Cost overruns threaten to bankrupt CA bullet train boondoggle
File this story under any number of headings: "Told ya so," "What did you expect?," or "You'd have to be brain-dead to have thought otherwise."
The bureaucrats in charge of building California's high-speed rail announced that the initial 119-mile stage of the project would cost $2.8 billion more than they thought just last year, up to $10.8 billion. The original estimate of the cost was $6 billion.
"The worst-case scenario has happened," said Roy Hill, who heads the consulting firm in charge of building the project.
The sharp increase in projected costs could require the California High Speed Rail Authority to return to the state Legislature for a supplemental appropriation from the bonds that voters approved in 2008. The remaining bonds probably would cover the cost increases, but partly deplete funds for further construction beyond the Central Valley.
The sobering news about the cost increases was long forewarned, though rail authority Chairman Dan Richard has consistently rejected those warnings. About a year ago, the Federal Railroad Administration issued a secret risk analysis that said costs were rising sharply and could hit $9.5 to $10 billion.
When The Times disclosed the warning, Richard downplayed the analysis. In 2012, WSP briefed a cost analysis for the 2014 business plan, showing sharply higher costs in the Central Valley. The cost estimates were not adopted in the 2014 business plan. Richard was not available for an interview.
It remains unclear how the Central Valley cost increases will affect the total program, which under the 2016 business plan is supposed to cost $64 billion. But the jump in the Central Valley – a 77% increase above the original estimate – suggests [that] the authority and its consultants have vastly underestimated the difficulties of buying land, obtaining environmental approvals, navigating through complex litigation[,] and much else.
According to Hit and Run, the costs for the total project have soared to more than $110 billion:
Assuming [that] the rest of the project saw the same budget increase, the whole project would skyrocket to more than $113 billion. And you probably shouldn't assume that the project's unexpected budget increases will scale at the same rate. The train's construction will get more challenging as it heads toward San Francisco and Los Angeles.
Or maybe "if it heads toward San Francisco and Los Angeles" is a better way to talk about the train's future. This boondoggle has been propped all along the way by Gov. Jerry Brown, who is entering into his final stretch as governor this year. He has been insistent in setting aside money to keep the project going even as more Democrats within the state have been increasingly concerned.
But as the Los Angeles Times notes, they may be a little shy about speaking too loudly. Vartabedian says Lt. Gov. Gavin Newsom, running to succeed Brown as governor, has declined for the past two years repeated requests to be interviewed about the high-speed train project's future.
Back in 2014, though, Newsom was more vocal and public when he reversed position. Like many institutional California Democrats, he supported the bullet train at first. But then once he recognized the costs growing out of control, he turned against it. He also said at the time that many Democrats felt the way he did, but few were saying so publicly.
That was before he announced he was running for governor, though. Newsom's acknowledgement tracks with observations by Reason's Matt Welch and former editor Virginia Postrel that the political class in California knew full well [that] this was all a fancy boondoggle designed to appeal those who glamorized zipping across the Golden State landscape in a shiny, superfast train.
Does Newsom still oppose Brown's train project? Or, assuming he becomes California's next governor, will he dip into the $13.5[-]billion "rainy day" fund and the state's surplus to try to keep the boondoggle going and the pockets of the train project's crony beneficiaries lined?
Not only incompetent government, but dishonest government as well:
From the very beginning, critics who analyzed the state's bullet train plan warned that the projections were way off. And deliberately so: The ballot initiative authorizing the train's construction requires that it not demand additional operational state subsidies, so there was a pretty significant incentive for the project's proponents to insist that it would be built within specifications.
Why do voters continue to fall for these lies? We see it time and time again at both the federal and the state levels: massive projects costing several times more than originally projected. The "Big Dig" in Boston was estimated to cost $2.6 billion when it was approved by voters. The eventual cost was $15 billion. The F-35 Joint Strike fighter plane was a whopping $163 billion over budget and seven years behind schedule. NASA's Webb Space Telescope – successor to Hubble – takes the booby prize. The telescope was supposed to be completed in 2011 at a cost of $1.6 billion. NASA now says Webb will launch in October – seven years behind schedule and at the incredible cost of $8.7 billion.
When cost estimates miss by 400-500%, there is no other explanation except government lies. This is especially true with the California high-speed rail project, whose estimates were challenged by dozens of experts even before construction began.
Bureaucrats will say they had no idea costs would skyrocket they way they did. But when almost everyone else knows otherwise, what other explanation is there except officials trying to pull the wool over the eyes of voters?
This bond issue that was on the ballot in 2008 passed with about 53% of the vote – hardly a ringing endorsement in the first place. You have to wonder what the results would have been if state officials had published the true cost of the project prior to the vote.