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The Uncertain Future of the High-Speed Rail Program

Posted by Ken Orski on Tuesday, January 4th, 2011
Innovation NewsBriefs Vol. 22, No. 1 An Editorial Point of View The Illinois Department of Transportation has reached a cooperative agreement with Union Pacific and Amtrak that permits the release of a $1.1 billion federal high-speed rail grant to the state of Illinois to fund passenger rail improvements between Chicago and St. Louis. The agreement was proclaimed by state and federal officials as “historic” and hailed as “one giant step closer to achieving high-speed passenger service between Chicago and St. Louis.” But stripped of its rhetoric, the announcement only reveals how exaggerated that claim in fact is and how cost-ineffective and wasteful the Administration’s “high–speed” program is turning out to be. The billion dollar program of improvements, to be completed by 2014, will enable “higher-speed” trains to travel between Chicago and St. Louis, a distance of 284 miles, in 4 hours and 32 minutes, cutting present trip time by 48 minutes according to the announcement. As the Springfield Journal Register pointedly observed, that is 22 minutes longer than the trip time of 4 hours and 10 minutes promised in the original grant application and in a White House press release announcing the project last January. Currently Amtrak operates passenger service between Chicago and St. Louis at an average speed of 53 mph. The announcement is silent about the expected increase in average speed when the project is completed but our calculations show that the planned track upgrades would raise average speeds to roughly 63 mph. In other words, the billion dollar project will result in increasing the average train speed merely by 10 miles per hour. From what we can read between the lines, Union Pacific drove a hard bargain as a condition of signing the cooperative agreement. “Our priority in working out this agreement,”  the company’s CEO, Jim Young said in a prepared statement, “was to protect Union Pacific’s ability to provide the exceptional freight service our customers need and expect. … This agreement allows us to deliver on those customer commitments.” The message is clear: UP’s freight operations will take precedence over passenger rail operations. The route, we are told, needs to accommodate as many as 22 freight trains a day ultimately. Union Pacific also seems to have won out on another contentious issue. The cooperative agreement is silent about any penalties the railroad might face if on-time performance standards for passenger service are not met – a condition that the Federal Railroad Administration had insisted upon in its initial (and later withdrawn) guidelines concerning the terms of the cooperative agreements. The Illinois announcement, released two weeks before a new Congress takes office, was meant to give a boost to a program that by all accounts is barely limping along.  The record speaks for itself. Item:  Two major high-speed rail projects — in Wisconsin and Ohio— have been cancelled by the incoming governors because  of an excessive cost burden the operation of the new rail services would have imposed on state taxpayers. Item:  The Florida Tampa-to-Orlando high-speed line  is still in doubt as Gov. Rick Scott ponders the project’s cost and financial impact. His verdict is due in February but, with Florida’s budget deficit at $3.5 billion, the Governor says all state agencies, including the Department of Transportation and its Florida Rail Enterprise, will have to justify every penny they want to spend. This involves a state match of $280 million plus future operating costs of the high-speed passenger service. The 84-mile line with its four stops has been described by TIME magazine’s Michael Grunwald as having the feel of a “glorified Disney shuttle” — too short and too slow to earn the distinction of a bullet train. As one bus industry executive observed, this is a market more suitable for a “Megabus”-type of intercity luxury bus service which could be provided at no cost to the Florida taxpayers. We think the Governor would be well advised to consider the express bus alternative before embarking on a $2.7 billion rail project. Item: The California high-speed rail program, with its starter line in the sparsely populated Central Valley, has been dubbed as “the railroad to nowhere.”  “It defies logic and common sense to have the train start and stop in remote areas that have no hope of attaining the ridership needed to justify the cost of the project,” U.S. Rep. Dennis Cardoza (D-CA) wrote in a November 30 letter to Transportation Secretary Ray LaHood. Thanks to an additional federal grant of $616 million, part of the funds previously allocated to the states of Wisconsin and Ohio, the originally planned 65-mile line “from nowhere to nowhere” would now be extended  from the tiny town of Borden north of Fresno to Bakersfield, a city of 339,000 in the southern portion of the valley. Although the Californial High-Speed Rail Authority views this as only a first step in “a continuous process which should logically lead to the completion of the whole network” connecting  Los Angeles with Sacramento and the Bay Area, that vision leaves many observers unconvinced.  As a Wall Street Journal editorial concluded, “a realistic concern is that the state will have to terminate the project after completing the first segment because the feds and private investors won’t pay to finish it.” (WSJ, December 11, 2010). The  price tag to complete the system is estimated at $43 billion.  Strong community opposition at both ends of the line may also prove to be an obstacle to building the full network. Item: a number of HSR cooperative agreements (NC, NY, MI, WA, IA) remain stalled in contentious negotiations with the affected Class 1 railroads which object to burdensome conditions and requirements desired by the government, such as mandatory automatic train control and penalties for not meeting on-time performance. Given this state of affairs, it’s not surprising  that the Administration would wish to portray the Illinois project as a “giant step forward,” hoping to build political momentum behind the program and refute the widely held impression that the high-speed rail initiative is on its last legs. Whether the program can regain momentum, will depend largely on U.S.Congress. To the incoming Republican lawmakers, eager to make good on their promise to cut federal spending, any unspent HSR funds will present a tempting target for rescission.  As of January 1, 2011 only $4.23 billion of the $8 billion in ARRA funds were obligated according to the Federal Transit Administration ( http://www.fra.dot.gov/rpd/HSIPR/462.shtml). As for future funding, an early test will come when the President submits his FY 2012 budget proposal in early March. Will his budget request contain funds for high-speed rail and what will the Congressional reaction to it  be?  “Predictable revenues rather than undocumented ‘needs’ will dictate the level of future transportation budgets,” a senior congressional aide told us, suggesting that spending for programs that “aren’t working” (his words) will need to be cut and investments prioritized so that the Highway Trust Fund can remain solvent. The high-speed rail program, with its relatively small political constituency and modest grass roots support, and with little to show for in terms of concrete accomplishments or demonstrable benefits, will be at a severe disadvantage when competing for limited resources against highways and transit in future congressional appropriations. Adding to the uncertainty facing the HSR initiative is Congressman Mica’s announced intent to revisit the program and refocus it in ways that, in his words, “makes sense.” As Congress heads back to Washington this week and with Republicans poised to take control of the House, high-speed rail advocates will have little to cheer about. Kenneth Orski Editor/Publisher Innovation NewsBriefs

C. Kenneth Orski is a public policy consultant and former principal of the Urban Mobility Corporation. He has worked professionally in the field of transportation for over 30 years, in both the public and private sector. He is editor and publisher of Innovation NewsBriefs, now in its 22nd year of publication.

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