California’s beleaguered high-speed rail project paid more than $680,000 in dubious travel expenses to consultants connected to the project — including premium plane tickets and rideshare trips to gyms, nightclubs and an “escape room,” according to a damning new audit.
A report released Tuesday by the inspector general of the California High Speed Rail Agency found the department paid some $2 million in travel payments to four consulting firms — financial, legal and track design contractors — but handed out a slew of questionable reimbursements in the process.
Consultants billed the state for premium flight upgrades, prohibited international travel and rideshare trips to gyms, restaurants, a cigar lounge and more, according to the report obtained by The California Post.
“We often found little or no explanation of the need for consultants to travel, and when we did find stated purposes for travel those purposes frequently raised doubts about its necessity,” the report said.
California’s ambitious high-speed rail megaproject is facing a critical cash bottleneck and could run out of money by the end of 2027. The California High-Speed Rail Authority’s Inspector General warned the project will run out of funding by as soon as the end of next year.
The estimated cost of the train project has ballooned to a staggering $231 billion, according to one estimate, with completion now delayed until roughly 2039. However, the rail authority pegs the project cost at $126.3 billion after a reassessment this year.
Yet despite the fiscal woes, consultants for the rail project appeared to spend without restraint on travel costs, according to the report, citing vague explanations such as “meetings with HSR executives.”
The rail authority sloppily approved the expenses on “an assumption that the CEO or a member of the executive team requested or desired the travel, without any explanation of the need for travel or consideration of its cost,” the inspector general alleged.
The total contractor payments amounted to $2 million over the last two fiscal years, but the rail authority didn’t routinely document to expense approvals, according to the audit. About 60% of the $1.15 million of travel expenses reviewed had no advance approval.
Of the $2 million, the inspector general tallied $680,000 that had no advance approval, including $592,900 in expenses that were not allowable under state travel regulations or contract rules.
Many of the questionable expenses were Uber rides to recreational spots.
For example, one consultant was repeatedly reimbursed for premium Uber rides to Planet Fitness gym locations in and around Sacramento. The audit also listed Uber rides to a tiki bar, nightclub and various restaurants in the Sacramento area.
The inspector general also found trips to an out-of-state sushi restaurant in Denver and a cigar lounge in Washington, D.C.
“These trips clearly appear to be for personal enjoyment rather than for the benefit of the State, and the Authority should have questioned the necessity of those costs rather than paying them outright,” the report said.
Premium and first-class flights were taken on the rail authority’s dime without justification, and the rail authority paid more than $118,000 in travel-related costs associated with individuals traveling from other countries — despite international travel being barred contractual agreements.
To remediate the issues, the inspector general asked the rail authority to enforce travel regulations and to established approved office locations for all consultants.
Republicans and other long-time critics of the expensive high-speed rail project blasted the findings of the report as more evidence the project needed to be shut down.
These are “wasteful and unallowable travel expenses,” said Assembly GOP Leader Alexandra Macedo. “Californians are already paying some of the highest costs in the country. They should not be forced to subsidize consultant lifestyles for a rail project that still has not laid a single mile of track.”
Sen. Tony Strickland (R) said the report is not a suprise.
“California families are struggling with the high cost of living and deserve answers and accountability for how their taxpayer dollars are being spent on this project,” he told The Post. “It’s time to pull the plug and put those taxpayer dollars toward the needs of Californians today.”
“The Authority appreciates the Office of the Inspector General’s oversight and remains committed to transparency and continuous improvements as we build the nation’s first high-speed rail system,” a spokesperson for the rail authority said in a statement.
“We take these findings seriously. In response, the Authority will strengthen internal controls around consultant travel, implement more rigorous documentation and approval requirements, and recover any improper costs identified. We are also working closely with the OIG to ensure corrective action that is both accurate and fair,” the statement added.
The project is far from complete since workers broke ground on the project in 2015. Only this year did the ill-fated rail project enter what officials called the “track-laying phase.”
Gov. Gavin Newsom, who himself admitted in 2019 there was no path to get the train from San Francisco to Los Angeles, pushed the state to instead focus on a 171-mile segment between Merced and Bakersfield.
About 119 miles are under active construction with completion now targeted for 2032, though the Office of the Inspector General, in charge of auditing the project, recently said that goal may be optimistic.
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