Solyndra Times Seven: Why California’s High-Speed Rail Project Is an Even Greater Waste of Federal Tax Dollars
The national media have devoted plenty of skeptical attention to California’s bullet-train boondoggle—from the ballooning cost of the California High-Speed Rail Authority project to its shoddy management to the baffling decision to build the first segment in the lightly populated Central Valley. But the press has yet to focus on a crucial fact: the bullet train isn’t just some quirky Left Coast fiasco; it’s also a grotesque waste of federal money. The project serves as a powerful reminder of the Obama administration’s mishandling of the $787 billion stimulus that Congress passed in February 2009 with solemn assurances of prudence and accountability. The bullet-train project, in fact, can be thought of as “Solyndra times seven”—that’s how far its costs outstrip those of the much-touted Bay Area solar panel manufacturer that burned through $528 million in federal loans before declaring bankruptcy and folding last September.
In California, the federal government is committed to spending $3.5 billion—with most of those dollars coming from the 2009 stimulus—for a project whose problems are glaring. State officials are trying to remake the bullet train on the fly, promising at a legislative hearing in Silicon Valley to implement changes that would bring down the cost and speed up construction. But none of those changes alters the fact that the bullet-train project appears clearly to violate federal regulations governing stimulus spending on transportation. The rules, published in the Federal Register on June 23, 2009, require that applications for stimulus funds to build high-speed rail projects would be approved only after “rigorous analysis,” factoring in a careful examination of the proposed project’s “financial plan (capital and operating),” “reasonableness of financial estimates,” and “quality of planning process.” Grant recipients would make regular progress reports, corroborated by Federal Railroad Administration audits. Even the most cursory analysis shows that the California bullet train falls far short of compliance with the rules.
State auditors, the University of California’s Institute for Transportation, and an ad hoc peer-review committee appointed by the legislature all lambasted the project’s financial plan as incomplete, overly ambitious, and based on unverifiable numbers. In January, the peer-review group issued its assessment: “We cannot overemphasize the fact that moving ahead on the HSR project without credible sources of adequate funding, without a definitive business model, without a strategy to maximize the independent utility and value to the state, and without the appropriate management resources, represents an immense financial risk on the part of the state of California.” The peer review followed a damning analysis published in November by the state’s nonpartisan Legislative Analyst’s Office, perhaps the most respected agency in Sacramento, which concluded that rail officials had yet to address how to fund the (at least) $98-billion-system linking Los Angeles and San Francisco.