New California high-speed rail plan cuts cost

SAN FRANCISCO, April 2 (Reuters) - California officials on Monday unveiled a major overhaul of a controversial plan to build a high-speed rail system in the state, slashing the cost by some $30 billion, to $68.4 billion, and addressing other criticisms of the massive project.

The new plan must now receive a final blessing from the California High Speed Rail Authority before going to the state legislature, which has to approve the release of the first chunk of the nearly $10 billion in rail bond funds voters approved in 2008.

The state must greenlight the spending and sell the first of the bonds to obtain $3.3 billion in federal matching funds and start construction in the fall as planned.

Planning for the project has been sharply criticized after cost estimates ballooned to nearly $100 billion and the High Speed Rail Authority failed to quell opposition from communities that would be affected by the train lines, especially the wealthy suburbs south of San Francisco.

Governor Jerry Brown, a staunch supporter of the project, responded with a shake-up of the High Speed Rail Authority, which was then charged with producing a new business plan.

Under the new proposal, much of the initial spending would go toward upgrading commuter train tracks near San Francisco and Los Angeles rather than building separate lines. That approach is supported by local transit officials who see an opportunity to improve existing services.

The so-called "blended system" design could also mean increased travel times, though the new plan still projects a two-hour, forty minute travel time between San Francisco and Los Angeles.

The new plan also proposes an initial track - which would be the first high-speed rail corridor in the United States - linking the Central Valley town of Merced to the San Fernando Valley at the doorstep of Los Angeles.

The federal grant money requires that construction start in the farm-rich Central Valley, but the previous proposal to start by connecting two small Central Valley cities was widely ridiculed as a train to nowhere.

The plan proposes expanding the system with new tracks only when the legislature identifies funding for the work.

The plan notably proposes using revenue raised through California's new carbon trading system for reducing greenhouse gasses, which goes into effect this year and is expected to raise billions in revenue. (Reporting By Jim Christie; Editing by Jonathan Weber and Todd Eastham)