by Haley Jensen, 3 October 2021 | Comments
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| Image source: Gary Coronado, Los Angeles Times |
Background
High-speed rail transit systems exist in several developed nations around the world, most notably in Japan. The United States has lagged behind these countries, not only in high-speed rail travel, but in railroads and public transportation in general. As of today, there is not a single high-speed rail system in America. There are many causes for this, many of them directly tied to the enormous cost of building such systems. In the wake of the Great Recession of the early 2000s, the federal government turned towards the development of rail travel as a possible way to kickstart the American Economy. The Passenger Rail Investment and Improvement Act of 2008 (PRIIA) and the American Recovery and Reinvestment Act of 2009 (ARRA) allocated approximately $10 billion towards the revitalization of American railroads and the creation of a high-speed rail system (Feinberg, 2016). These pieces of legislation created the High-Speed and Intercity Passenger Rail Program (HSIPR), which would be administered by the Federal Railroad Administration. The funding, disbursed by HSIPR, was to come in the form of seed money given to states to assist them in the development and construction of rail projects. Thirty-nine states submitted 500 applications for funding, which accounted for $75 billion in projects, far in excess of the $10 billion available (Feinberg, 2016). The state of California was one of the applicants, and received $3.9 billion in federal funds from HSIPR.
Discussions regarding the development of the California High-Speed Rail (CAHSR) began in earnest in 1996 with the passage of Senate Bill 1420, which created the High-Speed Rail Authority (High-Speed Rail Act, 1996). In 2008, Californians voted to pass Proposition 1A, or the High-Speed Rail Bond Measure, which “authorized the issuance of $9.95 billion in general obligation bonds [...] for the planning and construction of an 800-mile high-speed rail system connecting San Francisco to Los Angeles” (Ballotpedia, 2021). Legislators estimated the fiscal impact of this Proposition at approximately $20 billion and potentially $1 billion a year in operating costs. The language of the Proposition itself did not establish an estimated completion date for the project (Ballotpedia, 2021). Thirteen years later, not a single section of the track has been completed, billions more taxpayer dollars have been allocated to the project (in addition to billions in federal funding), and political debate continues to rage over whether the project should be completed at all. In this section, we will examine some of the political and fiscal challenges facing the CAHSR and we will explore possible future outcomes for this ambitious infrastructure project.
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| Image source: Office of the Governor of California via Streetsblog California |
Political Challenges
California Governor Gavin Newsom has struggled to find support for the CAHSR project on both sides of the political aisle. Legislators from both parties have expressed reservations about the continued funding of the project given the fact that it is both over-schedule and over-budget. Many of the political disputes surrounding the CAHSR are geographic. The original plan was for the system to run from San Francisco to Los Angeles. To date, construction has begun, but has not been completed, on a 171-mile stretch between Merced and Bakersfield, which comprises most of the Central Valley. This area of the state is rural, and much more sparsely populated than the major population centers of the Bay Area or the Los Angeles valley. In essence, construction began in the one area of the state where ridership is estimated to be the lowest (Garcia, 2021). This decision has seemingly caused a loss of political support amongst legislators who represent Northern and Southern California. Laura Friedman, mentioned above, has argued that taxpayer dollars would be better spent on local public transportation (Garcia, 2021). Many Republican lawmakers in California, in particular House Minority Leader Kevin McCarthy, support stopping the project altogether. McCarthy, who ironically represents the Central Valley where construction on CAHSR has at least begun, calls the project “a colossal waste of precious taxpayer dollars” (Rodrigo, 2019).
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| Image source: Robert Gauthier, Los Angeles Times |
Budgeting and Finance Challenges
According to the High-Speed Rail Authority, “the current cost estimate to deliver the 500-mile system linking San Francisco to Los Angeles/Anaheim via the Central Valley ranges from $69.01 to $99.9 billion” (California High-Speed Rail Authority, 2021). Funding for the CAHSR project comes from several sources. The original funding, amounting to $9.95 billion, for this project was authorized by Proposition in 1A in 2008. In 2009, the project received $2.5 billion in federal funding from ARRA as part of the federal government’s commitment to developing rail travel. The next year, “$929 million in additional federal funding was appropriated by Congress from Fiscal Year (FY10) Transportation, Housing and Urban Development funds” (California High-Speed Rail Authority, 2021). The CAHSR project did not receive any further funding until 2014 until the California legislature acted to provide a continuous revenue stream in the form of cap-and-trade funds.
