California High Speed Rail: Wrong Plan at the Wrong Time

Amid market upheaval and an uncertain economic future, California voters will be asked to authorize almost $10 billion in state borrowing next month for a poorly-designed and financially risky high-speed rail network. That's equal to the $10 billion in borrowing from future lottery revenue needed to reduce further budget shortfalls starting next year. More perspective: the California Legislative Analyst's Office (LAO) projects the annual cost of servicing the debt on the high-speed rail bond at $647 million. That's more than the $510 million Gov. Schwarzenegger had to cut from this year's budget to make ends meet. Those cuts impacted programs to lower prescription drug costs and provide financial aid to elderly renters and homeowners. The money has to come from somewhere, folks.

I've surprised some with my opposition to the California high-speed rail plan, but there's a simple explanation: I can read a business plan. And this one is full of holes. We are supposed to believe that an 800-mile rail system through densely populated urban and suburban areas, national forests, mountain passes and high deserts can be built in 20 years for $40 billion. Heck, we've been trying to get the L.A. subway completed for 15 years, and that's only eight miles. The reality is that the high-speed rail project will take twice as long to build and cost two to three times as much as we're told. Proposition 1A will turn out to be a subprime mortgage on a sprawling, unfinished state-owned toy-train McMansion.

As the Pasadena Star-News wrote earlier this week:

We don't buy into the utter nonsense of the knee-jerk opponents who would be against this proposal no matter what. They call Proposition 1A "pork on a train" - but that's what they call any government expenditure whatsoever. A state that can't in good times invest in itself is a dying state.

But, the newspaper goes on to say:

Right now, though, when we need to find ways to simply balance our budget in order to pay teachers, keep health clinics open and operate other essential services, we're going to have to wait to get aboard this train.

I've been a leading advocate of passenger rail and public transportation, but this is the wrong plan at the wrong time for California. According to the state's LAO, "Over the past 12 years, the authority has spent about $60 million for pre-construction activities." What we've gotten from that, mostly, is a fancy Web site.

It's time to go back to the drawing board. Here is a way to move forward:

1. Start small. Plan for a route such as San Francisco - Sacramento or Los Angeles - San Diego (and not via Riverside) which has a ready market of intercity travelers and can be built at far lower cost. Show success, then build out a statewide system if it makes sense.
2. Engage private enterprise. The proven model in our country's history is for government to assist or undertake transportation infrastructure development and then allow private industry to operate it. California, with whatever federal assistance can be obtained, should fund the infrastructure and then contract with an operator to own, run and maintain the trains. The state should charge a fee to cover ongoing capital needs, and should enter into a long-term contract to encourage the operator to make investments in rolling stock, services and personnel.
3. No work should be undertaken on the project until a preliminary contract is signed with an operator. California taxpayers shouldn't be left holding the bag.

In the 19th century, we saw eager entrepreneurs ready to build railroads, spurred on by federal land grants. In the 20th century, we saw fledgling airlines and young trucking companies jumping at the chance to build transportation businesses as airports and Interstate highways were built. Here in the 21st century, we need to see private enterprise raise its hand. Unless there's a business case to spend billions of taxpayer dollars to build the California high-speed rail network, we should stick to Southwest Airlines.