Shortage of Funds for Shorter California High-Speed Rail

California Governor Gavin Newsome recently said the new goal for California’s High-Speed Rail project would be to complete a 171-mile long section between Merced and Bakersfield.

The original goal objective was to link San Franciso and Los Angeles.

The current costs estimates for Merced to Bakersfield is $16 to 18 billion. However, this is likely underestimating the costs. There about 200 pieces of land that still need to be acquired. There are many other areas where cost overruns and delays are likely.

The federal government has terminated a $929 million grant for the project and is trying to clawback $2.5 billion. California will likely be able to prevent the clawback.

California has about $15.1 billion in funding assuming all of the Cap and Trade fees from now until 2023 are included. The High-Speed Rail project has been getting 25% of all the cap and trade money. This is about $400 to 500 million per year in fees.

Nextbigfuture predicted the failure of the San Francisco to Los Angeles high-speed rail project in December, 2018.

Even building the 171-mile Merced to Bakersfield line is a huge challenge. California has the money to build the shortened line. However, there are large political and project management challenges to completing and operating a Merced to Bakersfield line.

California state law requires that a rail line has to be able to operate profitably. There will need to be creative accounting to not allocate the likely end costs of $20 billion when calculating the operating profitability of the line.

SOURCES- Los Angeles Times, Auditor of the State of California

Written By Brian Wang, Nextbigfuture.com

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