California High-Speed Rail Authority's Own Watchdog Flags $2M in 'Wasteful' Consultant Spending

The Office of the Inspector General for the California High-Speed Rail Authority has identified more than $2 million paid to consultants for travel-related costs that failed to comply with state regulations and contract requirements.

The findings appear in an investigative report on allegations of wasteful and unallowable travel expenses for contracted consultants. The watchdog flagged expenditures including travel to destinations that appeared unrelated to state business, travel originating from locations other than a consultant's approved office location, and upgraded ride-share rides and flights.

The scrutiny arrives as the authority confronts a financial crisis. A July 31 report from the authority's OIG concluded the California High-Speed Rail Authority may run out of money by December 2027.

To bridge the gap, the authority is asking the California Department of Finance to find a way to borrow against the expected $20 billion in funding from the state's cap-and-invest program, according to the Fresno Bee. That program is due to disburse $1 billion per year through 2046.

"If we don't solve the cash issue to bring cash in advance and go back to a billion dollar a year construction, the project is not going to be on the schedule that we have today," Authority CEO Ian Choudri said at the authority's June 24 board meeting.

The spending criticism is not the authority's only immediate problem. The city and county of Merced sent a letter responding to changes in the authority's 2026 business plan that depart from the railroad's original plan. To cut costs, the authority reduced the scope of the Merced-Bakersfield segment, and the revised plan would relocate the Merced station away from the city's downtown.

"Moving the station would eliminate the planned combined downtown connection among high-speed rail, Amtrak and [the Altamont Corridor Express], while creating substantial new infrastructure and connectivity needs," the Merced letter states.

The authority's own projections underscore the segment's financial fragility. When the Merced-Bakersfield segment enters service, projected passenger revenue would cover only about 45% to 74% of operation and maintenance costs, according to the authority's 2025 Supplemental Project Update report.

Republican lawmakers in the state have escalated the spending controversy. In a Sept. 22 letter to Attorney General Rob Bonta, they demanded an investigation of wasteful spending.

"We also ask that you investigate whether executives at the High-Speed Rail Authority violated any criminal statutes in ordering these payments, including misappropriation of public funds," the letter states.

The authority now faces pressure on three fronts: an OIG finding of noncompliant consultant expenses, a projected funding cliff in December 2027, and local opposition to its cost-cutting redesign of the Merced-Bakersfield segment. Whether the Department of Finance authorizes borrowing against the cap-and-invest funds will largely determine whether construction continues at its current pace.