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Will California bite the high-speed rail bullet?


1 July 2012 Last updated at 17:05 from: http://www.bbc.co.uk/news/business-18173394

.Will California bite the high-speed rail bullet?  By Kaitlin Funaro


Map of the US showing proposed lines

A high-speed railway network in the US could bring jobs and economic growth

Central Valley, California
High-speed rail requires massive upfront investment, which is difficult to attract during an economic downturn
Farming communities in California's Central Valley may soon have to make way for the high-speed revolution if rail supporters have their way.

A $68bn (£43bn) bullet train is set to run through dairy farms and grapevines, whisking passengers between Los Angeles and San Francisco in two hours and 40 minutes.

"What is so great about trains is the ability to move large numbers of people efficiently, comfortably, safely, environmentally-responsibly and we can do it price-competitively," says Tom Richards, vice chairman of the board of the California High Speed Rail Authority.

Though the project could still be derailed by financial challenges.

Close to collapse
In 2008, California voters agreed that almost $10bn could be borrowed via the bond market to start constructing a bullet train. 

"One of the reasons why this particular project is so troubling is it doesn't have a dedicated revenue source”
Lisa Schweitzer
University of Southern California
 Yet, nearly four years later not one foot of track has been laid and the entire project is on the brink of collapse.

This is because the funds from the bond issue will not be released until the California legislature approves a plan for the high-speed rail.

Massive upfront investment is hard to raise at a time when California faces an unprecedented budget deficit, which has ballooned to $16bn from $9.2bn in January.

Critics say California simply cannot afford to spend billions in taxpayer funds to build the train, so the plan has encountered much resistance.

'Train to nowhere'
A high-speed railway network in the US could bring jobs and economic growth The fact that the bullet train's original price tag has soared does not help.

Originally, it was $40bn, though it soon shot up to almost $100bn, before coming down again by about a third after a revised, more modest plan was released in April.

According to the plan, workers would soon break ground on the initial 130 miles of track that Mr Richards calls the backbone of the system.

This first phase of the bullet train would then run in a low-population part of the state, connecting Los Angeles to rural parts of central California.

This lack of a major transport hub has led some critics to call it the "train to nowhere" - raising further doubts about the latest plan's viability.

"It puts the first critical dollars in one of the lowest ridership areas of the state," says California State senator Joe Simitian, chairman of the budget subcommittee on transportation.

"We probably have one million commuters in that area, and we have 28 million riders in the northern and southern parts."

Access for all
But all is not lost, high-speed rail supporters say, as rail travel is becoming more popular across the US.

Amtrak, the nation's largest passenger rail service, had its best year yet in 2011, with 30 million passengers.

And in last year's State of the Union address, President Barack Obama said the US should catch up with the rest of the world.

"Within 25 years, our goal is to give 80% of Americans access to high-speed rail, which could allow you go places in half the time it takes to travel by car," he said.

"For some trips, it will be faster than flying, without the patdown."

Funding gap
 Continue reading the main story

Start Quote
Now that we're going to make the decision to spend billions on shovels in the ground, it's time for a reality check”
End Quote
California Senator Joe Simitian
Chairman of the budget subcommittee on transportation
 Set against such optimism, it is discouraging for California's rail supporters that several other US states have decided against building bullet trains, even with federal help.

Governors in Florida, Wisconsin and Ohio have returned hundreds of millions of stimulus dollars offered to build high-speed rail lines.

In California, meanwhile, no more than $3.3bn federal stimulus dollars have been earmarked for the high-speed rail project, leaving a large funding gap that has yet to be filled.

"What we're really arguing about right now is $3bn from the federal government," says Lisa Schweitzer, transit policy and planning expert at the University of Southern California.

"The reason this particular project is so troubling is it doesn't have a dedicated revenue source.

"When we decided to build the interstate highway system we had a new tax, the Gas tax. This created a nice big fat pot of money.

"[The bullet train] project doesn't have a big pot of money. It doesn't have it at the federal level, it doesn't have it in California."

Urgent decision?
Mr Richards acknowledges that funding for the entire $68.4bn budget has not been secured, but insists that that is standard procedure for a big infrastructure project.

He is confident that the budget will be met through private investment and federal funds, though to help pay the bills would like to see a quarter cent sales tax increase.

The Obama administration recently dispatched Transportation Secretary Ray LaHood to California to urge the legislature to approve the plan.

The future of America's first bullet train will soon be decided. The Senate is expected to vote on whether to issue $6bn in bonds later this week.

Hence, workers may start breaking ground soon.

Senator Simitian and others in the legislature are unhappy about the timeline being rushed.

"Now that we're going to make the decision to spend billions on shovels in the ground, it's time for a reality check," he says.

"And it's time to make sure we give that decision the care and consideration it requires."

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