California panel declares high-speed rail project “not financially feasible”

posted at 2:40 pm on January 4, 2012 by Ed Morrissey

When the California legislature undertook the most expensive public-works project in American history, they also created an independent review board to ensure that the LA-to-San Francisco high-speed rail project would have solid financial footing.  Perhaps they intended this panel to be a public-relations rubber stamp, but if so, it just proves that their miscalculations weren’t limited to cost projections.  Yesterday, the California High-Speed Rail Peer Review Group sent a “scathing” letter to the political leadership in Sacramento, calling the project’s finances and costs “fundamentally flaw[ed]” (via Andrew Malcolm):

In a scathing critique that could further jeopardize political support for California’s proposed $98.5-billion bullet train, a key independent review panel is recommending that state officials postpone borrowing billions of dollars to start building the first section of track this year.

Gov. Jerry Brown has said he will ask the Legislature in the coming months to issue the first batch of $9 billion in voter-approved bonds for a high-speed rail network that backers say will create jobs, help the environment and transform the state’s economy.

But in a report Tuesday, a panel of experts created by state law to help safeguard the public’s interest raised serious doubts about almost every aspect of the project and concluded that the current plan “is not financially feasible.” As a result, the panel said, it “cannot at this time recommend that the Legislature approve the appropriation of bond proceeds for this project.”

So who sat on this expert panel?  Amazingly, some actual experts:

The panel includes private-sector financial experts, a University of California dean of engineering, a former Caltrans director and a local government representative. Their warnings are likely to weigh heavily on lawmakers as they consider the project in coming months, said Sen. Joe Simitian (D-Palo Alto), a longtime supporter of high-speed rail who has grown increasingly concerned about the project. Simitian has raised the possibility of putting the entire project on hold for a year to reevaluate the current plan.

“We can’t simply dismiss the legitimate concerns by a group of this caliber,” Simitian said. “Denial is not going to move the project forward.”

The chair of the Rail Authority claims that the report is both misleading and “deeply flawed”:

Tom Umberg, chairman of the authority board, said in a letter to lawmakers that the report is “deeply flawed, in some areas misleading and its conclusions are unfounded.” He appealed to lawmakers to look beyond it as they reconvene for the year on Wednesday. “As the report presents a narrow, inaccurate and superficial assessment of the HSR program,” Umberg wrote, “it does a disservice to policy-makers who must confront these decisions.”

Of course, this comes from the same Rail Authority that initially predicted that the project would cost $33 billion, only to admit three years later that projected costs had nearly tripled to $98.5 billion … before ground had even been broken on the project.  Something tells me that between the Rail Authority and the CHSRPRG, the latter will have more credibility than the former with legislators who have to explain borrowing for a project when California can’t pay its bills now.

Will the panel’s report change the mind of Governor Jerry Brown?  Of course not:

Brown spokesman Gil Duran said in an e-mail that the Peer Review Group’s report “does not appear to add any arguments that are new or compelling enough to suggest a change in course.”

Hey, if Brown thinks that a project whose costs have tripled from their earlier estimates — the estimates on which voters relied when approving the project in 2008 — presents no fiscal problems, then why should he worry when the state-mandated review board tells him that the project can’t work?  Sounds like California’s political class has learned nothing from their financial travails of the last several years.  Voters, on the other hand, might have other ideas of fiscal sanity — and perhaps start cleaning house in the legislature in the fall before the legislature cleans them out financially for good.


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A 100 billion dollar payout to union labor is a liberal’s dream project. For the rest of Californians, they will have a high speed train directly to the unemployment line.

BigOil on January 4, 2012 at 4:29 PM

No, we need a highspeed train to Lost Wages (LV).

jake49 on January 4, 2012 at 3:46 PM

Strange, that’s what Harry Reid told them. But that route was determined to be a loser — especially after Amtrak stopped the Desert Wind service.

Additionally, Pres. Clinton vetoed double-tracking the route (which would have cleared up BNSF problems with passenger trains on the route) due to environmental concerns relating to the desert tortoise.

unclesmrgol on January 4, 2012 at 4:33 PM

For the rest of Californians, they will have a high speed train directly to the unemployment line.

