Going Off the Rails in Texas | Citizens Against Government Waste
The WasteWatcher: The Staff Blog of Citizens Against Government Waste

Going Off the Rails in Texas

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.

America’s first high-speed rail project could happen in Texas, where Houston and Dallas would be connected along a 240-mile stretch of railroad.  However, what Texas Central Partners (TCP) and other high speed rail advocates are calling the Texas Central Rail, CAGW considers a colossal waste of taxpayer dollars.

When the TCR was first introduced, executives at TCP claimed that no taxpayer dollars would be used to finance the project.  However, this has proven to be false, since TCR’s former president and chief executive officer, Tim Keith, stated that TCP would in fact be seeking federal taxpayer dollars to help finance the construction debt of the project.  Due to the overwhelming evidence against its viability, there is little doubt that TCR will lead to taxpayer dollars being wasted for an unwise and unwarranted project.

Furthermore, the proposal fails to meet the “Buy American, Hire American” standard President Trump has set for new infrastructure projects around the country.  TCP has partnered with Central Japan Railway Co. (also known as JR Central), the company behind the Shinkansen “bullet train” system that transports Japanese passengers daily.  TCP has agreed to buy JR Central trains, which will be built in Japan, using Japanese materials, parts, and labor.

The Japanese Bank for International Cooperation, a state-owned entity that provides financing for export-based projects, will also be taking a significant role on the project.  The Bank of Japan has also stated that it “will guarantee a large portion” of the multi-billion dollar debt the project will incur.  And the Japan Overseas Infrastructure Investment Corporation for Transport and Urban Development has already put $40 million into the project.

Potentially having someone other than American taxpayers on the hook seems to be the good news.  But the numbers that TCP has proposed for financing the construction of the project do not add up.  Ridership estimates are grossly exaggerated.  TCP claims that a whopping 5 million passengers annually would ride the train by 2025, or approximately 13,700 passengers daily.  To highlight how outlandish these numbers are, consider that over the last eight quarters an estimated 2,800 passengers flew between Houston and Dallas on a daily basis.  For the TCP projections to become a reality, the high-speed rail would have to capture every single airline passenger, as well as an additional 10,900 daily passengers, for a total ridership that is five times higher than current air travel alone.

In addition to the bloated ridership projections, TCP has greatly underestimated the cost of construction with a price tag of $10 to $12 billion.  However, according to a Reason Foundation study done by Baruch Feigenbaum, the cost is more likely to be around $18 to $20 billion.  The Texas Department of Transportation (TxDOT) concurs with the Reason Foundation’s analysis, estimating the project to cost $18.3 billion.  Unlike the Reason Foundation and TxDOT, TCP has not provided the data to back up its low-ball estimate.

Clearly, the estimated ridership and construction costs do not appear to be grounded in reality.  Furthermore, TCP is entrenched in lawsuits about eminent domain over private property needed to build the railroad.

In December 2016, a Houston judge denied TCP’s petition to recognize the railroad’s eminent domain claims.  The judge’s ruling also prohibited access to private property in order to conduct surveys necessary for an Environmental Impact Statement, a required first step for the infrastructure project.

With wildly unrealistic ridership projections, along with a TxDOT study indicating that these ridership projections are unlikely to cover operational costs, not to mention the dubious legal justification and questionable foreign investment, the TCR may come to a halt before it gets on track.


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