Newsom strikes agreement on bullet train funding

California Gov. Gavin Newsom and legislative leaders have reached a deal to provide $20 billion — $1 billion a year — to the state’s high-speed rail project through 2045.

The full Legislature is slated to vote Saturday on the agreement to extend the cap-and-invest program to 2045 — and use $20 billion from that program to fund the troubled project.

The funds would be enough to complete the initial 171-mile stretch in the Central Valley, but not enough to complete the entire San Francisco to Los Angeles rail line.

California High Speed Rail Authority CEO Ian Choudri lauded the decision, calling it a historic commitment of the largest guaranteed infusion of funding for the high-speed rail program to date.

The agreement would resolve “all identified funding gaps” in the Central Valley and “opens the door for meaningful public-private engagement,” Choudri said in a statement. “We must also work toward securing the long-term funding — beyond today’s commitment — that can bring high-speed rail to California’s population centers, where ridership and revenue growth will in turn support future expansions.”

The rail authority can borrow against the future funding guarantee to finance the remaining construction on the route between Merced and Bakersfield, expected to be completed by 2033, he said.

The Central Valley segment currently carries an estimated cost of $37 billion, higher than the $33 billion the entire line from Los Angeles to San Francisco was expected to cost when voters approved a $9 billion bond measure in 2008 to launch the project.

In 2019, Newsom directed the rail authority to focus on the Central Valley stretch as project costs soared to between $89 billion and $128 billion.

Talks around the proposal to extend the cap-and-trade program, in which companies bid on credits that allow them to emit greenhouse gases over regulated levels, were contentious, let alone discussions on dedicating a fixed amount to the rail project.

The cap-and-trade program was originally created in 2006 through the passage of Assembly Bill 23 with the aim of lowering greenhouse gas emissions in California by 2020 to 1990 levels. The program was originally set to expire in 2030.

In recent years, the program has brought in $4 billion in revenues annually, which has gone to support public transit, wildfire prevention and housing, as well as high-speed rail. Funding is supposed to go to projects that alleviate environmental harms.

Newsom pushed lawmakers for several months to extend the program to 2045, before reaching an agreement Wednesday with legislative leaders.

The high-speed rail authority released a 71-page report in August outlining a plan it says will revitalize the project providing a clear path to achieving commercial success at the earliest stage.

Republicans at the state and federal level have called the project a boondoggle, whose funding could be better spent elsewhere.

In July, the Federal Railroad Administration terminated $4 billion of federal grants after a compliance review in which it found the project could not meet binding obligations it made to receive the funds. The HSR plan released in August included expectations of receiving federal funding.

The project has support from the U.S. High Speed Rail coalition, a national advocacy organization for high-speed rail.

“We applaud Governor Newsom and legislative leaders for their commitment and determination to make high-speed rail a success,” said Ray LaHood, former U.S. Secretary of Transportation and co-chair of U.S. High Speed Rail. “The agreement represents the most important step forward to date for this transformational project.”