Dive Brief:
- The California High-Speed Rail Authority faces criticism over “wasteful” spending for consultants and received a letter from the city and county of Merced in response to changes in the authority’s 2026 business plan that differ from the railroad’s original plan.
- The Office of the Inspector General for the High-Speed Rail Authority identified over $2 million paid to consultants for travel-related costs that did not comply with state regulations and contract requirements.
- The California High-Speed Rail Authority may run out of money by December 2027, according to a July 31 report from the authority’s OIG.
Dive Insight:
The authority, facing a financial crisis, is asking the California Department of Finance to find a way to borrow against the expected $20 billion funding from the state’s cap-and-invest program, which is due to be disbursed at the rate of $1 billion per year through 2046, according to the Fresno Bee.
“If we don't solve the cash issue to bring cash in advance and go back to a billion dollar a year construction, the project is not going to be on the schedule that we have today,” Authority CEO Ian Choudri said at the authority’s June 24 board meeting.
To cut costs, the authority reduced the scope of the Merced-Bakersfield segment. The revised plan would relocate the Merced station away from the city’s downtown, according to the letter. “Moving the station would eliminate the planned combined downtown connection among high-speed rail, Amtrak and [the Altamont Corridor Express], while creating substantial new infrastructure and connectivity needs,” the letter states.
When the Merced-Bakersfield segment goes into service, projected passenger revenue would account for about 45% to 74% of operation and maintenance costs, according to the authority’s 2025 Supplemental Project Update report.
The OIG’s spending report identified unallowable and questionable consultant expenditures, including travel to destinations that appeared unrelated to state business, travel from locations other than the consultant’s approved office location and upgraded ride-share rides and flights.
The state’s Republican lawmakers demanded “an investigation of wasteful spending” in a Sept. 22 letter to Attorney General Rob Bonta. “We also ask that you investigate whether executives at the High-Speed Rail Authority violated any criminal statutes in ordering these payments, including misappropriation of public funds,” the letter states.
