California bullet train project still lacks needed financing

Managers of California’s bullet train project announced what they termed an “historic milestone” last month: “the creation of more than 10,000 construction jobs since the start of high-speed rail construction.”

That takes a little explaining.

Government agencies that build public works projects and their contractors sometimes overstate economic impacts, nowhere more obviously than in claims of job creation.

Each day, according to the High-Speed Rail Authority, more than 1,000 men and women are working on the construction of an initial San Joaquin Valley stage of what is supposed to be eventually become a statewide system of very fast trains.

The HSRA says the 10,000 jobs number “is a comprehensive count of all construction jobs that have been employed by this project. This number takes into account laborers who have worked with one or more subcontractors and have held one or more job(s) on this contract. Most workers spend on average nearly 100 days on the job sites.”

Whether that explanation constitutes 10,000 jobs is open to some debate, although it certainly sounds impressive.

The celebratory press release quoted Amit Bose, who heads the Federal Railroad Administration, as saying, “Ten thousand jobs created is one of many milestones to come on this historic project, and the Federal Railroad Administration remains committed to strengthening state partnerships to advance even more progress and deliver the passenger rail benefits people want and deserve.”

However, it doesn’t mention that, a few days earlier, the federal government had rejected an application for a $1.2 billion in grants that the project needs if there is any hope of actually completing the San Joaquin Valley section between Merced and Bakersfield.

“There is no doubt that we want federal money, that we need federal money,” Brian Annis, the project’s chief financial officer, told the Fresno Bee.

The San Joaquin segment is being built with funds from a $9.95 billion bond issue approved by voters in 2008, a previous federal grant and some proceeds from the state’s auctions of carbon emission credits, but they are not enough. The 171-mile stretch is currently projected to cost $22 billion, roughly one-fifth of what the entire north-south system would need.

When the bond issue was being presented to voters 15 years ago, the total cost was pegged at about $40 billion with an assumption that federal funds and/or private investors would complete financing. Since then, the projected costs have risen steadily to more than $100 billion and officials have searched in vain for additional money.

Govs. Arnold Schwarzenegger and Jerry Brown were enthusiastic supporters. But when Gavin Newsom became governor in 2019, he was openly skeptical.

“The project, as currently planned, would cost too much and take too long,” Newsom said as he took office. “There’s been too little oversight and not enough transparency. Right now, there simply isn’t a path to get from Sacramento to San Diego, let alone from San Francisco to L.A. I wish there were.”

His critique was widely interpreted as a desire to cancel the project, but its supporters – particularly construction unions – ramped up pressure and Newsom quickly insisted that he wanted to not only continue construction but expand it on both ends to connect Merced with Bakersfield. He later overcame legislative resistance and appropriated the remainder of the 2008 bond issue to continue work.

Nevertheless, the bullet train’s fundamental problem remains: how to get enough money to complete the San Joaquin segment and find another $80 billion or so to make it a statewide system.

The answer may depend on what happens in national politics since generally Democrats support high-speed rail as a tool to battle climate change while Republicans oppose it as a boondoggle – and one of the more vociferous opponents is House Speaker Kevin McCarthy, whose hometown is Bakersfield.

(Updated on March 2 to reflect HSRA’s explanation of how 10,000 jobs was calculated.)