BigOil on January 4, 2012 at 4:29 PM

might not need one after all, the unemployment line will easily link SFr to LA in the near future :-(…

jimver on January 4, 2012 at 4:34 PM

Liberalism’s atheism on display. Reject God = reject sanity.

leftnomore on January 4, 2012 at 4:35 PM

No problem… they’ll just have to adjust the price of a one-way ticket to compensate for the overages… $4,947 to get from SF to Oakland sounds reasonable.

mankai on January 4, 2012 at 4:46 PM

I can’t for the life of me see why this can’t be cost effective.
It would only cost $98500.00 for the first million riders. That doesn’t include operating expenses, cost overruns, ect…. Surely they can make this work…HAHAHAHAHA

buckeyerich on January 4, 2012 at 4:49 PM

Voters, on the other hand, might have other ideas of fiscal sanity — and perhaps start cleaning house in the legislature in the fall before the legislature cleans them out financially for good.

What, you mean California voters? Really??? Ed, you used to LIVE there, how could you write the above sentence with a straight face?

Don’t get me wrong, I hope you are correct, but I know you’re not and I think you know it too.

I got out of there in 1994 and I appear to be one of the more prescient ones, even though it was already a toilet then.

runawayyyy on January 4, 2012 at 4:51 PM

Me too. It’s much easier to watch this from a distance.

trigon on January 4, 2012 at 3:33 PM

I miss the rest of the family (including the in-laws, oddly enough), but that wasn’t reason enough to stay and unwillingly continue to participate in economic hari-kiri with the increasingly dysfunctional majority electorate of the state.

It’s become pretty obvious that even a best-case fiscal sanity scenario is going to take 20 years plus for the state to pull out of the mess it’s in …and I ain’t got 20 years of job productivity left.

As it turns out though, non-California weather (i.e., cold & snow), is kind of nice after all (I’d never lived anywhere but California, so I was a bit apprehensive about snow). My first white Christmas ever, whoo-hoo.

davisbr on January 4, 2012 at 3:46 PM

I miss my friends. Most of my family is gone or already moved out. I’m down in East Texas, so there hasn’t been any snow. Yet. So far, I’ve actually enjoyed the weather. I guess we’ll see about that when summer rolls around.

trigon on January 4, 2012 at 4:56 PM

Yesterday, the California High-Speed Rail Peer Review Group sent a “scathing” letter to the political leadership in Sacramento, calling the project’s finances and costs “fundamentally flaw[ed] transformed

Oh yeah….

BobMbx on January 4, 2012 at 4:56 PM

IF they can find someone to buy the bonds what interest rate will they have to pay on the bonds?

marinetbryant on January 4, 2012 at 5:22 PM

High-speed rail is not a grand solution to America’s congestion and mobility problems, as it is often alleged to be. While high-speed trains in Europe and Japan are technologically impressive, nearly all the routes in those jurisdictions lose money and need large subsidies to stay afloat. America’s geography is even less suited for a successful high-speed rail system than Europe or Japan because our cities are less dense and spaced farther apart.

Sigh… when will libtards realize THIS AIN’T EUROPE?

FlatlanderByTheLake on January 4, 2012 at 5:35 PM

So the projected costs have only increased by 100% per year, big whoop!
/

Metal Head on January 4, 2012 at 5:48 PM

You know, this high speed rail concept could work, with a few design modifications:

Instead of building the track from L.A. to S.F., just run a thousand feet of track off the Santa Monica pier and Pier 39 in S.F., out into the ocean. Load the trains full of liberals, democrats, progressives & illegals….full speed ahead.

Governor Moonbeam, the state legislature and the union leaders can all ride on the ceremonial first train. The rest of us can stand on the pier & cheer.

MichaelGabriel on January 4, 2012 at 5:58 PM

I always hear the complaint about illegals…that they should stay in their country and try to make changes before running away to the U.S. Same goes for California. We shouldn’t run off and leave this beautiful state to the unions and illegals. This is still the United States the last time I checked…we need to act like it.

Ditkaca on January 4, 2012 at 3:47 PM

This x 1000!

(CA native)

Mary in LA on January 4, 2012 at 6:03 PM

You people just don’t understand.

China has a high-speed rail. That makes them look better than us. So WE need to have a high speed rail. See….that shows that America is a leader and our President is forward-thinking. It’s THE FUTURE!

If it’s good enough for Beijing, Canton, and Fouzhou…isn’t it good enough for America?

rbk2000 on January 4, 2012 at 6:33 PM

Brown spokesman Gil Duran said in an e-mail that the Peer Review Group’s report “does not appear to add any arguments that are new or compelling enough to suggest a change in course.”

