Dive brief:
- The California High Speed Rail Authority is facing criticism over “wasteful” consultant spending and received a letter from the city and county of Merced in response to changes to the authority’s 2026 business plan that differ from the rail’s original plan.
- The High Speed Rail Authority’s Office of Inspector General identified more than $2 million paid to consultants for travel-related costs that did not meet 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.
Diving knowledge:
The authority, which is facing a financial crisis, is asking the California Department of Finance to find a way to borrow from the planned $20 billion in funding from the state’s cap-and-invest program, which must be disbursed at a rate of $1 billion annually through 2046, according to the Fresno Bee.
“If we don’t fix the cash issue to bring cash up front and get back to building $1 billion a year, the project won’t be on the schedule we have today,” the authority’s chief executive, Ian Choudri, said at the authority’s June 24 board meeting.
To cut costs, the authority reduced the reach of the Merced-Bakersfield segment. The revised plan would move the Merced station away from downtown, according to the letter. “Moving the station would eliminate the planned combined downtown connection between 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 enters service, projected passenger revenue would account for between 45 percent and 74 percent of operation and maintenance costs, according to the authority’s Project 2025 Supplemental Update Report.
The OIG expense report identified unallowable and questionable consultant expenses, including travel to destinations that appeared unrelated to state business, travel from locations other than the consultant’s approved office location, and enhanced shared travel and flights.
Republican state lawmakers demanded “an investigation into the improper spending” in a Sept. 22 letter to Attorney General Rob Bonta. “We also ask you to investigate whether High Speed Rail Authority executives violated any criminal statutes in ordering these payments, including the misappropriation of public funds,” the letter said.
