How many people will use California’s bullet train? Planners lower ridership estimates

Changing commuter patterns stemming from the COVID-19 pandemic and sluggish expectations for population growth in California are driving down forecasts for ridership on the state’s future high-speed rail project.

In a report due to the state Legislature on Wednesday, the California High-Speed Rail Authority unveiled the latest incarnation of its ridership projections for its Merced-Bakersfield section, anticipated to be the first interim operating segment for electric bullet trains. The new numbers represent a significant drop in the anticipated number of passengers for the first year of service when — or if — operations become reality sometime between 2030 and 2033.

Forecasts for future expansions of what is planned to be a statewide high-speed rail system are also lower than previous projections from the rail agency’s 2020 business plan.

The report, which also addressed rising costs and schedule slippage, drew a sharp reaction from state Assembly Minority Leader James Gallagher, R-Yuba City. “Think how many students we could educate, how much water we could capture,how many acres of forest we could restore,” Gallagher said in a prepared statement, “if we had pulled the plug on this debacle years ago.”

Senate Republican Minority Leader Brian W. Jones, R-San Diego, offered similar thoughts. “The broken promises on this project are breaking the bank for Californians,” Jones said. “It’s time to pump the brakes on the hot mess express and defund the High-Speed Rail.”

In a February preview of the report to the rail agency’s board of directors, authority CEO Brian Kelly said that for the Merced-Bakersfield segment — which includes construction now under way in the central San Joaquin Valley — the expectation for overall train ridership in the Valley dipped from almost 8.8 million passengers per year forecast in a 2019-2020 financial plan to about 6.6 million in the 2023 project update.

That translates to a decline of almost 25% in the ridership forecast, which represents collective rail ridership including existing passenger rail service offered by Altamont Corridor Express (ACE) trains in the North Valley and Amtrak’s San Joaquin trains, as plans call for the high-speed rail route to connect with both ACE and Amtrak at Merced.

“Transit ridership in California is generally down and we are not immune from those impacts, … “ Kelly told the board at its meeting in Sacramento. “Even though we are not a current operator, when we estimate what our ridership will be, we are informed by what’s going on in the real world. And we are seeing this pressure everywhere.”

Kelly attributed the lower forecast to a trio of factors confronting not only high speed rail but other public transit systems in California: slower population growth than previously predicted in the state, a slowdown in employment and new jobs, and sluggish recovery of overall transit commuter ridership in the aftermath of the COVID-19 pandemic as more people worked from home rather than commuting every day to an office or workspace.

Population slowdown, fewer commuters

“There was a time when California was going to have about 50 million people by 2040,” Kelly said. “That (forecast) now is 41.5 million.” That means an overall lower potential pool of riders for the high-speed rail system.

“Transit operators up and down the state saw a huge impact when COVID struck,” he added. “Those ridership numbers have not come back, and (operators) are seeking operational funding (from the state) to help.”

“Because we are connecting to ACE and Amtrak in the Central Valley, the reduction in commuter ridership in California post-COVID is lingering,” Kelly said. “Part of that is while people are still employed, they’re not necessarily gong t work five days a week as they were before. They’re going fewer days, so transit ridership has been impacted by that.”

The report also notes lower ridership projections on a future “Valley to Valley” line that would connect San Jose and the Silicon Valley to the Merced-Bakersfield line compared to the authority’s 2020 business plan. The previous forecast for operations in the year 2040 was for about 18.4 million passengers annually; the 2023 update now anticipates ridership of about 11.5 million per year – a decline of almost 40%.

For an entire Phase 1 bullet-train system between San Francisco and Los Angeles/Anaheim, projected 2040 ridership in the 2020 business plan was 38.58 million per year; that has been reduced in the 2023 update by about 19%, to 31.28 million.

“These are preliminary numbers,” Kelly added. “We’re going to do a lot of refinement with these with our partners over the course of the next several months and report further in the 2024 business plan.” He said the rail authority’s efforts will include Caltrans, which oversees intercity rail in California, as well as the two joint powers authorities that operate the ACE and Amtrak San Joaquin train services.

What the new numbers mean

While local and commuter transit systems may be feeling more of the effects of fewer people commuting to work daily, “longer distance trips like air travel or longer-distance train trips, that ridership is more stable,” Kelly said.

Air travel “has come back further from COVID, and our analysis shows that as well,” he added. “I think anyone who’s been to an airport can see that air travel is pretty robust again.”

