High-Speed Rail

A full-scale mock-up of a high-speed bullet train is displayed at the Capitol in Sacramento. (Rich Pedroncelli / Associated Press)

Ralph Vartabedian
March 18, 2016

The state has enough money to build an initial operating segment of the bullet train from San Jose to the Central Valley but faces major uncertainties about funding for the entire 500-mile system and whether the initial system will be profitable, according to a new report by researchers for the Legislature.

The California High Speed Rail Authority has identified the source of the $21 billion it says it needs for the first segment, said the report by the Legislative Analyst’s Office. But the project is $43.5 billion short of the total needed for the entire $64-billion, 500-mile link from San Francisco to Southern California, the report said.

The analysis was conducted on the rail authority’s revised business plan, which was released last month. Under the 2016 plan, the state would tap existing federal grants, the sale of bonds approved by voters in 2008 and greenhouse gas fees to build the $21-billion initial segment.

But funding for the rest of the project is unidentified, the report said.

Analysts noted that the use of greenhouse gas fees would extend only until 2020, when the fund-generating program is set to expire. The fees this year are providing an estimated $600 million for the project, and the rail authority ultimately wants approval to borrow against future fees.

The report also noted that state law will allocate an additional $400 million from the greenhouse gas fees that the Legislature previously borrowed for the general fund.

The rail authority’s business plan says private investors will eventually help fund additional construction for the full system, based on future profits from operating a partial segment. But legislative analysts raised concerns about that projection, saying “it is unclear whether the system will actually generate an operating surplus.”

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