California high-speed rail costs criticised

An independent panel has claimed that a plan to construct a high-speed rail network in California is not financially feasible and poses a huge risk to the state's finances if it goes ahead in its current form.

The California High-Speed Rail Peer Review Group (CHSRPRG) - which was appointed by the state legislature to analyse funding for the rail system - criticised the California High-Speed Rail Authority's (CHSRA) funding and business plans for the mega infrastructure project.

A new CHSRA business plan released in November put the cost of building the state's proposed new rail network at between US$ 65.4 billion and US$ 74.5 billion for the first phase. The previous estimate was US$ 36.4 billion in 2010.

The peer group pointed out that there was no existing funding sources at any level of government that could credibly fill this gap.

CHSRPRG chairman Will Kempton said, "There is no High-Speed Rail funding in the federal full-year 2012 budget, and CHSRA admits that committed federal funding for the period of 2015 to 2021 is not fully identified."

He warned that, without committed funds, a mega-project of this nature could be forced to halt construction for many years before additional funding could be obtained, and added that private sector interest would also stall until the full public role was defined.

"We are not optimistic that this situation will change in the foreseeable future," he said, emphasising that moving ahead with the project without credible sources of funding would represent "an immense financial risk on the part of the State of California."

CHSRA defence

However, the CHSRA defended the plan and described the peer review as "deeply flawed".

CHSRA chairman Thomas Umberg said that while the Authority took legitimate criticism seriously, including the need to employ more workers in order to start construction on the project on time, he added, "what is most unfortunate about this report is not its analytical deficiency, but that it would create a cloud over the programme that threatens not only federal support but also the confidence of the private sector necessary for them to invest their Dollars."