California’s Failed Green Dream


California’s new governor, Gavin Newsom, delivered an inaugural addressearlier this week that accurately reflected the mentality of his supporters. Triumphalist, defiant, and filled with grand plans. But are these plans grand, or grandiose? Will Governor Newsom try to deliver everything he promised during his campaign, and if so, can California’s state government really deliver to 40 million residents universal preschool, free community college, and single payer health care for everyone? It’s reasonable to assume that to execute all of these projects would cost hundreds – plural – of billions per year. Where will this money come from?

While California’s budget outlook currently offers a surplus in excess of $10 billion, that is an order of magnitude less than what it will cost to do what Newsom is planning. And this surplus, while genuine, is the result of an extraordinary, unsustainable surge in income tax payments by wealthy people. California’s tax revenues are highly dependent on collections from the top one-percent of earners, and over the past few years, the top one-percent has been doing very, very well. Can this go on?


A cautionary overview of the economic challenges facing California’s state government would not be complete without mentioning the neglected infrastructure in the state. For decades, this vast state, with nearly 40 million residents, has been falling behind in infrastructure maintenance. The American Society of Civil Engineers assigns poor grades to California’s infrastructure. They rate over 1,300 bridges in California as “structurally deficient,” and 678 of California’s dams are “high hazard.” They estimate $44 billion needs to be spent to bring drinking water infrastructure up to modern standards, and $26 billion on wastewater infrastructure. They estimate over 50 percent of California’s roads are in “poor condition.” In every category – aviation, bridges, dams, drinking water, wastewater, hazardous waste, the energy grid, inland waterways, levees, ports, public parks, roads, rail, transit, and schools, California is behind. The fix? Literally hundreds of additional billions.

What Governor Newsom might consider is refocusing California’s state budget priorities on areas where the state already faces daunting financial challenges, rather than acquiescing to the utopian fever dreams of his constituency and his colleagues.

Texas vs California Bullet Trains

Larry Elder discusses two paths to Bullet Trains with Professor of Economics, University of California, Los Angeles and Senior Fellow, Hoover Institution, Stanford University — Lee Ohanian. Dr. Ohanian catches us up with the latest regarding Trump’s economy as well. I haven’t done audio of the sage for a while (job change), but it is good to catch up with this run. Here is the professors article on the trains:

Lord Jerry Brown Looks To His Serfs To Work on High Speed Rail

An amazing statement (above) from Jerry brown. He views us as serfs, is he our lord?

  • Serfs lived in small communities called manors that were ruled by a local lord or vassal. Most peasants were serfs. They were bound to the manor and could not leave it or marry without the manor lord’s permission. Serfs did all the work on the manor farm: they worked the fields, cared for the livestock, built and maintained the buildings, made the clothing, and cut firewood. Men, women, and children worked side by side. Serfs had small plots of land they could work for themselves; sometimes a serf saved enough money to buy his freedom and became a freeman.

Cost Side:

(WSJ – May 18, 2012) California’s budget deficit has grown by $7 billion in the last four months. Uh oh. The good news in this debacle is that the state’s fiscal woes will make it nearly impossible to complete Governor Jerry Brown’s runaway high-speed rail train. The bad news is that the Governor is going to try anyway.

Transportation experts warn that the 500-mile bullet train from San Francisco to Los Angeles could cost more than $100 billion, though the Governor pegs the price at a mere $68 billion. The state has $12.3 billion in pocket, $9 billion from the state and $3.3 billion from…

HotAir continues:

This weekend the Wall Street Journal reports that our earlier estimation was in error. The financing isn’t “risky” at all… it’s an unmitigated disaster.

The good news in this debacle is that the state’s fiscal woes will make it nearly impossible to complete Governor Jerry Brown’s runaway high-speed rail train. The bad news is that the Governor is going to try anyway.

Transportation experts warn that the 500-mile bullet train from San Francisco to Los Angeles could cost more than $100 billion, though the Governor pegs the price at a mere $68 billion. The state has $12.3 billion in pocket, $9 billion from the state and $3.3 billion from the feds, but Mr. Brown hasn’t a clue where he’ll get the rest. Maybe he’s hoping Facebook will buy the train, though he’ll have a hard time convincing Mark Zuckerberg that it’s worth 100 Instagrams.

As the WSJ article goes on to point out, voters were originally sold on putting up $9B in bonds to fund the project on the promise that it would “only” cost $33B in total and that a combination of federal dollars and private investments would make up the rest. But Washington is facing something of a cash crunch itself, in case you hadn’t heard, and no investment firms want to pony up any money without some assurance of revenue down the road. It’s simply not happening.

