with the airlines will actually keep prices down.

Nevertheless the funding for High Speed Rail is increasingly risky, according to the state auditor.
Yet California – and the federal government – are plowing full steam ahead.

“We are committed to High Speed Rail in California,” said Ray LaHood on a recent visit to Sacramento. The U.S. Transportation Secretary added, “We have committed the most amount of money, $3.5 billion dollars.”

Add that money to the $9 billion California voters have already approved and it’s enough to start building 130 miles of track next year between Fresno and Bakersfield.

But with California state government in debt and a federal government deficit, how can the bullet train possibly get built?

“Well the answer to how it gets built is that it gets built in pieces,” said Dan Richard. The High Speed Rail Chairman added, “And we only start a piece when we have the money. And that’s the essence of the business plan.”

Richard told CBS 13 the additional funding could come from naming rights and other areas that could be auctioned off to the highest bidder.

“In Japan, one-third of the revenues from High Speed Rail come from the real estate development around the stations,” Richard told CBS 13. He added, “We don’t have those numbers yet in our business plan – or things like leasing the right of way for solar or fiber optic cable. So we’re really at the front end of exploring all the different things we can do to pay for this.”

The new chairman says High Speed Rail systems around the world actually make money without taxpayer subsidies.

But can it happen here in California?

The High Speed Rail Authority must convince the California legislature it can be done – with a new business plan that’s due in March.

More from On The Money
  • sacramentan

    A freakin waste of money!!! Annual cost to maintian it would most lilkey be in the billions.


    Of course the new Chairman of the Rail Authority is “optimistic” about this foolish bullet train. Does one think that Guv Moonbeam would have appointed someone to that post who would be otherwise? His (high-paying) job DEPENDS on this folly being built! No train, no job! He is probably hoping this job will be his last; that he will be able to retire and live off the taxpayers for the rest of his life.
    There is NO WAY that revenue from riders will ever come anywhere close to paying for the operation of this dumb project!
    If it was possible to haul passengers for a profit, the railroad companies would already be doing so!

  • sassafras

    They better start building quake proof double decker freeways instead of throwing money to the high speed railway Authority members, what a gross waste of $ for years now. Having jobs close to home would help with traffic problems also. Vote Brown out of office and disband the H S R authority and we won’t hear any more about it.

    • V0416

      I could not have said it any better. We need to get rid of Brown and the unions, and get on the right track. That is not the High Speed Rail Track.

  • kingsfan

    calif voters want it, the feds are putting money up for it. So why are 2 repub legislators going against the will of the people and all the jobs that will be created?

    • Ginna

      Because the people that voted for it weren’t looking at it logically. The POTENTIAL for jobs to be created is fine and dandy. The REALITY of how deeply in debt the state will go while trying to build it is not okay. Yeah, California could use a high speed rail line… just not yet. It’s equivalent to being $100k in debt and applying for a home loan of $300k and being approved. Yay! You have a house! Oh noes! You can’t afford that house!

      Same deal. This was a vote that could have waited til California was at least somewhat back on course in terms of budget and funds. Federal funds will only cover so much of the line.

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