California High-Speed Rail Update

Finishing the high-speed rail line from San Francisco to Los Angeles is now expected to cost $77.3 billion, says the California High-Speed Rail Authority’s latest cost estimate. This is a big jump from the 2016 estimate of $64.3 billion and an even bigger jump from the $25 billion estimated in 2000, which was the only one available when voters approved the project in 2008. Completion has also been pushed back from 2020 in the 2000 plan to 2029 in the 2016 plan to 2033 in the latest plan.

While the cost increase has gotten a lot of media attention, less noticed is the fact that this $77.3-billion plan is for trains that will go at “speeds exceeding 200 miles per hour” and “typically” take “under three hours” to go from Los Angeles to San Francisco. The 2000 plan called for trains going 220 miles per hour and taking two-and-a-half hours from LA to San Francisco.

Of course, 220 “exceeds” 200 and two-and-a-half hours is “under” three hours, but the softening of the language makes it clear that the authority doesn’t expect to meet the original 2000 targets. This is partly because of a 2013 law effectively limiting speeds in Santa Clara and San Mateo counties. A further quibble is that the “under three hours” estimate is for non-stop trains, and most trains “typically” won’t go non-stop.

To be fair, the authority’s estimates have shifted over the years from estimates adjusted for inflation to “year-of-expenditure” estimates. In the latter case, every delay to the project is going to cause estimates to rise. But even in constant-dollar estimates, the costs have nearly doubled.

The 2000 plan’s estimate of $25 billion was in 1999 dollars, which equals about $35.4 billion in 2017 dollars. The most recent plan’s estimate of $77.3 billion is in year-of-expenditure dollars, which equals about $67.5 billion in 2017 dollars. That’s a 91 percent increase in constant dollars.

Today’s estimate would be even more for a full 220-mph, 2-1/2-hour line that was promised in 2008. The last time the authority projected a cost of that line was 2012, when it was estimated to cost $74.5 billion in 2010 dollars ($83.5 billion in 2017 dollars). So the cost overrun for the as-promised-but-no-longer-planned system is at least 135 percent.

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Even if construction is ever completed, the authority’s problems are not over. The plan estimates 18 million to 32 million riders in the opening year of the full, Los Angeles-to-San Francisco line, rising to 32 to 55 million trips by 2040. Based on this ridership, the authority estimates that fares will cover operating costs. But Amtrak only carries 12 million trips in the Boston-to-Washington corridor, which has more people and a better central anchor (New York vs. Fresno), so even California’s low numbers seem optimistic.

Even if it could cover operating costs, that won’t be enough for long, because rolling stock and fixed infrastructure soon wears out, as Boston, Chicago, New York, San Francisco, and Washington transit riders know all too well. The plan includes a “life-cycle” analysis that estimates taxpayers will have to start injecting about $500 million a year (in today’s dollars) after around 2060 to keep the system moving.

Thirteen years late, 91 percent cost overrun, broken promises about speeds, and some people still think this is a good idea. One who does not is Quentin Kopp, who is known as the “father of California high-speed rail.” As a state senator, Kopp introduced the original legislation creating the rail authority. As the first chair of the authority, he led the campaign to pass the 2008 ballot measure that allowed the state to sell $9 billion worth of bonds to fund the project.

Yet now he says that the project’s slower speeds means that it will fail to collect enough fares to cover operating costs, which he had promised it would do in 2008. As such, he now “regrets” supporting the program.

In 2008, it might have been easy to believe that $9 billion was a good start on a $25 billion project, since the federal government might pick up another $9 billion and the rest could come from a variety of sources including private operators eager to profit from operating the line. But with the cost rising to $77-billion-plus for a project that won’t keep its original promises, with little prospect for more federal funding and no prospect for private investors, it seems likely that Kopp’s baby will be stillborn.