In other words, the Governor has already ignored these problems so there’s no point in an independent panel of experts reaching the same ignored conclusions.

Gee, Governor, if a consensus of experts is unconvincing in the case of high-speed rail, how come that same consensus is undeniable in the case of Global Warming?

Socratease on January 4, 2012 at 6:55 PM

Voters, on the other hand, might have other ideas of fiscal sanity — and perhaps start cleaning house in the legislature in the fall before the legislature cleans them out financially for good.

Don’t bet on it. California is the same state that keeps re-electing Nancy Pelosi and Barbara Boxer.

SoulGlo on January 4, 2012 at 7:39 PM

California will be the next Greece. It’s going to happen. It’ll break off and fall into the ocean from the weight of its own debt and mismanagement.

I’m a native and it sickens me to see how my home has fallen so far from when it was known as ‘The Golden State.’ The Legislature and a series of stupid governors have spent the last 30 years destroying it and creating a welfare state for illegals that do nothing but drain its resources, leaving nothing but a desiccated husk. With businesses and (tax-paying) residents fleeing the state, California will be a high-tech dustbowl within 10 years, an unfinished, abandoned high-speed rail system serving as the headstone for its collapse while the illegals, their patrons in the Legislature,(along with the US Congress) and the idiots who keep voting them into office, all wonder where it went wrong.

I gotta get out of here.

Dave in San Diego on January 4, 2012 at 8:09 PM

I still believe we can solve a lot of problems, like the California High Speed Rail project, by simply requiring all public officials supporting such projects to issue personal guarantees on the budget of such projects; these guarantees would be nonterminable even in bankruptcy and be binding on their parents, children and grandchildren (just like the bonds). Somehow, I suspect forcing them to submit to personal liability might reduce their enthusiasm for these types of projects.

Over50 on January 4, 2012 at 8:12 PM

OK, I know this is a dead thread, but just to put in my $0.02 (that’s a whole lot less than the high-speed rail cost):

$98.5B construction cost

Assume the train is good for 20 years, at 365 days per year for that train (no maintenance, no operating costs, just construction cost amount):
$13.5 Million dollars per day over that 20 years needs to be recovered

So, at a cost per ticket of the following amounts, the following numbers of people need to ride the train on average per day over the next 20 years. Note: this is an average that would require that number of people, all day, every day 24/7/365:

$500 / ticket 26,986 people per day or 1124 people per hour
$250 / ticket 53,972 people per day or 2248 people per hour
$100 / ticket 134,931people per day or 5622 people per hour

Also note: this is just to pay for the initial cost of the train with an expected lifespan of 20 years. It does not pay for maintenance, upkeep, or operating costs. That’s a baseline number that have to be passengers just to pay the original cost.

I may be a rocket scientist, but it doesn’t take one to run the numbers and see that they just don’t work.

As an added sanity check, let’s make the outrageous assumption you get 100 people per train car, that says the following numbers of cars have to be in motion 24/7/365:
$500/ticket 112 cars (maybe do-able for two-way track, 56 cars going both ways)
$250/ticket 224 cars
$100/ticket 562 cars
That’s not looking very reasonable

… and this doesn’t even take into account load factors, queuing theory or any other real-world assessments that account for the fact that human behavior is not evenly spread over all hours of the day, every day of the week, all year. That would start looking even uglier.

AZfederalist on January 4, 2012 at 9:15 PM

How about if they build a series of giant slingshots. Wouldn’t that work and be cheaper?

Mr_Magoo on January 4, 2012 at 9:27 PM

If the Chinese can’t make a HSD profitable with their population density and lack of adequate roads, how is California going to make this sele-supporting?

Yeh I know; just shut up and enjoy the train wreck.

KW64 on January 4, 2012 at 10:30 PM

This will be the moment of truth for California. If they sober up and bow to the reality that this HSR project is far beyond financial possibility, there will be hope they can right the ship. If they take the swan dive into fiscal madness instead, we’ll know that the lunatics are firmly in charge and that it’s just a matter of time before the state slips ‘neath the briny.

Jeffersonian on January 5, 2012 at 9:05 AM

“is not financially feasible.”

Duh. We have been saying that since the first dum dum proposed it !! We didnt need a stupid PANEL to tell us that.

TX-96 on January 5, 2012 at 9:18 AM

They need to make the rails from Rearden Metal.

Dasher on January 5, 2012 at 9:20 AM

Comment pages: 1 2