A new report on California’s embattled High-Speed Rail (HSR) project is raising concerns over transparency — and warning that it could run out of money by the end of next year.
The report was submitted July 31 by HSR Inspector General Benjamin Belnap to Governor Gavin Newsom, Senate Pro Tem Monique Limón and Assembly Speaker Robert Rivas. It is based on the IG’s analysis of the authority’s final 2026 Business Plan, which provides updates, expected milestones, and other details around the rail project.
The report is among the latest developments for the High-Speed Rail project, which has faced increasing state and federal criticism as costs balloon and delays continue to mount.
Voters originally approved $9 billion in bonds for the project under Prop 1A in 2008. At the time plans called for high-speed rail connections from Los Angeles to San Francisco, with an estimated cost at the time of $45 billion.
But over a decade later, and with billions of dollars already spent, the first stretch of track in the Central Valley still remains unfinished.
Earlier this year, the Inspector General along with state budget watchdogs warned lawmakers that High-Speed Rail’s funding may not keep pace with construction costs, and that the project could run out of money within two years.
Funding, transparency concerns
In his July letter, Belnap wrote that the inspector general’s office previously reviewed a draft of the High-Speed Rail Authority’s final plan in April. It concluded that the draft “was missing many statutorily required elements, which made the draft objectively incomplete.”
Belnap said the agency has since improved the completeness of the final plan, but said it “still did not provide funding plan information” despite this being required under state law. The IG’s report also raised concerns “regarding the plan’s transparency.”
Among its findings, the report said the High-Speed Rail Authority’s plan “does not sufficiently emphasize” that it will exhaust its current funding as soon as December 2027 “if it does not secure funding.”
The IG’s office said an analysis of the authority’s financing needs shows the agency must finance up to $9.5 billion between the 2027-28 and 2031-23 fiscal years. It will also need another $2.2 billion for the rest of the 2027-28 fiscal year to cover planned expenditures.
The report also identified several other transparency issues with the Authority’s business plan. Belnap wrote the plan does not sufficiently outline “scope changes and cost increases” for HSR’s first segment between Merced and Bakersfield.
The report said the authority continues to use a 2032-2033 completion date window for the 171-mile stretch, but said the “appropriate” estimate should now extend to September 2034. The final business plan notes a 24-month contingency window as recommended to, and adopted by, the Authority. But the IG’s report said this is not made “sufficiently clear.”
Belnap wrote that even this later 2034 start date is “likely insufficient” because the authority “continues to base its schedule on optimistic assumptions,” such as legislative action the organization is proposing “that have yet to be adopted.”
Belnap said the business plan “disclosed” that the High-Speed Rail Authority saw a nine-month slip in the Merced-Bakersfield schedule between August 2025 and March 2026, but offered no explanation as to the change.
The inspector general’s report also outlines issues with excluded financing costs, estimated at an additional $3.6 billion to $6.6 billion for the Merced-Bakersfield segment, and that the authority’s recent annual reporting was incomplete and late.
“As a result, neither decisionmakers nor members of the public have had the full benefit of opportunities that the law provides to oversee and comment on the project,” Belnap wrote.
He said the IG’s office has made “numerous recommendations” to the Authority on how to improve transparency, which reportedly have not been fully implemented.
“Instead, the Authority has obscured basic facts about the project, hindering lawmakers’ ability to provide effective oversight of the project and, in so doing, creating obstacles to achieving changes it seeks that require stakeholder agreement and legislative action,” Belnap wrote.
HSR responds
A High-Speed Rail Authority spokesperson told CapRadio in a statement the organization “values constructive oversight and partnership that helps strengthen the program,” and is committed to move the project forward.
The statement also says the authority “has fundamentally reoriented the high-speed rail project by moving into its tracklaying phase” and is making progress through collaboration with the private sector and other partners.
In a July 24 response letter to the Inspector General, the authority pushed back on some of the report’s claims. It said the agency believes some of these concerns “are more reflective of differences in interpretation rather than gaps in information.”
Officials wrote that the authority has “identified practical ways to adjust the program to meet available resources, improve delivery and create new opportunities for revenue and long-term funding.”
Regarding transparency concerns raised by the IG, the Authority acknowledged having missed previous deadlines, but said it has been open about why reports have been late.
The letter also says the Authority’s CEO Ian Choudri has “regularly outlined” the program’s strategic priorities at public forums and board meetings, and the organization is “actively working” on a 2027 update report that will meet its March 1 deadline.
High-Speed Rail also said segments of the Merced-Bakersfield line are currently under design and construction, with dozens of miles of guideway and multiple structures already completed.
According to the IG’s report, the revised Merced-Bakersfield stretch is estimated to cost around $35.7 billion. California officials say construction is “active” across 119 miles in the Central Valley.
Train orders cut
Shortly after the IG’s report was submitted to state leaders, the High Speed Rail Authority also adjusted its planned train procurement — cutting the number in half.
An Aug. 6 notice said the Authority was modifying its request for proposals initially issued on April 16, 2024. At that time High-Speed Rail had planned to purchase six initial trainsets, capable of operating at 220 miles per hour.
The first prototypes were anticipated to arrive in 2028 for testing and trials, with the remaining four coming by the end of 2030 to start operations in the Central Valley. Two vendors were also identified — the French company Alstom Transportation and Germany-based Siemens Mobility.
But now, the procurement document says the authority only wants to order three initial trainsets. It also lists an option for 19 more, but with no guarantee that this will actually be exercised.
The authority also said it is considering a “lease-purchase” financing structure for the vehicles, which it is requiring to be delivered and ready for testing no later than February 2030.
A spokesperson told CapRadio the Authority reevaluated its procurement requirements after roughly $4 billion in federal grant money for the High-Speed Rail project was cancelled by the Trump administration in July 2025.
Transportation Secretary Sean Duffy wrote at the time that “CHSRA’s mismanagement and incompetence has proven it cannot build its train to nowhere on time or on budget,” and called the project a “boondoggle.” A lawsuit filed by Attorney General Rob Bonta challenging the cuts was dropped in December.
HSR’s statement said it had modified the request to “remove provisions that had been federally required in connection with previously anticipated federal funding.” The Authority said the move would maintain the project’s schedule and reduce risk.
One of those removed provisions is a “Buy America” requirement. This refers to federal rules that require the use of domestic iron, steel and other materials in the production of trains and rail infrastructure that are federally funded. High-Speed Rail said in 2025 that all materials will be compliant with the “Buy America and the Build America, Buy America Act.”
The Authority acknowledged it dropped the “Build America” requirement because of current realities — there is no domestic supply chain or sourcing for high-speed trainsets, and no facilities in the U.S. can currently build them.
The Authority was expected to release its revised request for proposals this week, with a deadline of Oct. 16.
