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SACRAMENTO โ California sold $600 million in bonds Tuesday to help pay for building high-speed rail even as lawmakers and Gov. Gavin Newsom acknowledge challenges to completing the project.
The bond money is a key source of funding for the troubled rail system, which has been beset by cost overruns and delays. Voters approved $10 billion in bonds in 2008, which the state routinely sells to fund construction. The entire project is estimated to cost $77 billion.
โTodayโs funding announcement is a continued sign of progress to keep our transformative high-speed rail initiative moving forward in California,โ Democratic Sen. Jim Beall of San Jose said in a statement.
Wells Fargo and Jefferies, LLC, purchased the bonds, state Treasurer Fiona Ma said.
Funding at Center of State Senate Hearing
The bond sale came ahead of a Senate hearing about how the state should move forward. It was the first public hearing since Newsom signaled changes to the project. But his administration provided few new details, saying those would come in an update to the Legislature on May 1.
โLet there be no doubt, (Newsom) supports high-speed rail in California,โ said Lenny Mendonca, the governorโs appointee to lead the board overseeing the project.
Newsom in his state of state speech said there wasnโt a path for the project as planned and said he will instead focus immediately on completing and expanding a line through the Central Valley, adding about 50 miles of track to a line already under construction rather than going west toward the Bay Area.
But he also said heโd continue environmental work on the full line and seek private money to eventually build the full train. Lawmakers said theyโre still seeking clarity on Newsomโs vision for the project.
The projectโs funding challenges were at the center of Tuesdayโs hearing.
Federal Funding Threatened
Beyond bonds, the project gets money from the federal government and the stateโs cap and trade program, which raises money through credits to emit carbon. The Trump administration recently threatened to withhold or rescind roughly $3.5 billion in federal money, a move that would put the project further in jeopardy.
The state needs at least $50 billion more to meet the funding plan.
โThe inspiring vision of high-speed rail, replete with dramatic pictures of speeding gold and blue trains but presented in advance of a credible financing plan is now meeting reality,โ said Lou Thompson, head of a peer review group. โAction by the Legislature is badly needed.โ
Thompson and Helen Kerstein of the Legislative Analystโs Office said lawmakers need to decide if theyโll provide more money or change the project, potentially by finishing the high-speed line in the Central Valley and connecting it to Los Angeles and San Francisco using existing train and commuter services.
Senators also said the high-speed rail authority hasnโt been spending money or building as fast as it needs to ahead of 2022 deadlines.
Uptick in Construction Activity Expected
Construction slowed down through the winter months amid rain but an uptick is expected soon, said Joe Hedges, the chief operating officer of the project.
Hedges and other rail officials said the federal government has also slowed down progress because it has not completed required environmental reviews.
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