Professor Bainbridge...on law, politics, religion, culture & food

No High Speed Rail Bond

The LA Times today endorsed Proposition 1A, the massive high speed rail bond:

It’s a tough time for more bonded indebtedness, but this $9.95-billion bond to build a high-speed rail system is forward looking and a good investment.

Wrong. Proposition 1A is a classic example of the sort of fiscal irresponsibility that has California in its current budgetary mess. Shikha Dalmia:

With credit markets in New York in crisis last week, California Gov. Arnold Schwarzenegger sent an extraordinary letter to Treasury Secretary Henry Paulson asking for $7 billion. Although the governor has since withdrawn that request, it testifies to the dire state of his budget.

Yet days before penning his note, the governor told an audience at the Commonwealth Club of California not to worry about the state’s budget crunch and to approve $9.95 billion in new debt on the November ballot to build a bullet train to connect Los Angeles to San Francisco: “Just because we have a problem with the budget does not mean people should vote ‘no’ on high-speed rail.” (A spokeswoman confirmed Monday that, despite the request for federal money, the governor still supports the initiative.)

Actually, the state’s budget woes should give votes pause—especially since high-speed rail is a fantasy that has as much chance of delivering on its promises of creating 450,000 jobs, vanquishing road congestion and lowering greenhouse gases as “Conan the Barbarian” had of winning the Oscar. ...

The California High Speed Rail Authority, the state agency overseeing the project, maintains that the Los Angeles to San Francisco line will be so lucrative that it will generate enough revenue to pay for its own operating costs, as well as much of the remaining network, with private investors and Uncle Sam making up the difference.

But there is little reason to believe such cost or revenue projections. The Rail Authority admitted recently that the new estimate of $45 billon is 50% above the original 1999 estimate of $30 billion and more than double what California needs to update and expand existing rails and roads, according to the Howard Jarvis Taxpayers Association.

An analysis by the Reason Foundation has found that even this figure understates the final price tag by about $30 billion because the Authority has not fully taken into account the added expense of building in the world’s most active geological zone and erecting sound walls to abate noise and other nuisances. This is not surprising since political authorities habitually underestimate the cost of megaprojects. Bent Flyvbjerg, a Danish researcher who analyzed 258 infrastructure projects around the world, reports in his book “Megaprojects and Risk: An Anatomy of Ambition” (Cambridge University Press, 2003) that rail projects on average cost 45% more than originally advertised.

Another rosy assessment comes in estimates of annual ridership. The Rail Authority says the trains will carry 65 million riders each year. But the Reason Foundation’s study gives a much lower estimate—23 million riders annually—after looking at Japan and France, which have the world’s strongest markets for rail. Neither country has achieved the kind of ridership California is predicting and both countries have far higher population densities in the cities served by their bullet trains than Los Angeles and San Francisco.

To attract riders, California’s rail will have to out-compete cars and airplanes by keeping a lid on commute times and fares. To keep commutes short, the state legislature has put statutory limits on travel times. The Los Angeles-San Francisco commute, for instance, is legally required to come under two hours and 42 minutes. This is probably impossible because it would mean that the train will have to post average (not potential) speeds of 200 miles per hour, something that has not been achieved anywhere in the world, even in places whose flat topography allows for far straighter routes.

I’ll be voting NO. Early and often.