Friday, February 25, 2011

My take on the high speed rail...it's too big a risk...

The State of Florida is facing a budget crisis and though I did not vote for Governor Scott, I support his decision to turn down $2.4 billion in federal money for the bullet train project between Tampa and Orlando. 

When I first heard about the proposed 85-mile high speed rail plan, I was furious. I mean seriously? 85 miles? Would I really want to pay more than it would cost me in time and gas to get between those cities about 30 minutes sooner than by car? Not really. And I can't find a single person who has traveled between those two cities who would either. 

On the surface, knowing what I know about high speed rail and how it never seems to make any money (Amtrak is a fine example, not to mention that once fat cat businessmen and politicians get their greedy little paws on this project there will be mismanagement, corruption and major cost overrun), I really don’t want my state taking on this burden. I don’t care how many jobs it’s alleged to create. In the end, it’s going to cost us and cost us BIG.

Governor Scott made three excellent points in his argument to turn down the money.  From the Examiner:
  1. Capital cost overruns from the project could put Florida taxpayers on the hook for an additional $3 billion.
  2. Ridership and revenue projections are historically overly-optimistic and would likely result in ongoing subsidies that state taxpayers would have to incur. (from $300 million – $575 million over 10 years) – Note: The state subsidizes Tri-Rail $34.6 million a year while passenger revenues covers only $10.4 million of the $64 million annual operating budget.
  3. If the project becomes too costly for taxpayers and is shut down, the state would have to return the $2.4 billion in federal funds to D.C.
If you’re interested, Newsweek did a short but excellent story in October 2010 (definitely worth reading) titled “High Speed Pork: Why Fast Trains are a Waste of Money”

I have some thoughts on this issue based on what I’ve read so far. It is 85 miles one-way between Tampa and Orlando. I’ve driven the corridor many times and on a good day the drive between Tampa and Orlando takes about 90 minutes. The bullet train would travel up to 168 mph and would make five stops between Tampa and Orlando, and the trip would take about 60 minutes. So it is alleged to save about half an hour.
It is estimated that 4.5 million people travel between the two cities annually and that a bullet train might draw 11% of that number. Now by my calculations, 11% of 4.5 million = 495,000. Say a one way ticket cost $50 (there will likely be other costs to riders such as parking fees for their vehicles and luggage/fuel surcharges), that’s roughly $25 million in ticket revenue annually. However, what will it cost to maintain the rail and pay the employees? You’ve got overhead, maintenance, salary, benefits, etc. The costs will be much more than the annual revenue. What does this mean? The high speed rail will be running in the red, forcing it to be subsidized by the government. Remind you of anything? Amtrak perhaps?

Would you pay $50 to ride a one-hour train from Tampa to Orlando? Would you pay roughly $20 to park your car on either end? You might, but would 495,000 people annually be willing to do that? Sure $50 is pretty high for a one-way ticket but I’m estimating high. Any lower would result in a lower revenue for the project (thus equaling higher costs for the taxpayers) but I needed a number. 

Senator Bill Nelson claims that eliminating the project will cost 24,000 jobs and obstruct economic growth along the I-4 corridor. Though I’m wondering…if there are only five proposed stops between the two cities, how exactly will the rail encourage economic growth along the corridor? The train is not likely to stop in small towns but in more populated areas where there already is economic growth. It’s more likely that people driving the corridor will stop more often in places other than those planned five train stops.

How many of the 24,000 jobs will come to an end when construction is complete and how many will be permanent? How many of the 24,000 jobs will be outsourced? If private companies will be hired to build this line, they may not be pulling local workers. There just may not be enough people in the area, or in Florida suited for the jobs required for the rail. And will these companies be local? Or will they be from other states? As private companies should they be required to hire unskilled local workers as part of the deal? 

Who will essentially own the rail? The State? Private companies? Who will maintain it? Will the employees be private corporate employees or state employees? Will they be unionized? 

The main reasons this rail is being pushed is for the 24,000 jobs, the alleged reduction in emissions, and the reduction in overcrowding on the I-4 corridor. Oh and then our politicians supporting this try and make us feel guilty by telling us that if we don't accept the federal money, it and our tax dollars will go to building a rail in another city anyway.  So they say. I don’t buy it. Not good enough reasons.

The trade-offs as a result of this project are in no way in favor of the taxpayers. A lot of money will be put into this project but the return will not be anything close to what the backers predict. What are you willing to give up for the alleged 24,000 jobs and a revenue of $25 million annually, which of course the taxpayers will not see because it won’t be nearly enough to cover the actual cost of running the rail each year? 

Florida is a state where most of the jobs are in the service industry. We have no state income tax and most of the revenue is dependent upon sales taxes and tourism. The high speed rail project is too high a risk. If we want to create jobs, we need to encourage the creation of small businesses as well as manufacturing. We also need to encourage education both in the academic and vocational areas because the more skilled one is be it in an occupation such as teaching and nursing or welding, carpentry, and plumbing, the better chance he or she has at obtaining a well-paying job and career. 

Necessity is the mother of invention and great while things have been done in this nation in the name of necessity but this project is in no way one of them. It is time to focus our energies elsewhere for real solutions to the real problems facing this state using a more practical common-sense approach.

BTW I used a variety of sources: Tampa Bay Examiner, Newsweek, Orlando Sentinel, and the Washington Post


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