State lawmakers approved the sale of $2.6 billion in state bonds, opening the door to $3.3 billion in federal matching funds. The High Speed Rail Authority hopes to break ground soon on the first 28 miles of a 130-mile stretch in the Central Valley.
But Judge Michael Kenny says according to Proposition 1A, funding must be in place for a 290-mile segment from Merced to the San Fernando Valley, along with environmental approval. That is estimated to cost $24 billion to $31 billion, far more money than is available.
The judge's ruling said, in part, "Funds must be based on a reasonable ... expectation of receipt on a projected date, and not merely a hope or possibility."
At the court hearing in May, the state disagreed.
"There is an identification of funding sources. There is no requirement of a certain level of certainty," said California Deputy Attorney General Michele Inan had said.
In Friday's ruling, the judge said it's not clear that he has the authority to cut off funding. He will hold another hearing to determine what happens next. A date has not yet been set.
Dan Richard, chairman of the rail authority's board, said work will continue until the judge determines the remedy.
Central Valley landowners and the Kings County Board of Supervisors argued in their 2011 lawsuit that the $68 billion high-speed rail plan did not meet the promises made to voters when they approved selling $10 billion in bonds for it.
However, the lawsuit was filed in 2011, before the authority revised its business plan to scale back the cost and revise the planned routes, and high-speed rail officials believe many of the arguments made in court no longer apply to the project.
"The judge indicated that they really had to have the funding for the entire IOS (initial operating segment) that they picked, and that's $31 billion," said Mike Brady, an attorney for the plaintiffs. "They only have $6 billion of the $31 billion, so that's going to be a pretty big hurdle, I think."
Aaron Fukuda, one of the landowners who also was a plaintiff, calls the current plan useless.
"I don't want to give up my property for a dirt berm from Merced to Fresno," said Fukuda.
Earlier this week, the Los Angeles Times reported that various problems may push back the start of construction until early next year. At the same time, House Republicans are trying to cut off federal funding to California High Speed Rail altogether.
The Associated Press contributed to this report.