A new California Legislative Analyst Office report estimates that the state will have to pay $709 million annually in interest payments if Gov. Jerry Brown sells the $9.4 billion in bonds California voters previously authorized to build a high-speed rail system.
The report was initiated by State Sen. Doug LaMalfa, R, who has introduced legislation that would rescind Brown’s legal authority to issue new high-speed rail debt. Over $500 million have already been borrowed and spent to pay for the project, which the state estimates will eventually cost $98 billion. In addition to the $9.95 billion California has put up for the project, President Obama has also allocated another $4 billion in federal funds. There is no plan for how California will make up the difference between the estimated $98 billion total cost and the nearly $14 billion Obama and Brown have currently raised for the system.
“The amount of bond debt service for this rail would more than offset the cuts to the University of California, California State University or Medi-Cal,” LaMalfa told The Los Angeles Times. “Look at all the things that are important to this state. People want a new vote.”
California is already $3 billion short of the money needed to keep the state in the black through the rest of just this fiscal year. They are also facing a $6.5 billion deficit next year. A December poll showed showed that majorities of Californians both want a new referendum on the high-speed rail project and would vote to kill the project if they could.
Obama is undeterred by the project’s poor prospects. This February, Transportation Secretary Ray LaHood visited California and reaffirmed Obama’s support for the project: “The Obama Administration is committed to High-Speed Rail because it is good for the economy and the nation. I look forward to working with Governor Brown to make this project as successful as possible.”
