SACRAMENTO (CBS SF) -- Governor Gavin Newsom dropped a bombshell early in his State of the State address Tuesday, announcing that California would abandon the state's plan for a high-speed rail connection between San Francisco and Los Angeles.
During the address, he said that while he respects the vision of his predecessors Gov. Jerry Brown and Gov. Arnold Schwarzenegger, "...there simply isn't a path to get from Sacramento to San Diego, let alone from San Francisco to L.A. I wish there were."
"Let's be real," Newsom continued. "The current project, as planned, would cost too much and respectfully take too long. There's been too little oversight and not enough transparency."
Newsom did say that the state would continue work to finish the high-speed rail link between Merced and Bakersfield, dismissing critics who would call it a "train to nowhere" and citing the need to reduce air pollution in the Central Valley and tap into the region's economic potential.
The governor said the state would continue the "regional projects north and south" with the goal of completing the Phase 1 environmental work in addition to establishing new transparency measures that would "hold contractors and consultants accountable to explain how taxpayer dollars are spent."
The Governor's office later clarified that Newsom was still fully committed to building a high-speed rail connection between San Francisco and Los Angeles, despite there not currently being a path to do so.
In 2008, voters gave the state permission to issue $10 billion dollars in bonds to finance the project, which was supposed to stretch from San Francisco to Los Angeles. Three days after Election Day, the High Speed Rail Authority released its 2008 Business Plan estimating the project would cost $33 billion with a completion date of 2020.
For ten years, the project has been beset by ballooning costs, dozens of lawsuits, budget overruns, and scathing audit reports.
In 2011 the HSR Authority estimated the project would cost $98 billion. After a public outcry, in 2012 the Authority scaled back plans. Instead of a dedicated high-speed rail line, the trains would be integrated into regional rail lines for $68 billion. In 2018, the cost estimate for that "blended" plan jumped to $77 billion dollars.
All along, the HSR Authority has anticipated private investors would help defray the costs but none have stepped forward.
Newsom also said that he would be making his Economic Development Director Lenny Mendonca as the next chair of the High Speed Rail Authority, stating that "at the end of the day, transportation and economic development must go hand in hand."
The state got $3.5 billion in federal funding to complete the Merced to Bakersfield line. If it is not complete by 2022, that money must be refunded.
"I am not interested in sending $3.5 billion in federal funding that was allocated to this project back to Donald Trump," Newsom said.
That segment will be completed, but there is simply not enough money for the remainder of the project. As of December 2018, the Hoover Institute estimated the HSR Authority had $12.7 billion on hand.
"Let's just get something done," Newsom told the audience. "We'll connect the revitalized Central Valley to other parts of the state, and continue to push for more federal funding and private dollars."
Assemblyman Davi Chiu (D-San Francisco) told KPIX he wants a full high speed rail system, but he supports the Governor's position.
"We have to make sure that the projects we've already started as part of high speed rail get done and then see where we go from there," said Chiu.
Senator Jim Nielsen (R-Chico) thinks the whole project should be scrapped before any more money is wasted. He does not believe a short rail line from Merced to Bakersfield will help the Central Valley.
"I know the valley. And that train is not going to save the economy of the valley. It will just put more billions into [high speed rail]" said Nielsen.
Newsom also said during his speech that the state faces "hard decisions that are coming due" on clean water, housing and homelessness.
Newsom rebuked President Donald Trump again on border security after saying Monday he will withdraw most of the state's National Guard troops from the Mexico border.
"Last week, we heard (Trump) stand up at the State of the Union and offer a vision of an America fundamentally at odds with California values," he said. "He described a country where inequality didn't seem to be a problem, where climate change didn't exist, and where the greatest threat we face comes from families seeking asylum at the border."
Brown had agreed to deploy troops last year at the Trump administration's request, although he said they couldn't participate in immigration enforcement.
Newsom, though, said there's been a "gray area" in the troops' duties that may have allowed some to inadvertently participate in immigration activities. A Guard official said the state's troops have not helped detain anyone.
Newsom disputed Trump's claim there is a crisis on the border and said any need for National Guard troops was eliminated when Trump decided earlier this month to add 3,750 more U.S. troops at the border.
Newsom's speech also detailed his ambitious policy goals for the state.
He announced the creation of the new Commission on Homelessness & Supportive Housing to address what he said is a moral issue that has become a public health crisis. His administration recently sued the Orange County city of Huntington Beach, accusing it of not meeting its affordable housing goals.
The governor has invited the leaders of 47 other noncomplying cities to a meeting next week for what he called "a candid conversation."
"I don't intend to file suit against all 47, but I'm not going to preside over neglect and denial," he said during his address. "These cities need to summon the political courage to build their fair share of housing."
Newsom also promised to have a plan within 60 days for dealing with the recent bankruptcy filing by Pacific Gas & Electric Corp. after years of devastating wildfires.
He said he has convened a team of the nation's best bankruptcy lawyers and financial experts from the energy sector to work with his administration to develop a strategy to protect the state's power grid, wildfire victims, company employees and ratepayers.
"We are all frustrated and angry that it's come to this," Newsom said. "PG&E didn't do enough to secure dangerous equipment or plan for the future."
He also promised to address the pressure that climate change is putting on utilities.
© Copyright 2019 CBS Broadcasting Inc. All Rights Reserved. The Associated Press contributed to this report.
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