The California High-Speed Rail Authority may run out of money by December 2027 if it cannot borrow against the expected $1 billion per year funding from the state’s cap-and-invest program through 2046, according to a July 31 report from the Office of the Inspector General for the High-Speed Rail Authority.
Leveraging the cap-and-invest funds would be similar to how New York’s congestion pricing program enables its transit authority to borrow against future revenues through municipal bonds, an approach the authority is considering.
For that to work, the California attorney general must approve the authority’s eligibility to use revenue bonds, and the state must enact a law ensuring that cap‑and‑invest revenues cannot be reduced by future laws, the OIG said.
The authority “continues to assume legislative changes to improve the conditions of the project will occur almost immediately” and continues “to make overly optimistic assumptions,” the OIG said.
The authority’s 2026 business plan estimates interest costs for borrowing against future cap-and-invest funds at $3.6 billion, but the OIG says that costs could run as high as $6.6 billion. The authority said in an email that it did not include “speculative interest costs or inappropriately combine interest costs in the capital estimate,” which could depend on future policy choices, in explaining why it cited only the lower figure.
The California project also seeks funding from private investors and has entered a co-development agreement with a consortium of high-speed rail, infrastructure and investment firms to attract outside investors. Those would likely come with higher interest rates than internal state loans or revenue bonds.
The authority says in its 2026 business plan that it “remains optimistic federal funds will become available for the project in the future.” That’s unlikely under the Trump administration. The Federal Railroad Administration, under the direction of Transportation Secretary Sean Duffy, terminated some $4 billion in unspent federal funding previously awarded to the authority.
Negotiations are ongoing in Washington on the next multi-year surface transportation legislation, but a stopgap measure through Dec. 11 cuts passenger rail funding by 83% from current levels, according to the American Public Transportation Association.
The authority “continues to engage with stakeholders and pursue funding opportunities, and it intends to address financing risks and schedule considerations in the [upcoming] 2027 Project Update Report as informed by ongoing legislative and policy discussions,” it said in an emailed statement.