For the 171-mile trip between Merced and Bakersfield aboard electrified high-speed trains, the average trip time would be reduced by 190 to 100 minutes, and “we have greenhouse gas reduction benefits by electrifying the corridor,” Kelly said. “So while we’re seeing reduced ridership, we’re still seeing important benefits from building the Central Valley system.”

One potential repercussion of diminished ridership projections include the effects on operating revenues for the rail system. Proposition 1A, the $9.9 billion high-speed rail bond measure approved by California voters in 2008, includes a key provision that requires the system to be self-sufficient and be able to cover its own operating costs without any subsidies from taxpayers.

“I’ll just say this about the subsidy issue: It’s true that for the full Phase 1 system, the bond bill says the program shouldn’t be subsidized, but even at the lower ridership estimate we now see 31.5 million riders between San Francisco and Los Angeles,” Kelly told rail authority board members. “We think that is still going to be a net operating system surplus.”

“We’ll need to do a couple of things,” he added. “If the demand for transit is lower, you have to look at how you might need to shift your service plan, and how you shift your fare structure. In so doing, you can reach sort of a sweet point between number of riders and revenue generated.”

The rail agency, in its 2022 business plan, offered the contention that the authority would not face the same prohibition on subsidies for the interim Merced-Bakersfield service because some other agency — and not the rail authority — will operate the system.

“The authority recognizes that its implementation strategy for interim high-speed rail service connecting Merced, Fresno and Bakersfield may expose the authority to potential litigation over Proposition 1A compliance” related to subsidies, said Annie Parker, a spokesperson for the authority.

But “the authority believes that there will be no violation of the subsidy language because … the implementation strategy for the Central Valley segment is to lease its track and rail cars to another operation,” Parker added. “The entity leasing the assets from the authority will bear the revenue risk as it pays a fixed lease fee and receives revenue from the operations and a lower-than-current subsidy from the state.”

The California High-Speed Rail Authority has a memorandum of understanding with the San Joaquin Joint Powers Authority – the nine-county public agency that operates the Amtrak San Joaquin train service – to serve as the high-speed rail service provider in the Valley.

“This will put the completed infrastructure into service with greater benefits to passengers while the interim service is being run,” Parker said. “The authority is confident that it will prevail in any future litigation touching on these areas.”

Other complications

The report to the Legislature also deals with other complicating factors facing the rail project, including rising construction costs as a result of inflation and the potential slippage of the schedule for completion of the Merced-Bakersfield line in the San Joaquin Valley.

In the California High-Speed Rail Authority’s 2022 business plan, the estimate cost to complete planned Merced-Bakersfield segment to become operational ranged from $22.5 billion to about $24 billion. The 2023 update now projects the cost in a range between $29.8 billion and $32.9 billion.

Part of the problem was underestimating the cost of installing track and systems on the Merced-Bakersfield route before it sought bids last year. “We saw the supply chain impacts in the marketplace and we saw the inflationary impacts,” Kelly said. “So now we’ve upped our estimates for what track and systems will cost going forward.”

Construction is well under way with three construction contracts covering about 119 miles of the route from northwest of Madera to the town of Shafter, northwest of Bakersfield in Kern County. But the rail authority does not have the money it needs to extend construction north into downtown Merced and south into downtown Bakersfield to provide a fully operational 171-mile line by a target date of 2030.

The California High-Speed Rail Authority has so far received about $3.5 billion in federal grant funds, much of that coming in 2010 and 2011, for construction in the Valley. The rest of the money being used to build has come from Proposition 1A and from the state’s greenhouse gas reduction program.

But authority officials say they cannot complete the extensions to Merced and Bakersfield without additional federal assistance. And uncertainty over whether the California High-Speed Rail Authority can successfully compete for federal grants from the 2021 Bipartisan Infrastructure Law or other federal programs translate to potential delays in launching train operations with passengers.

Now, Kelly said, the rail authority has developed a “schedule envelope” spanning from 2030 to 2033 for operations to begin. “The biggest risk,” he added, “is the availability of funding as we make the schedule going forward.”

Republicans in the Legislature, however, have long been critical of the project, and the report offered more ammunition for their objections.

“In 2008, voters were told that a $9 billion state investment would complete a fully operation rail line connecting San Francisco and Los Angeles by 2020,” the Assembly Republican Caucus said in its statement. “Currently, the project has spent $10 billion, will have nothing to show for it beyond a test track from Madera to an almond orchard in Shafter, with no trains and no stations.”

Jones, the Senate GOP minority leader, added that “California is looking at a budget deficit and we have much more pressing issues that demand our attention – like tackling rime, cutting costs, acting on homelessness, and investing in students.”