Another $10-$14 Billion Needed to Fund High Speed Rail Line Bakersfield to Merced

The funding gap to complete the Bakersfield to Merced segment of the California High-Speed Rail Line grew on Monday following consultants to the project raising estimates from the original $7 billion gap to a now $10.2 billion gap.

According to the California High Speed Rail Project’s 2024 business plan, the first segment was on track to be completed between 2030 and 2033, with a total cost coming to $35.3 billion. However, in March, the California Legislative Analyst’s Office told lawmakers in an Assembly Transportation budget hearing that California High-Speed Rail needs $7 billion in funding by June 2026 or else the first Bakersfield to Merced leg of the system could be delayed further into the 2030’s. This was compounded by the federal government currently to pull the plug on $4 billion in funding, potentially raising the amount to $11 billion.

Last month, the leading solution to bridge the gap became private funding, with California High-Speed Rail Authority CEO Ian Choudri saying that the state may have to take out federal loans or issue new bonds if no private funding is secured. However, that amount was only for the original $7 billion gap. The increase in the gap on Monday means that the state now has to come up with $10.2 billion in 13 months time, along with the additional $4 billion in federal funding still up in the air. In total, the state is now looking at a $10.2 billion-$14.2 billion gap.

High speed rail officials named inflation as the primary reason for the increased budget gap, with the increased cost of materials including copper and concrete also playing a part. Despite their reasons, opponents bashed the huge increase on Monday, calling the project mismanaged and that there now needs to be serious talks in halting the project or selling it off for other companies to complete.

“The high-speed rail project continues to suffer from self-inflicted wounds, and I am extremely disturbed to learn about this latest information, which further erodes the public’s trust in a project as proposed will never be built,” said Senator Tony Strickland (R-Huntington Beach) in a statement. “Newsom’s lifeline of an annual $1 billion for the high-speed rail in his latest May Revise would never revive this mismanaged project. As vice chair of the Senate Transportation Committee, I urge my colleagues in the Senate to have a serious conversation on how we can discontinue this failed project as our state truly does not have the money to waste, and Californians are sensitive to government waste.

“This project as proposed is not going to be built, and now we’re spending billions and billions of dollars that we don’t have. After the $10.2 billion, if it goes forward, is more expensive than the whole entire project that was proposed to the people of California.”

$10.2 billion

In a follow-up interview with the Globe, Strickland then outlined what steps needed to take place next to officially end the High Speed Rail project, with moving the funds to other transportation projects across the state and letting voters decide on repealing High Speed rail being options.

“I urge my Senate Democrats to allow my bill, SB 94, be given a chance for reconsideration because my proposal would go toward lowering the gas taxes,” added Strickland. “If not SB 94 to offset the gas taxes, I think we should look toward transferring the HSR funds to proven transportation projects for LA with the upcoming Olympics and the World Cup, the BART, and the LOSSAN Corridor from Los Angeles to San Diego.

“The proposed high-speed rail that was initially sold to voters in 2008 has shrunken in scope and dramatically increased in costs. Perhaps it’s time to take it back to the voters and give them an opportunity to repeal the entire endeavor so that we stop wasting money as Californians are sensitive to wasteful spending.”

As of Monday evening, Senator Dave Cortese (D-San Jose), who is the chairman of the Senate Transportation Committee, had yet to respond to the Globe over the overrun increase. However Choudri said last month, following news of the $7 billion gap, that fixing it would be very difficult.

“We started this one, and we are not succeeding,” said Choudri last month. “That was the main reason for me to say, let’s go in, completely turn it around, and put it back to where it should have been. Fix all the issues, get the funding stabilized, and demonstrate to the rest of the world that when we decide that we want to do it, we actually will do it.

“In the ideal world, you can take the 500 miles, build it in your warehouse and then just drop it and everybody’s happy. But the programs are never built like that. You build incrementally and that’s what we’re doing right now. We are in talks with Gov. Gavin Newsom’s administration and state lawmakers on what will be needed to secure private investment. Without the private sector money the state may have to take out federal loans or issue new bonds.”

A new timeline for completion of the line was not announced, although it is very likely that segment completion will be delayed even further into the 203a0s. The added costs will also increase the total amount of the project close to $140 billion.