SACRAMENTO — California’s high-speed rail project could exhaust its available funding as early as December 2027 unless it secures additional financing, the project’s inspector general has warned, adding pressure on state lawmakers to address a multibillion-dollar funding gap.
The warning came from Benjamin Belnap, inspector general for the California High-Speed Rail Authority, in a review of the authority’s 2026 business plan. Belnap’s office said the plan did not sufficiently disclose that existing funding resources could be depleted by late 2027 without new financing.
The authority is building a 171-mile initial operating segment between Merced and Bakersfield in California’s Central Valley. Its 2026 draft business plan estimated the segment would cost about $36 billion, while the broader Phase 1 system linking San Francisco with Los Angeles and Anaheim carries substantially higher projected costs.
The funding challenge has intensified after the authority removed roughly $4 billion in previously awarded federal funds from its financial projections. The authority said the federal government terminated the grants in 2025 and that it dismissed its legal challenge later that year. Federal funding now represents less than 10% of the program’s overall budget, according to the authority.
California has committed long-term funding through its greenhouse-gas reduction program. Beginning in the 2026-27 fiscal year, the authority is scheduled to receive $1 billion annually from the state’s Greenhouse Gas Reduction Fund rather than a percentage of auction proceeds, providing a more predictable revenue stream.
But the inspector general has said that revenue alone does not resolve the project’s near-term financing requirements. In testimony to a state legislative committee in April, Belnap said his office estimated the project was about two years away from major schedule delays caused by insufficient near-term funding and that the authority needed to secure financing to avoid them.
The authority has said its revised 2026 business plan seeks to reduce costs and deliver the Central Valley segment more efficiently. Its draft plan projected a $1.7 billion reduction in the estimated cost of delivering the broader Phase 1 system through changes to the project.
The California High-Speed Rail Authority is continuing construction in the Central Valley while pursuing additional financing options, including public-private partnerships. The funding outlook remains a key issue as state lawmakers consider measures affecting the project and its financing.
