This commentary originally appeared in The Washington Examiner on June 25, 2016.
The windswept deserts east of California's Sierra Nevada are crisscrossed with thousands of miles of abandoned railroad beds, a legacy of the region's gold and silver boom town days. Hundreds of now defunct railroad companies, with picturesque names like Tonopah and Tidewater, Va., and Truckee and Carson, Colo., operated until the gold played out or truck transport grew more common and less expensive.
Over the jagged spine of California's granite backbone, 100 miles to the west, a new railroad track is being laid. But, unlike its narrow gauge cousins that sprang up 150 years ago, this railroad relies entirely on government funding and will likely never be completed.
California's High-Speed Rail project won narrow approval in a 2008 ballot proposition based on a series of lies that conned voters into authorizing almost $10 billion in bond debt. Voters were cynically told in the official voter information guide that they'd get "…an 800-mile High-Speed Train network … WITHOUT RAISING TAXES (emphasis in the original)" capable of traveling the 400 miles "from Los Angeles to San Francisco in about 2½ hours for about $50 a person." Moreover "[m]atching private and federal funding (were) to be identified BEFORE state bond funds are spent" on the $45 billion system.
Today California's High-Speed Rail boondoggle is at least 50 percent over budget and, if ever built as marketed, likely far more, and doesn't have "matching private and federal funding" as promised.
And now, what funding the rail project did have is in serious jeopardy as California's most recent cap-and-trade carbon dioxide auction raised only $10 million of an expected $500 million in May — 98 percent short of revenue expectations. Golden State lawmakers and Gov. Jerry Brown were expecting to divide up a pile of lucre from selling permission to emit carbon dioxide, a non-toxic gas essential to plant life. Some $150 million from the failed auction was supposed to go the government railroad — in spite of solemn promises to the voters that the train would be built "WITHOUT RAISING TAXES" — instead, the rail authority will receive only $2.5 million.
The High-Speed Rail Authority's most recent business plan anticipated $10.6 billion from greenhouse gas taxes through 2050 with half of that amount generated by borrowing on the future income stream from the carbon dioxide auctions.
To make up the short term gap in funding, California will have to use all of a $500 million reserve set up in case of weak auction proceeds.
But California's railroad experiment has a larger long term problem: The voters have figured out they were misled and now have other priorities.
Further, California hasn't seriously addressed its burgeoning public pension liabilities. A new report out of Stanford University calculates a $991 billion shortfall, or $77,700 per California household. In addition to its crushing pension burden, California will soon face mounting pressure on its already generous social welfare budgets as unskilled workers rapidly lose out to automation made all the more attractive by the state's recent approval of a $15-dollar-an-hour minimum wage.