Friday, August 19, 2011


While driving to the central coast a few weeks back, I often wished that some of the state fundsemployed over the last decade on mass transit schemes would have been used to repair or widen the roads connecting Menifee and San Luis Obispo.

Perhaps in answer to my starless wish, it now seems increasingly likely that more rational cost estimates may derail the high-speed San Francisco to San Diego boondoggle whose initial funding was authorized by 52.7 percent of California voters in 2008.

The most recent construction “guesstimate” just for the Merced to Bakersfield rail-to-nowhere section came in at 10 to 13.9 billion dollars—40 to 95 percent above the prior 7.1 billion figure. Considering the trajectory of this preliminary revision, the final project could cost anywhere from 80 to 200 billion dollars.

Earlier this year State Treasurer Bill Lockyear, the fellow charged with selling California’s high-speed rail bonds, observed that private investors have exhibited no real interest in purchasing these bonds absent a sound business plan. Indeed, Lockyear even acknowledged that he himself agreed with investors who felt the folks in charge of the project don’t know what they’re doing. Said Lockyear, “We don’t have a plan that makes sense.”

As more realistic cost estimates come in, the rapid-rail “business plan” seems to bear a mega-expensive price tag that will never be largely picked up, as hoped, by private investors, the federal government, and those who ride the choo-choo.

A prescient report last month by three Bay Area financial experts observed that megaprojects of this sort have a consistent record of cost overruns. Sixty percent is just the rail average. However, if the bullet train performs as badly as the San Francisco-Oakland Bay Bridge project, the final price tag would be more than five times present cost estimates or around $247 billion.

On the bright side, Boston’s Big-Dig came in with a comparatively modest 300% cost overrun—a ratio that would put California’s high-speed bottom line at over 130 billion.

Another low-balled item has been the price of bullet train tickets, which have already been revised sharply upward. Among items likely overestimated in early scenarios are ridership and ridership revenue.

Amazingly, even Democrats in the California legislature have begun to question the wisdom of proceeding with this high-speed rip-off. Senator Alan Lowenthal, a past supporter of the project, recently acknowledged that “we really need to re-examine what we’re spending and what we’re going to get for it.”

Put more accurately, legislators need to scrutinize the project carefully for the first time—and then, as
Rep. Diane Harkey has been urging, scrap it.

No comments: