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California’s Financial Disaster: The High-Speed Railway Project

The California High-Speed Rail Authority (CHSRA) was created in 1996 to improve California’s economy by constructing a high-speed railway (HSR) from San Francisco to Los Angeles. Although construction of the HSR began to take place as early as 2010, the HSR is still not complete. In their 2008 business plan, the CHSRA estimated that their project would be completed by 2030. However, their current business plan predicts the completion date to be in 2033. With billions of dollars spent and many incomplete sections, California’s HSR has become the country’s most expensive railway project. 

From the start, the CHSRA knew they would quickly run out of funding. Their 2008 business plan stated that due to their lack of funds, they would divide the HSR into different sections and build phases. There are two phases in total. Phase 1 is the main HSR project, and Phase 2 is the construction and connection of new/existing stations. Phase 1 of the project is split into different construction packages (CPs): CP1, CP2-3, and CP4. Currently, all CPs are incomplete, but CP1 and CP4 are closer to being completed than CP2-3. Phase 2 of the project is still a proposed plan and has yet to be fully projected financially in a business plan. 

Although the CHSRA’s initial plan had already split the railway into phases and CPs, the sectioning of the project was legally justified during the John Tos, Aaron Fukuda, and the Kings County Board of Supervisors v. California High-Speed Rail Authority case. A few rulings came out of this case, but the most significant was the standing that the CHSRA does not need to have financing, environmental clearance, and construction plans for the entire project. If the CHSRA built the HSR in phases while also meeting the requirements listed above for each phase, they would be in legal accordance. With their initial plan having legal backing, the CHSRA saw funding and bids from private companies, the state of California, and the federal government.  

In 2008, the CHSRA predicted the total cost of the HSR project would be $33 billion. Today, it’s estimated to be $113 billion. Hesitance to keep funding this black hole of a project comes from both private investors and the government. In 2021, California Governor Gavin Newsom asked the state legislature to release $4.2 billion in bond funds, which had been withheld by the assembly members, for the HSR project. The assembly members didn’t believe that the HSR project was the best way to spend most of the $9.9 billion in bond funds leftover from proposition 1A (2008). Eventually, the CHSRA was granted the $4.2 billion, and other California transit systems, like BART, were allocated a combined total of $3.65 billion in the yearly budget. 

As of right now, there are a few federal grant applications that the CHSRA hopes to receive, but their previous funding sources have started to slow down. Private companies are hesitant to invest and bid. The state of California is split on how to handle this transportation crisis. The public sentiment is broadly similar, the project has been awfully planned and political motivations will keep delaying any significant progress. Even though this entire project seems like a mess, too much money, time, and resources have been invested for all plans to stop now. Whether it takes ten years or twenty, California has no choice but to keep going until a high-speed railway connects San Francisco to Los Angeles. 

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