The California high-speed rail project could run out of available funding as early as December 2027 if the authorities do not find new sources of funding. At the same time, the initial order for rolling stock has been reduced from six to just three trains, and the federal ‘Buy America’ requirements have been removed.
The California high-speed rail project, one of the most ambitious and controversial infrastructure projects in the United States, is facing a new financial warning. The Office of the Inspector General estimates that the California High-Speed Rail Authority (CHSRA), the state body responsible for the project, could run out of available funds by December 2027 if it does not secure additional funding.
The problem is not necessarily a long-term lack of funds, but rather the pace at which they become available. The Authority has identified total funding of USD 39.3 billion , including approximately USD 1 billion annually from California’s Cap-and-Invest scheme, but expenditure during the peak construction period is expected to exceed revenue. In the 2027–2028 financial year alone, a further USD 2.2 billion would be required to keep the works on schedule.
A USD 9.5 billion shortfall over five years
The Inspector General estimates a cumulative funding shortfall of USD 9.5 billion between the 2027–2028 and 2031–2032 financial years.
Among the solutions analysed are domestic government borrowing, bond issues and private financing. However, borrowing could generate an additional USD 3.6 to 6.6 billion in interest, costs which are not included in the official estimate of USD 35.7 billion for the Central Valley section.
The report also highlights costs that are not fully reflected in current estimates: a USD 1.2 billion shortfall in contingency reserves, $816 million representing works that should be borne by third parties, and a further USD 1.7 billion for infrastructure provided for under existing local agreements.
From six trains to three
The financial problems are also reflected in the procurement of future high-speed trains.
In a revision of the tender procedure published on 6 August, the authority confirmed that no contract for the rolling stock has yet been signed. Furthermore, the initial order has been halved: instead of six trains, the project now provides for the procurement of three trains, with options for a further 19, though with no guarantee that these will actually be ordered.
The new trains must be delivered and ready for testing by February 2030 at the latest. The authority is also considering a lease-to-own financing arrangement, which means that the State of California may not purchase the trains directly from the outset.
The ‘Buy America’ requirement is also being removed
Another significant change is the removal of the federal ‘Buy America’ requirements for the first trains.
These rules, linked to federal funding, generally required rolling stock to be assembled in the United States and to use domestically produced components, including American steel and iron.
The CHSRA explains the change as a result of the withdrawal of the federal grant intended for the purchase of the trains. According to the authority, the removal of the conditions previously imposed by federal funding should reduce the risk of further delays and allow testing to begin in line with work on the track and systems.
The procurement of the trains has been delayed for some time. The funding documents signed during the Biden administration stipulated that the contract should be awarded by 31 December 2024, a deadline that was not met. Subsequently, the authority committed in court to signing the contract by 1 December 2025, but this deadline was also missed.
The project is being scaled back, and the deadline is slipping
The Inspector General’s report also shows that some of the savings presented for the project stem from a reduction in the infrastructure to be built, rather than from increased efficiency.
The preferred plan for the Merced–Bakersfield section reduces its length from approximately 275 km to 261 km, moves the future Merced station from the city centre to a suburban area, and temporarily postpones the construction of the railway line north of Bakersfield city centre.
The timetable has, in turn, been pushed back. Official documents now indicate that operations will commence between 2032–2033, but the statistical risk model used by the Inspector General suggests that completion could be delayed until September 2034.
Inspector General criticises lack of transparency
The report also criticises the way in which the authority presents the project’s status. Inspector General Ben Belnap argues that the documents have concealed or failed to present certain essential information regarding costs and the timetable with sufficient clarity, thereby hindering the oversight exercised by the California state legislature.
However, the CHSRA rejects this interpretation and maintains that these are differences of interpretation, not a lack of information. The authority states that the project has entered a new phase, including the transition to track-laying works and collaboration with private partners.
Political pressure is, however, mounting. The chairs of the transport committees in the California legislature have expressed concern over the train procurement situation and the funding shortfall, and further parliamentary hearings are expected to examine the USD 9.5 billion funding shortfall and the options available to the state for continuing the work.
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