California’s High-Speed Spending Spree

Mike Brownfield /

The State of California keeps sinking into a deeper hole of debt, with reports showing that the state’s budget shortfall is projected to be $16 billion, up from $9.2 billion in January. But despite all the red ink, the state is still going ahead with a high-speed rail boondoggle that would cost billions.

The LA Times reports:

If California starts building a 130-mile segment of high-speed rail late this year as planned, it will enter into a risky race against a deadline set up under federal law.

The bullet train track through the Central Valley would cost $6 billion and have to be completed by September 2017, or else potentially lose some of its federal funding. It would mean spending as much as $3.5 million every calendar day, holidays and weekends included — the fastest rate of transportation construction known in U.S. history, according to industry and academic experts.

That $6 billion is for just part of the project, which has been estimated to cost as much as $98.5 billion. But note the perverse incentive to spend. California stands to receive as much as $4 billion in federal funds that have either been provided or set aside for the project. If they don’t complete it on time, the LA Times reports, that money disappears. Now the race is on to spend.

But all the spending is happening in a state that is already far in the red — and whose leaders are turning toward tax hikes in order to dig themselves out. Gov. Jerry Brown (D) is proposing a 0.25 percent increase in sales tax and an income tax surcharge on wealthy Californians to prevent him from having to cut spending. But that just means more money will be available to spend on projects like California’s high-speed rail.

When it comes to the bullet train, is it worth it? Critics have slammed the increasingly high projected costs and have questioned its usefulness (the LA Times reported that just one segment of the track, costing $4.15 billion, would essentially be a “train to nowhere.”) And generally, projects like these have long-term costs, a perpetual need for government subsidies, and wasted money from a lack of ridership.

In April, a congressional committee headed by Rep. Darrell Issa (R-CA) launched an investigation into the project. Issa remarked:

California high-speed rail was sold to voters as a grand vision for tomorrow but in practice appears to be no different than countless other pork-barrel projects — driven more by political interests and consultant spending than valid cost-benefit analysis. Before more taxpayer money is sent to the rail authority, questions must be answered about mismanagement, conflicts of interest, route selection, ridership and other risks.

Taxpayers should take notice. Government likes to spend without limits, and even “free money” from Uncle Sam has costs. California is a prime example of what happens when that spending runs unchecked and elected officials refuse to just say “no.”