All the search engines today are filled with the $2 billion dollar give-away news articles and blogs. Each state that was in the receiving line and got a piece of the action is crowing over their own economic salvation and at the same time, blasting Florida for having relinquished that funding. (Nya, Nya, Florida. . we got your money!) You can read the details in this morning's earlier blog containing the Department of Transportation press release.
I certainly can't speak for each and every state and what these funds actually mean to them. But, I can generalize insofar as most states received these for Amtrak upgrades. In order to get away with this bait-and-switch, the DOT expanded the name from High-Speed Rail to High-Performance Rail. I guess being high is the important part.
How many new jobs that will create is anyone's guess, but it certainly won't be the thousands promised by Ray LaHood. The people that are going to do the work are already employed by the construction companies under contract with Amtrak.
In many cases, the intent is for speeds to go from 79 mph to 110 mph. It needs to be said right here and now, that while top speed is always the most newsworthy (especially for those who believe that everything in the world is a race), what really matters is the actual average speed and total travel time from point A to point B.
And, to follow up on that point, what really matters is not station to station travel, although that's all high-speed or any other speed train is able to provide, it's the door to door travel time for the passenger. If it takes a combined time of one hour from home to the station and one hour from the station to your intended office, the trip is going to be at least two hours long, regardless of how swift your travel time will be, including warp-speed.
All of which is to say, that all these Amtrak upgrades (NOTE: with high-speed rail dollars!), will increase general speed averages incrementally and modestly. Big deal!
But wait! What about California's true high-speed miracle waiting to begin construction in 2012? Our top-speed is going to be a mind-blowing 220 mph. We just got $300 million more from that Florida funding pool. The DOT press release suggests that those $300 million will buy the rail authority 20 more miles of track. That works out to $15 million per mile. The rail authority itself claims that they are going to be spending $75 million per mile in the Central Valley. Which goes to show you that California's rail authority AND the US Department of Transportation make up numbers to promote whatever they want us to believe, true or not. $15 million per mile is nonsense.
So, what can we expect? The federal funds now available to the CHSRA, aggregated, is almost three and a half billion dollars. Adding in the intended portion of the state Prop.1A funds, that total number for the Central Valley becomes less than $7 billion which still isn't enough for them to build them anything HSR usable. In any case, that's all they will have for the Central Valley at $75 million per mile. They can stretch it some, but not much. Did I tell you that there is world-wide inflation? That what they budget this year will cost more next year?
Meanwhile, it looks like there will be no more federal dollars after this. There are no more FY2011 funds, and the Republicans are determined that there will be no FY2012 high-speed rail funds either. Actually, Bill Warren has done some calculations and discovers that there is a remaining balance of $1.6 billion for HSR not accounted for in the FY2011 pool. We will keep our eye on that.
That means, that although the CHSRA can begin construction, or at least, land acquisition by September of 2012 (when construction must start or they lose the federal dollars), they are constrained to do that only in the Central Valley and nowhere else. And, unless the government finds more dollars to throw our way, that ends the HSR effort in California.
This does not mean that the CHSRA will close their offices in Sacramento, because so long as Governor Brown wants this organization to stay in business, he will find administrative funds for them to pay the rent on their lavish downtown offices, keep the staff on salary, and otherwise not let the rail authority disappear.
Want to know what this is all about for the CHSRA and their contractors? Protecting their high salaries.
What, in the meantime, is happening in Washington with high-speed rail dollars? Here is Bill Warren's take on this. He is one of the authors, along with Alain Enthoven and William Grindley, of all the financial papers to which we have been referring these past several months. (We posted a recent one this morning.)
1. The DOT/FRA has $10.1B in ARRA and FY09 and FY10 funds to award for HSR. There are no FY11 funds, per the budget agreement of last month. I predict there will be no FY12 funds allocated to HSR in the FY12 budget to be put in place, in the next few months, for the Oct 2011 to Sept 2012 time period.
2. As of this announcement, $5.8B of the $10.1B have been obligated, i.e. agreements have been signed with the states. This is consistent with the FRA HSR Web site, as of last night.
3. This leaves $4.3B of un-obligated funds, which Congress could rescind if they wanted to. Here is what we know about this bucket of $4.3B:
3.1. A total of $2.0B was awarded today, of which Calif. was awarded $0.3B.
3.2. There is an awarded, but un-obligated, grant of $0.715M to Calif. that the CHSRA says they expect to get "obligated" in this month, or in June.
3.3. That leaves a total of $1.6B that I have no visibility to. Some of these funds may be awarded to some states (other than Calif), and the rest would be available for future awards by the FRA.
What we learn from this is that Congress can still go after the $4.3B of un-obligated funds. And if they do, $1.015B of these un-obligated funds are currently awarded to Calif. (25% of the total)
Ray LaHood has become the voice of high-speed rail for the Obama Administration. Here is what Sam Staley has to say about LaHood's announcement for today, when the DOT Secretary spoke about the $2 billion awards.
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Secretary LaHood: "People that Ride Trains Know People Like Trains"
Samuel Staley
May 9, 2011, 10:22am
U.S. Department of Transportation Secretary Ray LaHood was on CNBC's Squawk Box this morning making the case for high-speed rail and Amtrak. The Obama Administration announced $2 billion in additional grants to Amtrak and 15 states to upgrade their passenger rail networks. The seven and a half minute video likely captures the best spin the Administration has on high-speed rail.
Among the "money" quotes:
•"This [high speed rail] is not just the president and vice presidents vision. It's America's vision."
•"Anybody that gets on a train knows that people like trains. I took the train up here last night from Washington. It was completely full. People are ready to get on trains."
•"We will connect 80 percent of America [to high speed rail] in the next 25 years. That's about half the time it took to build the Interstate system."
•"Amtrak made money last year because they gave good service, it's on time and people can afford it."
Unfortunately, the Secretary was wrong on several facts, including the one that Amtrak made money last year. Assuming he is referring to the 2010 fiscal year, which ended September 30, 2010, Amtrak had a net loss of $1.3 billion (up from $1.2 billion in FY 2009) according to its Audited Consolidated Financial Statements-Fiscal Year 2010. It's net loss on operations was $1.2 billion in FY 2010 (although it generated revenues of $2.5 bililon).
I believe Secretary LaHood was referring to the Northeast Corridor, which includes the medium-speed Acela line. Reportedly, this line covers its operating costs, but not its capital costs. But, that's one line along the highest density corridor in America (by a long shot). The ability to replicate this success elsewhere is highly questionable given U.S. development patterns, employment concentrations, and residential densities.
