The New High-Speed Rail Dilemma
PERSPECTIVE-I’ve written several articles over the years critical of California’s high-speed rail debacle. The last one was in November 2017. I suggested that gubernatorial candidate Gavin Newsom might come to his senses and end the project. After all, he was once against it, but flipped lest he alienate his union supporters in the primary.
The election behind him, he did just that.
Sort of.
While effectively cancelling the biggest and most costly segments, he left the 150-mile Bakersfield to Merced connection untouched. Whether there will be enough funding to complete even that remains to be seen given the history of cost overruns and unreliable estimates.
I really do not think he cares. It is just to soften the blow to the project’s misguided fans and political allies who would have benefited from the money pit it was destined to become from the start. Governor Newsom will not be in office when even this segment hits the wall.
But let’s say it is completed.
There is yet another obstacle.
Proposition 1A stipulated that there could be no government operating subsidy -- federal, state or local; the train has to run in the black. One has to question whether there is enough of a market in the Central Valley to generate adequate revenue to cover the fixed costs, not to mention the marginal costs. It is not as if fares can be raised willy-nilly to close losses. There is an inverse relationship between ridership and fares.
So what will happen when the train cannot legally operate?
A federal bailout?
Regardless of who controls Congress years from now, the taxpayers in the other 49 states will not be receptive to propping up the product of California’s recklessness. They have their infrastructure priorities, too.
Before Newsom fully commits to the Central Valley line, he should engage reputable analysts free from political influence to fully understand the market there. Up until now, the focus has been on the ridership from each of the end points – The Bay Area and Metro LA.
CAHSR is now a short line with a different set of demographics driving it.
Don’t let politics get in the way.
(Paul Hatfield is a CPA and serves as President of the Valley Village Homeowners Association. He blogs at Village to Village and contributes to CityWatch. The views presented are those of Mr. Hatfield and his alone and do not represent the opinions of Valley Village Homeowners Association or CityWatch. He can be reached at: [email protected].) Prepped for CityWatch By Linda Abrams.
