High Speed Rail Bonds Approved by California Voters

Proposition 1A, approved by 52.2% of California voters on November 4, 2008, authorizes the State of California to issue almost $10 billion in general obligation bonds to pay for part of an 800-mile high speed rail line between northern and southern California, which supporters hope could be built by 2020.

The California High Speed Rail Act, approved in 1996, established a seven-member High Speed Rail Authority and tasked it with developing a high speed rail system, which would run from San Diego to San Francisco and Sacramento. While developing alternative transportation systems is desirable, a number of uncertainties surround this project, including the following:

• Probable substantial construction cost increases. The original $25 billion cost estimate prepared in 2000 was later updated to $40 billion, which, given increases in construction costs and the dozen years (at least) needed to build the system, seems overly optimistic.
• Anticipated passenger revenues may be overestimated. Projections of $1 billion in annual operating profits are not credible.
• Uncertainty in securing other public funds and private investment. The $10 billion provided by Proposition 1A is a down payment. Proponents assume, but have no commitment for, similar amounts from private investors and federal transportation funds.
• Difficulty and expense in gaining access to needed, existing railroad rights-of-way. Union Pacific Railroad has rejected a request to share its rights-of-way with the HSR system. More land may need to be purchased, which would increase costs.

Proposition 1A did not target motorists alone for repayment of the bonds, so the Auto Club did not take a position on the measure.

For more information, including the recently released business plan for the high speed rail project, visit www.cahighspeedrail.ca.gov.