California's ambitious high-speed rail project is nearing a critical financial juncture, with a recent report from the Office of the Inspector General warning that the California High-Speed Rail Authority could exhaust its available funds by December 2027. The project may require up to $9.5 billion in borrowing over the next five years to maintain its construction schedule.
Inspector General Benjamin Belnap's report stated that the authority's financial status has been presented in a way that hinders legislative oversight. "Obscured basic facts about the project, hindering lawmakers’ ability to provide effective oversight of the project," the report noted.
Critics, such as State Sen. Tony Strickland, have voiced concerns about the project's viability. "The LAO described the public-private partnership plan as ‘risky,’ highlighting the uncertainty of relying on uncommitted funding and the reality that public-private partnerships only work when viable funding sources exist," Strickland said, calling for the project to be halted.
The report also found that some of the authority's recent cost-saving measures are a result of scaling back the project's scope rather than improving construction efficiency. For instance, the Merced-to-Bakersfield segment has been reduced in length, and planned station locations have been altered.
These adjustments, the inspector general noted, do not represent increased efficiency but rather a reduction in the project's planned scale. Furthermore, financing costs for the Merced-to-Bakersfield segment alone could add between $3.6 billion and $6.6 billion in interest, costs not accounted for in the current $35.7 billion estimate.
The original projected costs for the full San Francisco to Los Angeles line have fluctuated significantly, with estimates ranging from $126 billion to $231 billion. The authority's current timeline also faces scrutiny, with the inspector general's risk analysis suggesting the Merced-to-Bakersfield segment could be completed as late as September 2034, a deadline officials warned might still be overly optimistic.
In response, the High-Speed Rail Authority issued a statement acknowledging the importance of oversight and partnership. "The Authority has fundamentally reoriented the high-speed rail project by moving into its tracklaying phase, while making real, measurable progress through strong collaboration with the private sector and our partners across the state," officials said.
The governor's office referred questions to the California State Transportation Agency and did not provide a comment. Assemblymember Alexandra Macedo criticized the project's financial situation, stating, "Gavin Newsom wants to run America? The guy can’t even run a railroad."