California’s High-Speed Train Has Done a Lot More Good for Big Consultants than for Taxpayers or Riders

The ongoing saga of California’s high-speed bullet train may end up being as classic a story of Democratic politicians’ hubris as the Solyndra debacle. The difference is that the bullet train is still going – well, not the train itself, but the taxpayer spending on the planning – despite some optimism earlier this year that Gov. Gavin Newsom was going to put the project out of its misery. A Los Angeles Times story last week by Ralph Vartabedian is a deep dive on the consulting companies that have been intimately involved in the whole process. Here’s the most revealing nugget:

The rail authority’s consultants are hardly household names, but they are politically powerful and made major contributions to support the 2008 political campaign for the bullet train bond. They have staffed their ranks with former high-level bureaucrats, and their former executives have occupied key government posts….

The consultants, however, have played a key role in the political success of the project. Along with labor unions, consultants helped fund the campaign for the $9-billion bond that is paying everybody’s salaries, including their own.

Engineering and construction firms contributed $837,000 to the bond campaign, second only to the $1.6 million spent by various unions, according to a Times review of campaign filings. WSP put $107,000 into the campaign. There was no organized opposition to the bond measure. It passed with 52.7% support, but its popularity has dropped in public opinion polls ever since.

The consultants continue to provide political muscle for the project. A revolving door provides lucrative job opportunities for state and federal officials to enter higher-paying private jobs.

The firms and the unions that expected to profit from building the rail line paid for the campaign to persuade voters to approve the bond issue that would commit taxpayers to the project. And the consultants move in and out of government to make sure the project – if not any actual train – stays on track. Political scientists write about an “iron triangle” of government agencies that handle a particular issue or project, special interests that benefit from it, and legislative committees that oversee it. The flow of personnel – the “revolving door” – is part of that cozy process.

So how’s all that coziness working out for California taxpayers? Here’s the basic story:

When California shifted its bullet train plan into high gear in 2008, it had just 10 employees to manage and oversee design of the largest public construction project in state history.

Consultants assured the state there was little reason to hire hundreds or thousands of in-house engineers and rail experts, because the consultants could handle the heavy work themselves and save California money. It would take them only 12 years to bore under mountains, bridge rivers and build 520 miles of rail bed — all at a cost of just $33 billion….

But significant portions of this work have been flawed or mismanaged, according to records reviewed by The Times and interviews with dozens of people involved in the project. Despite repeated warnings since 2010 about weaknesses in its staffing, the rail authority believed it could reduce overall costs by relying on consultants and avoiding a large permanent workforce. But that strategy has failed to keep project costs from soaring. Ten years after voters approved it, the project is $44 billion over budget and 13 years behind schedule.

And here’s a typical example of economic analyses of stadiums, convention centers, mass transit, and other megaprojects:

At one time, Cambridge Systematics, the consultant that developed ridership models, estimated that more than 90 million people would ride the trains every year, based on an overly optimistic assumption that 90% of motorists along the route would switch to trains, said David Brownstone, a UC Irvine economics professor who reviewed the work of consultants that provided ridership estimates.

“Once we pointed out all the problems, they lowered it to 25 million and characterized it as a minor change,” he said. “Calling that a minor adjustment was a flat-out lie. The mistakes were obvious and crude.”

In Brownstone’s opinion, the rail authority didn’t question the calculations because high ridership estimates supported its revenue projections.

“Some of these consultants will tell you whatever you want to hear for a fee,” Brownstone said.

This Wednesday the rail authority plans to send the legislature “a detailed plan on building a partial operating system from Bakersfield to Merced for $16 billion to $18 billion.” You can drive from Bakersfield to Merced in 2.5 hours according to Google Maps. You can already take a train for $27 that covers the distance in two hours and 45 minutes, and the consultants promise that the high-speed train would cut that by 45 minutes. And all for only God-knows-how-many billions of dollars.

At only $535 million in unpaid taxpayer loans, Solyndra looks like a bargain.