Sunday, April 17, 2011

The Sunk Costs of High-Speed Rail

This HSR program was politicized from the beginning.  While the Republicans have cut whatever amount for HSR out of the FY2011 budget -- zeroed it out -- they have yet to do the same for the Transportation Bill authorization in the FY 2012 budget; that is, zero it out.  Hopefully, they will.   

Petra Todorovich, whose salary depends upon his ability to promote HSR funding, comments on the budget cuts by saying,  "It's always worrisome when an important infrastructure initiative becomes politicized,"  Is he kidding?  "Becomes politicized?" This program, from the very beginning has been nothing if not a political pork distribution effort.

So, why is California getting so much of the available federal funding, and can keep spending what it already has? Because, as I say, it's political pork, administered by the Obama Administration to secure electoral votes. California has the most of those.  California, I don't have to tell you, is a very blue state and the Administration is determined to throw money at California to keep it securely voting for Obama's re-election in 2012.

While Ohio, Wisconsin and Florida are always mentioned as HSR rejectionist states, there are several others, like upstate New York, and Missouri, whose Legislatures have Republicans also seeking to reject the federal dollars for high-speed rail.  

What the Republicans acknowledge and the Democrats persist in denying is that those Federal stimulus dollars for HSR are not 'free.'  They come at high cost to the state which must support the major part of construction costs and all the subsidizing necessary for the train's operations.  It's the government gift that keeps on taking.

The Democrats are very eager for those federal dollars because they are in denial about all this.  They don't care what the out-year costs will be to the state, since, by then, they will have received all the browny points (and gotten themselves re-elected) for bringing those dollars into the state to boost their ailing economies.

Kastenbaum's article tells us about the construction that will almost surely proceed in the California Central Valley, even though the likelihood of finding all those additional billions to actually build the entire rail system are close to zero.  So, all the expenditures for starting the high-speed rail construction are sunk costs; never to be recouped.  Wasted on the major contractors and their sub-contractors and consultants.  It's not about the train; it's about the money.  Money which buys politicians and their re-election.

No one is ready to confront the real costs of Obama's vision for high-speed rain in the US.  No, it's not $53 billion; that was the Obama draft budget number for the next transportation budget re-authorization.  

The current proposed costs for a national HSR program,   "The president's goal is to give 80 percent of Americans access to high-speed intercity trains by 2020," will be well over one trillion dollars.  And that's to build a luxury train for the well to do.  That's a good enough reason to be opposed to it.

U.S. high-speed rail program hit by deep budget cuts
By Steve Kastenbaum, CNN Radio correspondent
April 13, 2011 8:18 p.m. EDT

(CNN) -- President Barack Obama's plan for a national high-speed rail network suffered a serious setback as a result of the fight over budget cuts. No money will be allocated for high-speed rail projects for the remainder of 2011.

Supporters have pointed to the plan as a job creator and economy booster, while critics have expressed doubts about whether spending billions of dollars on high-speed rail is the best use of federal funds.

The news came as a blow to high-speed rail advocates such as Petra Todorovich of the Regional Plan Association in New York. "Obviously, it's a disappointment for many of the states that were seeking funding from the high-speed rail program," Todorovich said, "and it's a loss of momentum as we scale up for the president's ambitious proposal."

As details of the budget compromise on Capitol Hill were made available to the public there was confusion over just how much money was being cut from the high-speed rail program. Some published reports put the figure at $2.9 billion, and at least one said it was as much as $4.4 billion.
Experts respond to user comments about high-speed rail

But the U.S. Department of Transportation's figure is significantly lower. Federal Rail Administration officials claim that they lost what amounts to $1.4 billion in funds for high-speed rail.
The budget bill says the amount of money for "Department of Transportation, Federal Railroad Administration, Capital Assistance for High Speed Rail Corridors and Intercity Passenger Rail Service shall be $0" for the remainder of fiscal year 2011. Another section of the bill rescinds $400 million from the funds that were already budgeted for high-speed rail in 2010.

The cuts will not affect projects already under way across the United States, according to DOT officials. Projects that have been awarded grants will keep their funding. But that's not to say that there aren't concerns about future funding.

"It's always worrisome when an important infrastructure initiative becomes politicized," Todorovich said. "It's a big setback."

Proponents of California's high-speed rail project are concerned about the cuts and whether they can depend on future funding for a line that will ultimately link Los Angeles with San Francisco. The first phase is moving forward in the state's Central Valley.

Todorovich said that so far state officials have secured about $3 billion for a project that will cost about $50 billion. They were counting on federal dollars for the bulk of the remainder.

Obama's vision for a national high-speed rail network took some hits even before it became a part of budget negotiations in Congress. Transportation Secretary Ray LaHood redirected high-speed rail funds away from Wisconsin and Ohio after both Republican governors said they would oppose projects in their states.

Most recently, Florida Gov. Rick Scott, also a Republican, rejected a plan to link Tampa and Orlando via a high-speed rail line that ultimately would have grown to include Miami and Jacksonville among its stops. As a result, Florida lost $2.4 billion in federal funding. Now, Scott is taking credit for inspiring Washington to cut the rail program, according to the Broward-Palm Beach New Times.

Twenty-four states submitted requests to the DOT for a portion of Florida's high-speed rail funds. 

The department was in the process of reallocating the money when the budget cuts were announced.

The Obama administration has proposed spending $53 billion over a quarter of a century on a national high-speed rail network. The president's goal is to give 80 percent of Americans access to high-speed intercity trains by 2020.