There is a new report on the cost overruns on the California High-Speed rail project. Those no longer matter. The project will not get any meaningful money to complete any useful part. I predict this project will collapse within four years. I am giving myself a bit of leeway in this prediction. I think it is likely the plug will be pulled on the project within two years. The exact timing depends upon the nature of Gavin Newsom’s and the California’s government’s retreat. Is the illusion of a project maintained in order to gain a position in the legal battles? The project is already a dead man walking.
Gavin Has to Kill It Because It Will Be Better for Gavin Politically
The new Governor Gavin Newsom has supported this in the past. As a new Governor, he has already started to walk away from it. I think the political calculus on this is clear. Newsom will toss this under the Caltrain. He cannot toss it under the high-speed rail because it will not be operating and will probably be too slow.
I think it works out best for Gavin if he kills it by the end of 2019, but there could be other legal and political reasons for the illusion.
There is no way Gavin goes for re-election with this zombie rotting corpse to be used against him by opposing Democrats or Republicans.
Details of the Financial Doom of This Project
The $12.7 billion they have in secured funding is not secure. The federal government will claw back $3.5 billion given to the project in 2010 under President Obama.
Once a 2022 deadline is missed for the first segment, then the Federal government will take back the $3.5 billion. Federal Republicans or Democrats will take the money back. There are some in California’s government who are hoping for a big Trump-Pelosi infrastructure deal to save them. Those people need to have blood tests for drug or alcohol abuse. I think the battle for the $3.5 billion starts before 2022.
The High-Speed Rail project has the fantasy that they will keep getting 25% of all the cap and trade money until 2050 for another $15.7 billion. This already gave them $1.7 billion. There is the lie that they need a total of $77 billion to get the whole thing done. They do not have all the land and they still have environmental lawsuits. It will not be completed for less than a $100 billion. It does not matter they will not even keep $12.7 billion.
Any money that they keep getting from Cap and trade will be less than the $3.5 billion that they will lose from Federal money.
There will be at least two major political and legal battles at the end. There will be battle for the federal government to take back $3.5 billion. Fair or not it does not matter. They will be looking to argue over some form of technical completion of a useless section of unused high-speed rail.
The other will be with the California voters and the lawyers who represent some of them. There will be the argument that the system is not in compliance with the terms of the $7.5 billion bond. The imagined system will not be built. There will still be a fight over how fast could it go. Could it reach the speed spelled out in the bond? This war has already started. The attempts to get the bond money back will not stop.