California's Newsom Scales Back Plans for High-Speed Rail Line

(Bloomberg) -- California Governor Gavin Newsom indicated he is scaling back plans to build a high-speed railroad between Los Angeles and San Francisco and will instead focus on completing one segment of the train line that falls far short of the project’s original goals.

The state will finish roughly 120 miles of track already under construction in the Central Valley, a mostly rural agricultural region that runs down the spine of the state, Newsom said Tuesday in his first State of the State address to legislators, noting there “simply isn’t a path” for the full line. He moderated the tone in a subsequent Twitter post, saying he’s “going to make high-speed rail a reality” for the state.

California's Newsom Scales Back Plans for High-Speed Rail Line

California was one of the first U.S. states to champion a government-owned high-speed rail system like those that are ubiquitous in parts of Europe and Asia. Former Governor Jerry Brown defended the project as part of the state’s nation-leading effort against climate change, an issue that Newsom has made a centerpiece of his administration.

The project was long opposed by Republicans in the statehouse and in Congress, who tried to choke off federal funding, and has been beset by cost overruns, construction delays and lawsuits by property owners and taxpayer groups. In his speech Tuesday, Newsom said it has become too costly and his efforts would go toward building a stretch of the line between Merced and Bakersfield.

"The project, as currently planned, would cost too much and take too long," Newsom told lawmakers. "There’s been too little oversight and not enough transparency."

He said he would still seek state and federal funding, and that he didn’t want to walk away from money already committed by President Donald Trump’s administration to proceed with the project. His Twitter post after the speech indicated he will push to link the Central Valley region to other parts of the state.

Scaling back the rail plan would be a blow to one of Brown’s legacy projects and contrasts with proposals from Congressional Democrats in Washington on a sweeping package of climate-change measures unveiled by Representative Alexandria Ocasio-Cortez that would boost funding for high-speed rail across the U.S.

The California plan envisioned an 800-mile network, with trains speeding as fast as 220 miles per hour, making it one of the largest, and most costly, public works projects in recent U.S. history. But since $10 billion of bonds were approved by voters more than a decade ago to jump-start the line, it’s been roiled by political controversy escalating costs.

The California High Speed Rail Authority had estimated the full line would have cost $77 billion to complete. Backers were counting on the private sector to finance most of the costs, though much of that private funding remained uncertain. The Central Valley segment was expected to cost $10.6 billion, according to the latest business plan.

Carl DeMaio, who’s leading a proposed 2020 ballot measure to defund the project entirely, said in a statement that keeping a segment is "actually designed to keep this boondoggle alive."

Newsom said his administration would seek to align economic and workforce development strategies in Central Valley region -- anchored by high-speed rail -- and pair them with tools like opportunity zones, to form the backbone of a reinvigorated economy.

"I know that some critics will say this is a ‘train to nowhere.’ But that’s wrong and that’s offensive," he said. "The people of the Central Valley endure the worst air pollution in America and have some of the longest commutes in this state. And they have suffered too many years of neglect from policymakers respectfully here in Sacramento."

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