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California high-speed rail cost estimate soars
November 2, 2011 / 7:40 PM / 6 years ago

California high-speed rail cost estimate soars

SAN FRANCISCO (Reuters) - The latest business plan for California’s proposed bullet-train system puts its cost estimate at nearly $100 billion, more than twice a previous estimate and a stunning amount of money for lawmakers who must decide whether to move forward with the project.

“Sticker shock is an understatement,” said state Sen. Joe Simitian, a Democrat and member of a legislative subcommittee on the system’s funding.

The California High-Speed Rail Authority said on Tuesday the project’s price is now seen topping $98 billion through 2033, well above a previous estimate of $43 billion.

The new price-tag also dwarfs the nearly $10 billion of debt approved by voters in 2008 to help finance the rail system, whose backers expect financial help to build the system from the federal government and companies through public-private partnerships.

Lawmakers, while wary, welcomed the new estimate. They had thought the Authority previously low-balled the projected cost and had pushed it to retool the business plan.

California’s leaders should feel they at least have a realistic forecast of what it will take to build a high-speed rail network connecting the most populous U.S. state’s far-flung metro areas, Simitian said.

“We’ve got a real number, but, boy, is it a scary number,” he said.

MORE JOBS, FEWER EMISSIONS

To offset that sense of shock, the rail system’s backers are stressing it would serve over the near-term as a jobs program. California has a double-digit unemployment rate and forecasters expect it will ease only gradually.

The Authority said on Tuesday that a bullet-train network across California would create 100,000 jobs over the next few years and “another 1 million jobs moving forward.”

The Authority is also trying to capitalize on other concerns for Californians, notably fiscal and environmental ones. It said high-speed rail would be a bargain compared with $170 billion over the next 20 years to expand highways, airport gates and runways -- each contrary to California’s efforts to combat global warming.

High-speed rail will reduce carbon emissions by more than 3 million tons annually, according to the authority.

The mayors of Los Angeles, San Francisco and San Jose welcomed the Authority’s new business plan and urged the state to get moving on building the planned high-speed rail network.

Governor Jerry Brown wasted no time embracing it. “The High-Speed Rail Authority’s business plan is solid and lays the foundation for a 21st Century transportation system,” Brown said in a statement.

ONE LINE AT A TIME

Others in the state capital of Sacramento responded cautiously.

“For too long, High-Speed Rail Authority officials trumpeted the dream, but showed little taste for confronting economic and political realities,” State Treasurer Bill Lockyer said in a statement.

“Authority officials are demonstrating a new commitment to having a more honest discussion with the public and policymakers about the costs, benefits and feasibility of the project,” he added.

The response in the legislature was mixed. Democrat leaders embraced the plan, but it rattled many rank-and-file Democrats and left most Republicans shaking their heads in disbelief, said Republican Sen. Doug LaMalfa.

“The more this stuff comes out, the worse it looks,” LaMalfa said, adding that he would introduce a bill to return the project to the ballot to try to get voters to scrap it.

LaMalfa’s bill would face slim odds in the Democrat-controlled legislature.

Simitian said lawmakers’ concerns about the cost estimate may ease as they work their way through the 230-page plan. He noted it offers an option for slamming the brakes on a statewide rail system by dividing its construction into individual projects that could stand alone, if needed.

“People have been saying ‘If you build it they will come,'” Simitian said. “What we’re hearing now from the High-Speed Rail Authority is ‘Let’s build a piece of it and let’s see if they will come.'”

The business plan said: ”With the state’s success in securing almost $4 billion in federal funding, the first step can be taken now. It will create jobs, obtain right-of-way, position the system for future expansion, and preserve options for future decision makers.

“The decision to move ahead with the initial step does not commit the state to proceeding with the full program,” it added.

Reporting by Jim Christie; Editing by Dan Grebler

Our Standards:The Thomson Reuters Trust Principles.
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