Feds Predict Cost Overruns for Calif. Bullet Train

SACRAMENTO, Calif. (CN) – The Central Valley section of California’s high-speed rail project could exceed cost projections by as much as $3.6 billion, according to a risk analysis performed by a federal agency.

The analysis, which was delivered to state officials in December and disclosed to the Los Angeles Times last week, found that the 118-mile stretch of railroad between San Jose and Merced may go over budget, according to analysis performed by the Federal Railroad Administration.

The finding has given critics of the transformative and expensive transportation project further reason to label the project as nothing more than a boondoggle that is frittering away taxpayer dollars.

However, the California High-Speed Rail Authority pushed back Tuesday, saying in a letter to the California Legislature that the risk analysis upon which the cost overrun assertions are based was an internal document used by staff to prepare for possible outcomes rather than an indication of where the project is currently.

“As part of our ongoing work with the FRA, we discuss program risks and what is being done to manage those risks,” the letter, signed by authority chairman Dan Richard and the CEO Jeff Morales, said. “In fact, some of the factors identified in the risk analysis were already determined to be inapplicable or overstated.”

Representatives for the Federal Railroad Administration echoed the sentiments of the state agency.

“Risk analysis is a standard oversight tool used on major capital projects – not just California,” administration spokeswoman Patrice Legrand said in an email.

She added that California is “on track to spend down its recovery funds.”

Critics have nevertheless pounced on the report, with some Republican legislators in the statehouse agitating for hearings and members of California’s congressional delegation demanding the project cease.

“This report makes one thing clear: California high-speed rail must be stopped immediately,” House Majority Leader Kevin McCarthy, R-Bakersfield, said in a statement Monday. “There have been repeated concerns that this project was a designed failure since day one, and what’s worse, this report underscores a pattern of falsehoods that has misled taxpayers on what this project might actually cost and how much more taxpayers might be on the hook for.”

The Central Valley was supposed to be the easiest section of the $68 billion network – which will eventually span from San Francisco to San Diego – to build, with the proposed completion date of Phase 1 slated for 2029. The section from San Jose to Shafter, just outside Bakersfield, is scheduled to begin running in 2025.

The project has also elicited controversy in its use of eminent domain and outrage from landowners and farmers in the Central Valley.

However, proponents point to the project’s economic benefits, citing two recently released federal reports that indicate the project will result in more than $200 billion in net economic benefits, produce more than 20,000 direct and indirect jobs and provide environmental benefits in terms of reducing car dependency that could diminish emissions on California’s crowded highways.

Construction from Madera to Wasco has already commenced.