Walking away from the California high-speed rail project would be best for taxpayers and the state

It has been nearly 17 years since voters approved California Proposition 1A, which allocated $10 billion to the California High-Speed Rail Authority to build a new high-speed rail line between Los Angeles and San Francisco. The state says “approximately $13 billion” has been invested in the rail system, but taxpayers have nothing to show for it.  The high-speed rail project has been defined by mismanagement, exorbitant costs, and it’s time to pull the plug.

Current estimates say the high-speed rail system’s first segment in the Central Valley, connecting Merced and Fresno, may open in 2033, eight years from now and a quarter of a century after the 2008 Prop. 1A vote approving the project. The total estimated cost of the system is now over $100 billion.

At this point, it is almost universally agreed upon that it is doubtful, at best, that the high-speed rail line will ever reach the major metropolitan areas of Los Angeles or San Francisco. So, it is time to ask: How will the state wind down the project, and what should the California High-Speed Rail Authority do with the land it acquired?

First, the state needs to admit defeat. The Mercury News asked a team of 13 university economics professors and executives across the political spectrum if it was time to step away from the high-speed rail project. Twelve of the 13 said yes. The $9.95 billion approved in 2008 to start a rail project originally estimated to cost $33 billion was never realistic. As a Reason Foundation and Howard Jarvis Taxpayers Association study warned at that time, the original business plan underestimated costs, overestimated ridership, and lacked serious discussion of construction costs, train capacity, service levels, and possible speeds and travel times.

Further, for political reasons, the government decided that instead of the rail system running in a straight line between Los Angeles and San Francisco, or straight along I-5, it would veer off to run through multiple parts of the Central Valley. This was intended to build political support for the project in the region. But it increased the possible travel times, making them slower than promised, and almost doubled the cost. From there, the mistakes piled up. Rather than start with Los Angeles or San Francisco, places conducive to high-speed rail due to their large population, employment bases, existing urban transit service, and percentages of high-income workers, the state did the exact opposite, starting in the Central Valley.

Today, an orderly wind-down of the rail program would be most beneficial. Stopping the work is technically as easy as the California High-Speed Rail Authority ordering a pause on all construction activities. The state may have to pay some contractors a termination fee, but that is a fraction of the costs of completing the line.

California may also have to remove some of the tracks. Since the track is being built on state-owned right-of-way, the agency could contract with an outside entity to remove or sell it as is and let the new owners remove it. In the Central Valley, 44% of households are renters, often because there’s a lack of housing supply. Selling the rail project’s Central Valley land to homebuilders would allow the construction of many homes, which could help decrease housing prices across the region.

In walking away from the rail plan, the biggest cost will be that the state must raise revenue to pay off the bonds and the debt already accumulated from the project. Even if the project is canceled, the debt won’t be. But since studies show the train system would lose millions of dollars annually if it ever started operating, paying down the debt is still cheaper for taxpayers. It’s a painful choice for policymakers, but it is time to abandon California’s failed high-speed rail project.

A version of this column appeared in the Orange County Register.

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