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LAO: Merced–Bakersfield high‑speed rail faces roughly $7 billion funding gap; HSRA to deliver fuller update this summer
Summary
The Legislative Analyst's Office told the Assembly Transportation Committee on March 1, 2025 that the High‑Speed Rail Authority's project update shows about a $7 billion gap for the Merced‑to‑Bakersfield segment and that a fuller supplemental report is expected in summer 2025.
The Legislative Analyst's Office told the Assembly Transportation Committee on March 1, 2025 that the High‑Speed Rail Authority's project update report shows a funding shortfall for the Merced‑to‑Bakersfield initial operating segment and that more detailed information is coming in a supplemental report this summer.
"There is about a $7,000,000,000 gap between projected funding and costs as they currently stand," said Helen Kerstein of the LAO, summarizing the authority's project update report and warning that the gap could grow if federal grants are at risk or if costs rise.
Members and the authority discussed timing and risk. Jamie Matalka, chief financial officer for the High‑Speed Rail Authority, said about $13.8 billion has been spent to date on the program and that the authority is conducting a bottoms‑up reassessment of scope, schedule and costs at the direction of the new CEO. Matalka said the authority expects the supplemental, more detailed assessment to be available in the summer, with an internal target toward August.
LAO and members highlighted immediacy and federal review risks. The LAO noted that the federal Office of Inspector General previously indicated much of the gap will need to be addressed by June 2026 to avoid schedule impacts and that the federal government has launched reviews that could affect awarded but unobligated grants. "Decisions on cap‑and‑trade funding and the continuous appropriation of GGRF could be pivotal," the LAO advised.
Authority staff said they are exploring a new financing strategy that could include public‑private partnerships, innovative financing and long‑term commitments, and they described an industry forum held in January to solicit private sector input. LAO cautioned that while P3s are an option, prior attempts have shown private investors generally demand clearer, less risky revenue models, often after operations begin.
Ending: The committee urged the authority to deliver the supplemental project review as soon as material information is available so the Legislature can assess funding options in the 2025–26 budget cycle. Members warned against making significant funding commitments before reviewing the authority's detailed summer update.
