It never fails. The people who propose grand public project invariably start by giving us a projected cost that is, to put it mildly, unreliable. Then — guess what? — after the project is approved in principle, costs start going up. And up. Now it’s the turn of the California high speed rail folks to perform this familiar Kabuki routine. We learn from Ralph Vartabedian, Bullet Train Cost estimates Rise to $98.5 Billion, L.A. Times, November 1, 2011 (click here) that what started out as a projected cost of $34 billion went up to $43 billion in 2009. And that was just the beginning.
The nonpartisan California Office of Legislative Analyst estimates the true cost will hit $65 billion, and rumors have it that the Rail Authority’s engineering contractors have warned that the cost could go up to $78 billion. Now, the projected tab has gone up to $98.5 billion. But all California has on hand for that project is $9 billion in state bonds and about $3 billion in federal grants. Where will the extra money come from? Nobody knows, and given the threadbare condition of Uncle Sam’s purse, the chances of federal funding of the shortfall are between zero and nil.
One reason for the increased figures is that, believe it or not, those wonderful folks failed to give consideration to inflation in their original estimates. Also, they estimated the date of completion to be 2020, whereas now they are thinking more like 2030.
But wait, there is more. It also turns out that the high speed rail planners are now rethinking the route and may go back to the cheaper direct route of putting the railroad right-of-way alongside the Interstate 5 corridor, which would cross the Tehachapi Mountains at the Grapevine and bypass Palmdale whose officials want the raoilroad to go through their community and are vowing to fight the Interstate 5 route.
Finally, all these estimates were originally based on an assumed inflation rate of 2% through 2033, but that figure has now been raised to 3%. We should only be so lucky.