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By Megan Cartwright
Associate News Editor
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California's high-speed rail project could run out of money by December 2027, potentially forcing officials to further scale back the planned Central Valley route, according to Inspector General Benjamin Belnap.
State leaders will need to find new funding or secure a loan next year to avoid a looming financial cliff that could disrupt construction plans.
Communities expecting service on the planned Bakersfield-to-Merced route could see the initial operating segment shortened even further if additional money is not secured.
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Newsweek reached out to Belnap via email for comment on Monday.
Why It Matters
California's high-speed rail project, meant to take riders from Los Angeles to San Francisco, has faced years of delays, rising costs and funding challenges while state officials work toward opening an initial passenger route in the Central Valley.
Now, the project's government watchdog warns that time is running short, with a funding gap that could force officials to reduce the scope of the first operating segment unless lawmakers act.
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What To Know
Speaking on California Politics 360 on Sunday, Belnap said he warned about the approaching fiscal cliff earlier this summer, but lawmakers took no action before concluding the legislative session in September.
According to Belnap, state officials will have to move quickly next year to identify money in the budget or obtain financing to keep construction plans on track.
"What that means is, they have to dramatically reprioritize expenditures," he said on the show.
First Operating Segment Could Shrink
Project leaders have already narrowed their focus to completing a rail line between Bakersfield and Merced because the broader vision for the statewide system remains beyond current funding capacity.
That Central Valley segment is expected to cost as much as $36 billion.
Belnap said the financial situation could force another reduction in scope. Instead of connecting Bakersfield and Merced, officials may have to concentrate on completing a shorter stretch between Madera and Poplar Avenue in rural Kern County.
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Funding Options Remain Limited
Belnap said concerns about long-term financing emerged when he reviewed the authority's 2023 project update after assuming his role.
One challenge involves the project's inability to secure so-called "non-impairment language" during the most recent legislative session. Belnap said that provision would have helped the authority use future revenue from California's cap-and-invest program to support financing efforts.
The next opportunity to obtain that language will not come until July 2027, leaving limited time before the projected funding shortfall arrives.
As a result, policymakers may have to weigh difficult decisions about whether to devote additional taxpayer money to the project or pursue borrowing.
Watchdog Raises Oversight Concerns
Beyond the funding dilemma, Belnap pointed to accountability issues that his office has examined in recent reports.
A recent investigation found the California High-Speed Rail Authority allowed consultants to charge taxpayers for travel that was unnecessary or lacked proper approval.
A spokesperson for the California High-Speed Rail Authority previously told Newsweek in response to the findings: "The Authority will strengthen internal controls around consultant travel, implement more rigorous documentation and approval requirements, and recover any improper costs identified. We are also working closely with the OIG to ensure corrective action that is both accurate and fair.”
Belnap said the findings highlighted weaknesses in oversight and contract enforcement, arguing that consultants are more likely to continue seeking reimbursement for questionable expenses if those requests are routinely approved.
He said project managers must consistently apply existing controls and hold contractors accountable for spending decisions.
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Inspector General Seeks More Resources
Belnap also said staffing constraints have limited the watchdog office's ability to investigate complex issues surrounding the rail project. His office currently employs six staff members despite being authorized for eight positions. He said an ideal staffing level would be closer to 15 or 16 employees.
To address that gap, Belnap urged Governor Gavin Newsom to sign Assembly Bill 1608, legislation that would provide access to higher-level job classifications and expanded purchasing authority for specialized expertise.
Belnap said the proposal would allow his office to bring in outside technical experts when investigating matters such as engineering, design or safety concerns.
More Reviews Ahead
Despite the challenges, Belnap expressed confidence in his team's work and said several new reports are expected in the coming weeks.
Those include the office's annual report and a critical review of legislative proposals involving the California High-Speed Rail Authority.
Belnap declined to discuss any ongoing investigations but said the goal remains ensuring transparency and accountability as California's most ambitious transportation project confronts another pivotal financial decision.
Newsweek’s reporters and editors used Martyn, our AI assistant, to produce this story. Learn more about Martyn here.
Contact Newsweek editors on this story: Matthew Robinson and Sam Wilson.
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