Rail Boondoggles Not Limited to High-Speed Projects

It is no secret that many of the Obama Administration’s transportation initiatives have taken taxpayers for a ride. The culprit has been the tens of billions of dollars in funding for high-speed rail projects that the federal government has attempted to force down states’ throats.

Unbeknownst to many taxpayers, however, is that federal funding for light and heavy rail projects has proven to be comparably wasteful. Rail projects in Hawaii, Las Vegas, and elsewhere have been subject to overly rosy construction cost projections and ridership expectations, which often produce a deceptive picture of just how large a financial burden these projects will place on taxpayers.

The President’s stimulus package contained $8 billion for high-speed rail (HSR) projects, including $2.3 billion for a line linking San Francisco to Los Angeles and $1.25 billion for a line stretching between Tampa Bay and Orlando. In October 2010, Secretary of Transportation Ray LaHood announced an additional $2.4 billion for HSR projects across the country. Almost $2 billion of that was redirected from projects in Wisconsin and Ohio, where local officials refused to accept the stimulus money due to matching requirements that the states could not afford.

First proposed in mid-2009, there has been substantial media coverage recently about a proposed $4.9 billion loan from the Obama administration to build a roughly 200-mile high-speed rail line that would run from the edge of the Mojave Desert to downtown Las Vegas. According to a March 26, 2012 article from the Register Guard, the proposed loan from the Federal Railroad Administration (FRA) “would be about 3 times the combined amount the FRA loaned 32 other projects through the Railroad Rehabilitation and Improvement Financing Program since its inception in 2002.”

Ridership of the train will depend largely on whether the project’s targeted consumer demographic, Southern Californians, will be willing to drive 100 miles from the Los Angeles area, pull off the interstate, and then board a train for the final leg of the trip. A study commissioned by ACS Infrastructure North America, referenced in the March 26, 2012 Register Guard article, found that “most travelers were ‘broadly happy’ going to Las Vegas by car or airline. While most travelers would be open to riding a train, the report warned the company would need to lure riders with pampering.” Given that construction cost projections for that rail line have soared to as much as $6.5 billion, excluding interest on the loan, it is doubtful that the project could be financed without a hefty infusion of taxpayer cash.

In Honolulu, a $5.125 billion light rail project is being forced on the city’s residents despite several metrics indicating that public support is dwindling. Worst of all, the project is leeching funds away from other essential infrastructure needs. According to a March 26, 2012 article in the Hawaii Reporter, the mayor of Honolulu’s proposed budget “reveals dramatic reduction in spending levels for fire and police, road rehabilitation and sewer repair and maintenance to accommodate the anticipated debt for rail construction.” The city is hoping to secure $1.55 billion in federal funding for the project, which Senate Appropriations Committee Chairman Daniel Inouye (D-Hawaii) has said he believes he can bring in. This type of federal spending would be indefensible. Taxpayers across the country should not be forced to foot the bill for someone else’s enormously expensive project.

Dissenting voices, such as Cliff Slater of Honolutraffic.com, have long argued that the rail project will not reduce traffic and was selected as a transportation reform before alternative options, such as a bus rapid transit system, were properly examined. According to a recent poll of Hawaiians conducted for Hawaii News Now and the Honolulu Star-Advertiser, 43 percent of those surveyed believe that work on the rail project should proceed, compared to 53 percent that want the project to stop. This is a shift from a 2011 poll in which data indicated that 49 percent of those surveyed approved of the project and 45 percent disapproved.

Detroit Mayor David Bing (D) and Michigan Governor Rick Snyder (R) announced in December 2011 that plans for a $550 million light rail line to run from downtown Detroit to 8 mile road would be scrapped in favor of rapid transit busses. Although a shorter version of the rail line that would derive 80 percent of its funding from private sources has been proposed, there is great skepticism among federal lawmakers about the accuracy of the project’s $125 million cost estimate. If any federal funding is awarded to revamp Detroit’s transportation system, it should go toward developing the rapid transit bus system, a form of transportation in which construction cost estimates and ridership are easier to predict than light rail.

No doubt it would be lovely to have mass transit“whisking through towns at speeds over 100 miles an hour,” as President Obama has said. High-speed rail lines are incredible feats of engineering prowess that make for glorious photography and impressive ribbon-cutting ceremonies. As a result, federal spending on HSR enjoys bipartisan favor. But to blindly support federally-subsidized high-speed rail and other wasteful rail projects is to suffer from a politician’s typical myopia, and a tendency to obsess over what is shiny, while ignoring the massive opportunity costs of such politically-driven projects.

Citizens Against Government Waste teamed with the Reason Foundation and the Howard Jarvis Taxpayers Association to assemble a 2008 report examining the proposal to build a high-speed rail system between the San Francisco Bay Area and Sacramento to Los Angeles and San Diego via the San Joaquin Valley. The report found that the project posed several significant risks, which included overly optimistic projections for revenue, ridership, capital costs, operating costs, and travel times. Among the report’s main conclusion was that going forward with the project “could lead to negative financial consequences, such as substantial additional taxpayer subsidies, private capital investment losses, and bond defaults.”

Federal money spent on uneconomical rail projects could go toward paying down the national debt, education, and other priorities. But best of all, it could be left in the hands of taxpayers.

— P.J. Austin