California High-Speed Rail Could Lose Hundreds of Millions Annually

Published April 23, 2013

The California High-Speed Rail Authority is overestimating ridership by 65 to 77 percent and will need $124 million to $373 million a year from taxpayers to cover its operating costs and financial losses, according to a new study by Reason Foundation.

In 2008, voters were promised a bullet train trip from Los Angeles to San Francisco in two hours and forty minutes. However, the Reason study finds the system’s fastest non-stop trip is likely to take nearly four hours — 3 hours and 50 minutes, and most trips on the system would take four hours and 40 minutes or longer.

Sharing tracks with freight trains in some locations, as the California High-Speed Rail Authority has opted to do in order to lower construction costs, would also reduce speeds to 100 to 150 miles per hour in those places.

The Rail Authority claims the train would make up for using blended tracks by going 220 miles per hour in other stretches. However, the study finds that no train in the world achieves those speeds at this time.

Fares Already Climbing

If the California rail system fails to deliver on its promised trip times, other problems would mount. Longer travel times would make the train less appealing to people who could opt to fly or drive. Lower ridership numbers would also prompt the need for higher ticket prices. In 2008, voters were promised fares of “about $50 a person.” Tickets are now expected to cost $81, which would further reduce ridership.

The California High-Speed Rail Authority has already dramatically downgraded its ridership estimates for 2035. In 2008, it promised voters 65.5 million to 117 million riders in 2035. Now it predicts 19.6 million to 31.8 million riders in 2035.

The Reason Foundation study finds, however, that even if the system managed to equal European train ridership levels it would hit just 7.6 million rides a year. Thus, ridership in 2035 is likely to be 65 percent to 77 percent lower than currently projected.

Taxpayer Costs Soaring

As a result of these slower travel times, higher ticker costs and low ridership, California taxpayers should expect to pay an additional $124 million to $373 million a year to cover the train’s operating costs and financial losses, the Reason Foundation study concludes.

“The California high-speed rail project cannot be delivered at the cost promised to taxpayers, is based upon a business plan incapable of delivering on its legal requirements, and is justified by proponents based upon unachievable benefits,” Wendell Cox, Joseph Vranich and Adrian Moore, the study’s authors, write. “The CHSRA’s financing assertions are virtual fantasy and represent additional evidence that its April 2012 Business Plan sorely fails the test of what constitutes a credible business plan. The taxpayers and the state would be best served by its immediate cancellation.”

Source: Reason Foundation