The governor's plan jeopardizes a project that has consumed an estimated $30 million in public funds, but one whose soaring price tag has raised questions about its viability.
The stage is set for a fight in the Legislature over high-speed rail, which was projected to cost up to $37 billion, break ground in 2007, and begin serving passengers 10 to 12 years later.
"We're going to have to haggle it out with the governor," said Sen. Dean Florez, D-Shafter. "We've never given up the fight."
Schwarzenegger's $222 billion package of transportation, education, flood control, public safety and other planned improvements over the next 10 years gives no money to high-speed rail.
State Finance Director Mike Genest said construction of the 700-mile line simply does not seem practical in the near future.
Schwarzenegger also is asking the Legislature to pull from the November ballot a $10 billion bond measure to begin bullet-train construction.
"Under our calculations, we could not afford this entire package of infrastructure if we also did the $10 billion for high-speed rail and we don't see that being affordable in this 10-year cycle," Genest said.
Schwarzenegger proposes to maintain an office, staff and governing board for high-speed rail, but not to commit construction funds.
"There is still hope for high-speed rail," Genest said. "There may be other ways to finance it. There may be other routes they can pursue. We do think it's a visionary idea, maybe kind of far in the future."
But Mehdi Morshed, executive director of the High-Speed Rail Authority, said the project will die if the state won't help pay for it.
Asked if alternative funds were available, Morshed said, "Not that I know of even if there federal money, it would require a state match, and there's no state match."
"There's really no good reason to keep things going if the state's not putting any money into it," Morshed said.
Bullet trains, which operate in Japan and Europe, were envisioned as a way to reduce traffic congestion by zooming commuters from Sacramento to San Jose in 50 minutes, for example, or from San Francisco to Los Angeles in 2 hours and 35 minutes.
Proponents said the system also would bolster the state's economy by creating hundreds of thousands of jobs from construction work to restaurant and retail clerks along the 30-station route.
The system was scheduled to be built in phases, with the first stretch extending from San Francisco to Los Angeles.
Critics said the system would burden taxpayers for decades to come. Cost estimates have risen from $25 billion to about $37 billion in recent years.
"We always felt it was a boondoggle from start to finish," said Jon Coupal of the Howard Jarvis Taxpayers Association.
"If it has died, its death could not be a more blessed event, as far as we're concerned," Coupal said.
As an alternative to Schwarzenegger's growth plan, Senate President Pro Tem Don Perata has proposed a smaller-scale, $10.27 billion bond proposal that would include $1 billion for high-speed rail.
"He sees (high-speed rail) as something in the state's long-term interest," said Alicia Dlugosh, Perata's spokeswoman.
Under Perata's plan, the money would be spent for right-of-way acquisition, bridges, tracks and grade separations that could be used for commuter or freight trains regardless whether the bullet train system is built.
Perata supports taking the $10 billion bullet-train bond measure off November's ballot. He wants Schwarzenegger and lawmakers to agree instead on a compromise package of bonds that includes seed money for high-speed rail, Dlugosh said.
Assembly Speaker Fabian Nunez, like Perata, also has proposed an alternative to Schwarzenegger's $222 billion strategic growth plan that includes $68 billion of general obligation bonds.
Nunez's plan, currently skeletal in form, does not identify high-speed rail as among priority projects for funding.
"We want to see it happen sooner, rather than later, but not this year," said Steve Maviglio, Nunez's spokesman.
Assemblyman Alberto Torrico, D-Newark, said that delaying high-speed rail indefinitely could send costs soaring "geometrically" to $60 billion or $100 billion.
"Then, it's probably never going to happen," he said. "And that's sad. It's just shortsighted, to be honest with you, because it's something we need."
Torrico vowed to join the fight to force a compromise with Schwarzenegger.
But Sen. Tom McClintock, R-Thousand Oaks, said high-speed rail never should be funded through general obligation bonds, which are repaid from the state's general fund.
"It's a textbook example of how not to borrow money," he said. "High-speed rail will get you from Los Angeles to San Francisco for about the same price as an airline ticket and take you two hours longer. You tell me where the market is."