High speed rail will look to Sacramento for help. Will Newsom derail the project? | Opinion
California High-Speed Rail is the financial equivalent of a runaway locomotive heading straight toward the state Capitol.
The election of anti-rail Donald Trump comes just as the state hoped for the next federal administration to pay the vast majority of the estimated $6.5 billion necessary to complete the initial 171-mile segment between Bakersfield and Merced and launch service.
That plan must be called into question with the return of Trump, who is both an opponent of the project and just about all things Gavin Newsom. At the moment, the prospects of billions more from Trump to bail out Gov. Newsom seem as likely as an on-time Amtrak arrival.
That leaves one alternative.
“We definitely will be leaning toward looking at state funding,” said Natalie Daniel, the acting chief financial officer for the California High-Speed Rail Authority.
In railroading, coming close to building a line simply is not good enough. It is the difference between operating a service or just testing some track. Even some form of fiscal life support can be a death sentence in itself.
In one of his first acts as governor, Newsom focused on building this rail segment in the Central Valley rather than the full line between San Francisco and Los Angeles. “Let’s get real,” he said at the time.
For Newsom, things are about to get very real on high-speed rail. A refusal by the state to step in would mean he would own stranding more than $20 billion in previous state investments for a train to nowhere. Or he can try to find about $6 billion in the coming years by taking funds from something else, an effort that would be anything but easy.
For now, Newsom has been focused on more popular social and financial causes within California that push back on Republican orthodoxy.
In response to a conservative backlash toward female infertility treatments and in vitro fertilization in particular, Newsom has already championed legislation to mandate that all California insurers provide coverage for the treatments and procedures. Any additional costs for those covered by state insurance will become another burden on the general fund.
Then earlier this week, Newsom announced his intention to step in and have California provide rebates for the purchase of electric vehicles if the federal program under the Biden Administration gets scuttled by the new president and Congress.
“We will intervene if the Trump Administration eliminates the federal tax credit, doubling down on our commitment to clean air and green jobs in California,” Newsom said in a statement. “We’re not turning back on a clean transportation future — we’re going to make it more affordable for people to drive vehicles that don’t pollute.”
While the details of this plan aren’t fully baked, early indications are that proponents would look to a pot of money managed by the California Air Resources Board to pay for the rebates.
One of CARB’s signature climate change programs is to require certain major polluters to purchase credits as a way to compensate for their emissions. The Greenhouse Gas Reduction Fund, also known as the Cap and Trade program, produces in the range of $4 billion annually to meet various needs.
Adding a big electric vehicle rebate program into this program budget would displace something else. And that’s where the high-speed rail budget dilemma comes into play. Because this is the same pot of Sacramento money that the rail service has depended on. The rail authority will receive $1.1 billion from this state program in the existing fiscal year’s budget.
Daniel of the rail authority isn’t looking for less state money. She’s looking for more, as well as greater reliability. “We would also be looking for a guarantee that we wouldn’t have monies…redirected later by statute to somewhere else,” she said.
To get trains running in the Central Valley, the authority was banking on $4.7 billion in additional support from the federal government. Although some grant proposals are pending with the Biden administration, they do not add up to $1 billion, Daniel said. Any other last-minute funds would be outside an ongoing process.
The total needs for the additional funds are in the range of $6.5 billion. The direct costs to build this initial Central Valley segment are between $29.8 billion and $32.9 billion, or about $190 million per mile.
Already, Republicans are on the warpath in Washington to defund the project. Sierra Congressman Kevin Kiley, R-Roseville, has said he will introduce legislation to end any future stream of federal funding.
Newsom will have to show his hand no later than Jan. 10, when he is constitutionally required to propose the coming year’s state budget.
We’ve come too far to give up and allow a nearly complete valley rail system to stand forever idle as some monument to California dysfunction.
Newsom was right in 2019 to put a hold on the broader north-south rail ambition to focus on a piece that was achievable. It would be wrong to walk away now simply to fight Trump on issues that happen to be more popular
This story was originally published December 12, 2024 at 5:00 AM.