The Cap-and-Trade program is an emissions trading program that aims to reduce pollution and greenhouse gases. It works by setting a cap on greenhouse gas emissions, and then creating and selling “allowances” that allow specific entities to emit those gases. To date, the program has brought in billions of dollars in revenue (California Air Resources Board, 2021). In 2014, California legislators “appropriated 25 percent of the annual proceeds from the Cap-and-Trade Program” to the CAHSR project, and in 2017, extended this funding through 2030 (California High-Speed Rail Authority, 2021). With the combined funding from both state and federal sources, the High-Speed Rail Authority estimates that they have “secured approximately one-third of the funds needed to complete the current estimated cost of the system” (California High-Speed Rail Authority, 2021).
Most recently, in early September 2021, Newsom and legislators met to discuss the High-Speed Rail Authority’s request for an immediate appropriation of “all the remaining money” from the 2008 bond (Vartabedian, 2021). Newsom threw his support behind the Rail Authority, but Assembly Transportation Chair Laura Friedman, a Southern California Democrat, argued that the Rail Authority should proceed with the money remaining in their budget, approximately $2 billion, rather than requesting the remaining bond funds (Vartabedian, 2021). Ultimately, the talks broke down without a decision made, and are scheduled to resume after the holidays in January 2022.
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| Image source: California High Speed Rail Authority |
Future of the Project
California’s high-speed rail continues to face substantial challenges, both political and financial. The continued funding from the Cap-and-Trade program will likely keep the project alive, but alone it will not be enough to fund the project to completion. It seems at this time that the future of the CAHSR project is uncertain. If the project is ever going to be completed, it will be quite some time before that happens.
Annotated Bibliography
Ballotpedia. (2021, June). California Proposition 1A, High-Speed Rail Bond Measure (2008). Ballotpedia. https://ballotpedia.org/California_Proposition_1A,_High-Speed_Rail_Bond_Measure_(2008)
This Ballotpedia entry succinctly summarizes California's Proposition 1A (2008), which authorized funding for the California High-Speed Rail project for the first time. This summary includes the language contained on the original ballot measure, a general overview of the position, the date the election took place, and a detailed account of the election results. The entry on Proposition 1A also contains important information regarding the timeline of major events related to the CAHSR project, specifically with regard to other instances of public funding for the project. Ballotpedia is a reliable and impartial online encyclopedia that provides useful background information on a wide variety of American political topics.
California Air Resources Board. (2021). Cap-and-Trade Program. ARB.ca.gov. https://ww2.arb.ca.gov/our-work/programs/cap-and-trade-program
This source is an informational guide on California's Cap-and-Trade program. This guide is published by the California Air Resources Board, the public agency that administers the Cap-and-Trade program. The summary of the program gives background not only on how the program works here in California, but also general information on how emissions trading systems work at their core. It was important to learn more about this topic given the fact that the ongoing funding of the CAHSR project relies heavily on the success of the Cap-and-Trade program. This source also shone a light on why the legislature would choose to apportion revenue from this program to the CAHSR. Both the CAHSR and the Cap-and-Trade program are committed to reducing the effects of climate change.
California High-Speed Rail Authority. (2021). Capital Costs & Funding. HSR.ca.gov. https://hsr.ca.gov/about/capital-costs-funding/
The California High-Speed Rail Authority's website contains a wealth of information about the history, future, and financing of the project. Their page regarding the Capital Costs and Funding of the CAHSR lists every major funding source for the project and a timeline of when past and future funding was received. The page also summarizes the total estimate cost to complete the project, estimates how much funding has been received, and how much more will be needed. This page is useful to anyone interested in learning more about how the CAHSR is financed and what it will cost to complete.
