A report from the California High-Speed Rail Authority's inspector general says the project could run out of money by December 2027 because it can't access capital from its $1 billion annual allocation from the state's cap-and-trade program quickly enough.
The cash-flow issue means the project could be challenged by early next year if lawmakers and the governor don't take action by Aug. 31, when the current legislative session ends.
Inspector General Benjamin Belnap's
The state has an Aug. 27
The State Treasurer's Office deferred to the California Department of Finance for comment, but a DOF spokesman couldn't immediately be reached.
"The California High-Speed Rail Authority values constructive oversight and partnership that helps strengthen the program, and we are committed to working together to bring California's voter‑approved high‑speed rail system to reality," a CHSRA spokesperson said in a statement.
In the letter to lawmakers and the governor, included with the report, Belnap wrote: "the business plan does not sufficiently emphasize that the Authority will exhaust its current funding resources as soon as December 2027 if it does not secure financing."
The state has already spent $18 billion on the project and its first planned segment, Merced to Bakersfield, is expected to cost at least $36 billion.
Current estimates to complete the entire route from Los Angeles to San Francisco are estimated at $126.1 billion, with completion set for 2039 and full service to start in 2040, according to CHSRA's 2026
Voters approved $9.95 billion in general obligation bonds in 2008 to build high-speed rail, then estimated to cost $45 billion with a 2020 completion date.
U.S. Transportation Secretary Sean Duffy
Following the loss of federal support, the CHSRA shifted its strategy toward leveraging state funds and private capital. In June, the authority finalized a
This new approach relies heavily on the state's cap-and-invest program.
In September 2025, Gov. Gavin Newsom and legislative leaders
"The Authority has fundamentally reoriented the high-speed rail project by moving into its tracklaying phase, while making real, measurable progress through strong collaboration with the private sector and our partners across the state," the authority's spokesperson said.
The CHSRA business plan notes its possible funding options include borrowing internally from state resources, revenue bonds and private sector financing.
Exploration of specific financing mechanisms is a positive step, but the authority and state lawmakers have little time for delay in deciding upon a strategy and implementing it, the IG wrote.
The authority "has obscured basic facts about the project, hindering lawmakers' ability to provide effective oversight of the project," Belnap wrote.
The High-Speed Rail Authority Board of Directors approved the business plan in June.
In "our response to the OIG report, we respond that we have been clear that continued progress requires establishing a financing mechanism by 2027, and we are actively communicating that need," the authority's spokesperson noted.
In the response to the OIG, the authority wrote that the "Supplemental Project Update Report and the 2026 Business Plan provide the clearest picture to date of how these decisions affect delivery timelines and how appropriate financing tools can keep the (Merced-Bakersfield) segment on schedule — including the need for a mechanism by December 2027 to convert long-term Cap-and-Invest revenues into near-term capital."
The authority also noted in its response that the business plan "provides a clear analysis comparing financing with a pay-as-you-go approach, showing that financing remains more cost-effective even under higher cost scenarios. Relying solely on pay-as-you-go annual funding would lengthen delivery timelines, add billions in inflation-related escalation, and jeopardize the planned 2033 opening."