…read more…

As HotAir admits:

  • ….I remain a fan of rail travel, partly because I hate flying and partly from a sense of nostalgia I suppose. And I’m still hopeful that projects like this may yet come to fruition in places where they make sense. The Northeast corridor from Boston to Washington, DC still looks like it could support a high speed rail project if it were implemented intelligently. But California has neither the money nor the culture to support it….

The California [Taxpayer Funded] Bullet Train vs. Private Business

West Coast Blog has this story about the final cost — so far — of the California boondoggle known as the Bullet Train:

Bullet Train From SF to LA Doesn’t Cost $33.6 Billion Anymore… Try $100 Billion!

Ok, so that headline may sound like Dr Evil from the Austin Powers movies. How many of you actually read it in the Dr Evil voice? But even though it wasn’t Dr Evil speaking the headline, it sure feels like he is controlling the budget for high-speed rail project in California.

The high-speed rail project was approved to build a bullet train, very similar to those in Europe and parts of Asia, to connect San Francisco and Los Angeles. It would cut the traveling time between the two cities from 5-6 hours (by car) down to 2 Hours 40 Minutes. When it was passed 3 years ago, the estimated cost was $33.6 Billion broken down as follows:

$15 Billion – Federal Government
$5 Billion – Local Government
$10 Billion – Private Investors
Remainder – California

But in the last 3 years, the California High-Speed Rail authority has had problems raising money from private investors. Surprise? Not only has the project had trouble finding investors, the estimated date of completion of 2020 has been pushed back to 2033. This delay in time has caused the majority of the cost increases and estimated costs are now expected at $100 Billion. FYI: the entire California state budget is only $86 Billion.

…read more…

Take note the almost instantaneous ballooning effect of the total cost via government meddling, here is the L.A. Times giving the most recent total cost update:

As the price tag for California’s bullet train has soared to nearly $100 billion, a central argument for forging ahead with the controversial project is an even loftier figure: the $171 billion that promoters recently estimated will be needed for new roads and airports if no high-speed rail is built….

….The bullet train is aimed at meeting future transportation needs of the state….

Newsflash! People are leaving California, not coming to it!

Another L.A.Times story says this:

…When the first business plan surfaced, it projected a $34-billion cost. By 2009, the estimate had jumped to $43 billion, in part because the authority included future inflation in the estimated cost of building the system over the next decade.

In August, the authority released two planning documents that signaled even higher costs. The cost of building only the first two segments in the Central Valley had jumped in price by as much as 100%, not including future inflation…

…read more…

 And HotAir points out the death knell for this type of liberal thinking:

CA auditor warns bullet train project financing “increasingly risky”

Few people probably noticed the absence of “high-speed rail” from Barack Obama’s State of the Union speech last night. The issue took a prominent position in SOTU speeches in 2011, when Obama dedicated five paragraphs to pushing it, and in 2010, when Obama promoted the high-speed rail project in Florida that Governor Rick Scott killed. Last night’s mentions: zero.

Perhaps the White House didn’t have a good answer as to why their pet rail project in California has become so expensive and bloated that the state auditor issued a warning hours before the SOTU began about its financing becoming so “increasingly risky” that state lawmakers should consider whether to proceed (via Andrew Malcolm):

In the latest in a series of cautionary reports by outside agencies and groups, the auditor’s report finds that the California High-Speed Rail Authority has made some progress in addressing planning and fiscal concerns but still has important work to do to ensure that the project can be built as promised.

“The program’s overall financial situation has become increasingly risky, in part because the authority has not provided viable funding alternatives in the event its planned funding does not materialize,” the auditor’s report says.

The authority has secured $12.5 billion for the first leg — from Los Angeles to San Francisco — of what is planned to be an 80-mile network, according to the report says. But it notes the projected cost of that phase has risen to between $98.1 billion and $117.6 billion.

The auditor warns that the state has no clear way to raise the $105 billion in funding necessary to complete the project, but that’s just half of the problem:

“The success or failure of the program” depends on obtaining up to $105 billion in additional funding, which has not been identified, the report says. It also finds that cost estimates for the initial phase do not include operating or maintenance outlays, which the auditor estimates could total $97 billion between 2025 and 2060.

…read more…

Bullet Train Zips Through Train Station with Slow Mo Camera Filming-from the train

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