Assembly committee warns of near‑term cash‑flow risk for High Speed Rail; LAO and inspector general press for clearer funding plan

The Assembly Transportation Committee held an oversight hearing on the California High Speed Rail Authority’s supplemental project update and the 2026 draft business plan, where nonpartisan reviewers told lawmakers the plan lacks a clear, timing‑based funding path and that a near‑term cash‑flow gap could jeopardize progress.

Inspector General Ben Belknap told the committee that, by his office’s estimation, "we are only 2 years away, give or take a few months, from the authority not having the funds on hand necessary to keep the project on schedule." He urged the authority and lawmakers to find a financing solution this year, saying future GGRF revenues and likely federal support could be insufficient in the near term.

Helen Kirstein of the Legislative Analyst’s Office (LAO) said the supplemental project update and related business plan contain tradeoffs and assumptions that matter to lawmakers. She noted the authority’s updated Merced‑to‑Bakersfield cost estimate and the LAO’s view that, under some assumptions, "there’s likely insufficient funding to complete to Bakersfield," particularly if the $4 billion in federal funds that were rescinded are not restored and if interest and borrowing costs are included.

HSRA Chief of Staff Mark Lisonbee said the authority is relying on a mix of state funding (including an annual $1 billion GGRF allocation through 2045), internal cost savings and prospective private‑sector participation. Lisonbee said HSRA’s draft business plan outlines three scenarios — completing Merced‑to‑Bakersfield, extending to Gilroy/Peninsula, and a full Phase 1 build — and that the authority has identified about $2 billion in design and scope savings for the Merced‑Bakersfield segment. He added that HSRA’s current accounting shows about $39.3 billion available and an estimated Merced‑to‑Bakersfield cost of about $34.8 billion, leaving roughly $4.5 billion to help with financing or cash‑flow needs.

Both OIG and LAO witnesses warned lawmakers that those savings and schedule assumptions depend on statutory and administrative changes, successful capture of projected savings, and the timing of revenues. The LAO and OIG recommended that HSRA present a funding plan that aligns the timing of projected expenditures to projected revenues, include financing costs in its totals, and publish a procurement schedule tied to funding so legislators can see when cash will be needed.

Lawmakers pressed HSRA on the specifics. Assembly members asked for ridership, fare and technical assumptions that back the business plan’s revenue projections; HSRA said technical appendices and modeling exist and will be shared with legislative offices. Several members also asked whether scope changes—for example station locations outside downtown Merced or Bakersfield and single‑tracking in places—drive the $2 billion savings and whether those changes comply with SB198; HSRA confirmed the savings are largely tied to scope and station changes and said it will work with communities and the legislature to provide comparative analyses.

The committee chair requested quarterly, bipartisan staff briefings and a year‑by‑year table showing expected expenditures, expected receipts and any gaps to give legislators the data needed to act. The authority agreed to provide additional technical documentation and to work with the OIG and LAO on more detailed cash‑flow information.

The committee did not vote on any legislation or formal action at the hearing. The next procedural step the Chair signaled was additional hearings and staff briefings as members review the draft 2026 business plan and the authority’s follow‑up materials.