Here’s what CA high-speed rail can do with new $1B-a-year promise from state

Months after the feds began trying to defund it, California high-speed rail on Saturday obtained a $1 billion annual financial commitment through 2045 from the state.

That means California’s High-Speed Rail Authority can consider the project’s initial Central Valley route fully funded — even if it doesn’t recover the $4 billion the Trump administration pulled from it in July.

The commitment could also determine high-speed rail’s ability to attract private capital, as investors want to see a project with a strong state backstop before putting their money in.

“This agreement demonstrates that Californians are standing up to the Trump Administration’s backward-thinking obstruction and choosing instead to invest boldly in the future,” the rail authority said in a statement Wednesday, when the deal was first announced.

The money will come from California’s Cap-and-Trade program, now called Cap-and-Invest, which was set to expire in 2030 but was extended through 2045 by the state’s Legislature on Saturday. The program generates public dollars from companies that buy credits at state auctions to offset their greenhouse gas emission.

Since its introduction in 2012, the program has provided $7.9 billion for high-speed rail and was previously slated to provide another $5.5 billion through 2030. The program is now set to expire in 2045 and prioritizes $1 billion per year for high-speed rail before allocating revenue to other environmental initiatives in the state.

“This is a huge win,” said Henry Perea, a rail authority board member from Fresno. “The door is wide open for high-speed rail.”

Central Valley high-speed rail segment funded?

California voters approved $9.95 billion in bonds in 2008 to help fund a high-speed rail system that would connect San Francisco and Los Angeles by 2020 at a cost $33 billion.

Today, the focus is on first completing the 171-mile Merced-to-Bakersfield segment under construction that could be operational by 2032 at a cost of $36.75 billion. A recent rail authority report says the agency will have a total of $28.16 billion in capital funding available through 2030.

That includes future Cap-and-Invest allotment of more than $5 billion that was slated for the project prior to Saturday’s program extension. It also includes the $4 billion rescinded from high-speed rail this year by the Trump administration, which has criticized the project’s history of delays, cost increases and focus on the Central Valley.

The rail authority has sued to get that money back. But even if it doesn’t, the new Cap-and-Invest commitment from the state would bring its available funding up to nearly $40 billion through 2045.

“A billion dollars a year up to 2045 absolutely guarantees the fact that we will build what we’ve been working on,” Perea said. “And that’s the 171 miles between Merced and Bakersfield.”

An Office of Inspector General report from last year found the rail authority needed to secure the money to fill its funding gap by 2026 to avoid impacts to its construction schedule. But Perea said the agency does not need to have all the money on hand right away to stay on track.

“As we’re moving down the line in construction, we’ll be drawing down the money we need to,” he said. “The way money is allocated, money will not be slowing down anything having to do with the completion of the 171 miles.”

Is private investment coming to CA high-speed rail?

Obtaining strong financial backing from the state has been central to the rail authority’s plan to begin attracting private investment.

Perea said the Cap-and-Invest extension “definitely gives us the ability to bond against that money.”

That would allow the project to borrow money from the private sector as investors have a state guarantee of $1 billion per year through 2045.

Last month’s report from the rail authority said the agency received 31 responses — “from a wide range of industry participants” — to a request for expressions of interest in public-private partnerships issued in June. The agency told The Bee it will reveal those respondents in a later report.

But the rail authority has also said its ability to attract private investment will increase as it moves toward the state’s major urban centers. There, projected revenues are higher than in the Central Valley and provide more assurance to private investors.

Rail authority CEO Ian Choudri previously told The Bee he would like an even larger and lengthier financial commitment from the state as the project works toward the Bay area and Los Angeles. To get there, it will need more money.

Perea said obtaining an even stronger, longer-term commitment from the Legislature is still the plan.

“We’re going as far as we can go right now under the existing program, to 2045,” he said. “But the door is wide open for us to continue this discussion of increased funding opportunities for high-speed rail as we’re building.”