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September 2012

California has a high-speed rail project

California’s state legislature authorized the first sale of $4.6 billion of the $9 billion voter-approved 2008 Proposition 1A High-Speed Rail (HSR) bonds. That matches and commits the state’s $3.4 billion federal HSR stimulus grant.

Indeed, 32 states are receiving federal HSR funding, 11 of which have Republican governors. California’s last four governors supported HSR; two Republicans and two Democrats. This non-partisan project has begun, so let’s step back and apply some logic.

Early cost projections
Certainly the California project suffered from a sequence of business plans that give the impression of increased costs. Most of those apparent increases result from two understandable phenomena.

First, the early cost projections were based on current-year (1998 or early 2000) fund values. The new projections are based on year-of-construction or 2029 fund values. That adds nearly 30 years of compounded cost-of-living fund value increases, about one-third of the total cost, but is more conservative and credible.

The second phenomenon was that early cost projections were based on average costs-per-mile not considering potential significant elevated or underground sections. Later, detailed planning with each community revealed that many desired elevated or depressed tracks, multiple times more expensive. So, the project costs increased to meet the communities’ desires, as should be the case with a world-class state’s transportation system. The result is the current $68 billion estimate for a 520-mile system from Anaheim via Los Angeles’ Union Station, the Central Valley, San Jose, and to San Francisco’s new TransBay Terminal. That cost-per-mile compares favorably with the other HSR projects around the world and quite favorably with the 427-mile, $151 billion proposed HSR Acela upgrade from Boston to New York; Philadelphia; and Washington, D.C.

Why not spend the HSR funds on education, health care and other threatened state programs? The HSR funds can be spent only on HSR. The $3.4 billion in federal stimulus funds, if not committed by the end of the year, will be returned and distributed to the other 12 designated national HSR corridors. The $9 billion in state Proposition 1A bonds were voter-approved only for HSR; use it for HSR, or lose it. Yet the investment of those billions right now converts the unemployed into local, state and federal taxpayers and rekindles the flagging local economy in the most economically devastated portion of California. President Roosevelt would be proud.

But the U.S. can’t afford it!
New England needs the Acela Corridor upgrade, as does California need HSR. How can every other industrialized country in the world, and many emerging countries, afford HSR, but the world’s richest country cannot? Over 30 HSR systems currently operate worldwide, most with a profit after operating and maintenance costs, with many more in planning or construction. Only the U.S. does not. And, not coincidentally, according to Tom Brokaw in the June issue of Discovery, the U.S. pays more than $5 billion per week to import foreign oil. And, according to the National Geographic, with only 4% of the world’s population, the U.S. creates nearly 30% of the world’s greenhouse gases.


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