Feinberg, S. (2016, July 14). Lagging behind: The state of high speed rail in the U.S. House Committee on Oversight and Government Reform. https://oversight.house.gov/sites/democrats.oversight.house.gov/files/documents/2016-07-14%20Sarah%20Feinberg%20DOT%20-%20Testimony.pdf
This source is a written statement from Sarah Feinberg, given to the House Committee on Oversight and Government Reform, subcomittee on Transportation and Public Assets. Feinberg is the administrator for the Federal Railroad Administration (FAA). The statement was given on July 14, 2016. In this written statement, Feinberg argues that the United States has failed to keep their railroad system modern and efficient. She discusses at length the High-Speed Intercity Passenger Rail (HSIPR) Program, which is administered by the FAA. This program gives federal funding to applicants (usually states) that are working on high-speed rail projects. She closes by arguing that the country needs a modernized rail system in order to keep up with other developed nations. This source provides considerable background on the federal government's investment in rail travel, and also briefly touches on the funding given by the federal government to California for the CAHSR project.
Garcia, M. (2021, July 22). Bullet train budget battle: Should California spend more on urban transit, not high-speed rail? CalMatters. https://calmatters.org/politics/2021/07/california-high-speed-rail-funding/
This source is an research article published by CalMatters, a nonpartisan news outlet covering California politics. The article explores issues with the CAHSR especially with regards to its delayed construction and financial woes. Author Marissa Garcia speaks to several California legislators about their concerns with the CAHSR project and why they are hesitant to allocate additional funds to the project. This source provides insight into the political challenges facing the CAHSR, especially the waning support for the project on both sides of the political aisle.
High-Speed Rail Act, Cal. S.B. 1420, Chapter 796 (Cal. Stat. 1996). http://www.leginfo.ca.gov/pub/95-96/bill/sen/sb_1401-1450/sb_1420_bill_960924_chaptered.html
The High-Speed Rail Act of 1996 represents the state of California's first commitment to the construction of a high-speed rail system. Although this piece of legislation did not allocate any funding to the project, it did establish the High-Speed Rail Authority. The creation of this agency allowed for formal research, development, and planning of the project. The Act also discusses the need for high-speed rail as a way to provide much needed transportation infrastructure in the state. Legislators acknowledge in the act that the freeways, highways, and airports currently operating in the state will not likely be enough to support the population of the state as it continued to grow. Given that the state has grown exponentially since 1996, it appears that legislators were correct in that assessment. This source is highly significant to the CAHSR project because it represents the first real step towards making the project a reality.
Rodrigo, C. M. (2019, February 12). McCarthy praises California governor for abandoning 'train to nowhere'. The Hill. https://thehill.com/homenews/state-watch/429685-mccarthy-praises-california-gov-for-abandoning-train-to-nowhere
This news article discusses opposition to the CAHSR project from California's Republican legislators. In particular, it cites Tweets made by House Minority Leader Kevin McCarthy in which he refers to the CAHSR project as a "train to nowhere." The author also briefly discusses the history of the project and notes that the project has suffered from delays and cost overruns. This information provides important context regarding the political and financial challenges facing the CAHSR.
Vartabedian, R. (2021, September 3). Newsom and California lawmakers hit an impasse on financing bullet train. Los Angeles Times. https://www.latimes.com/california/story/2021-09-03/negotiations-on-california-bullet-train-funding-hit-an-impasse
Author Ralph Vartabedian provides thorough and well-written analysis of current developments and challenges for California high-speed rail. The Los Angeles Times is a reliable news source and Vartabedian's article covers the issues from several points of view. I relied on this source for information regarding Governor Gavin Newsom's recent support of the California High Speed Rail Authority's request for an apportionment of all remaining bond funds. The author of the article quotes several comments from the meeting that took place to discuss the request, revealing that legislators were not in support. The article also contains several compelling images of the construction taking place on the Central Valley span of the high-speed rail system.