Tuesday, June 28, 2011

Indicators of the Pattern of Required Rail Subsidies from the States. So-called HSR in Iowa.

“The Federal government is again offering money it does not have to entice a state to spend money that it does not have on something it does not need.”  (Wendell Cox)

There are several issues worth pursuing in this brief article, but we will select only one.  Iowa is contemplating a HSR link between Chicago and Iowa City that would oblige the State of Iowa to provide permanent subsidies; first for the construction, and subsequently for the operation of this train.  

The point here is that this is a pattern that was the basis for the rejection of federal funds by three states, Ohio, Wisconsin and Florida. We've made much of this issue.  The "free" HSR dollars from Washington have a big, fat string attached.  The State will be on the hook for untold millions and billions.
So will all those other states now eager for these "free" federal funds.

How can that not be the case for California, with a HSR project expected to cost well above $100 billion?  The several billion for the CHSRA from the FRA will be the gift that keeps on taking. To begin with, the California voted for a $9.95 billion bond issue that will cost the state (that is, the taxpayers) $20 billion over the life of the bonds. 

But, neither the federal nor the state dollars now available will cover the true costs of constructing this rail line.  We'll have more to say about that in further blog entries.

We ignore this reality at our own cost and it will be paid for dearly in a state that struggles to manage its own annual budget.

Monday, June 27th, 2011  
Posted by Malia Hill
Oh, Rail-ly?
Dark cloud of growing public doubts cast shadow on Honolulu rail.
BY MALIA HILL – It looks like Hawaii isn’t the only state out there being seduced onto the shoals of building an expensive rail system by the siren song of federal funding.  Will Iowa (or Hawaii) find the captain that can tie himself to the mast of fiscal responsibility and resist the temptation of federal subsidies?  Governor Abercrombie hasn’t proved to be much of an Odysseus for us yet–at least in terms of leading us out of our directionless wanderings through high spending and budget woes, but one can always hope.  (And now, having beaten this metaphor into submission, I give you the news from Iowa.)
Unneeded Rail Project Extorts State Subsidies
The federal government is asking Iowa to provide at least $20 million in subsidies for a so-called “high-speed rail” line from Chicago to Iowa City — even though a faster, cheaper bus service is already available.
Luxury intercity bus service between the two cities, with plugs for laptop computers and free wireless high-speed Internet, takes 3 1/2 hours and costs $18. The rail service would take 5 hours and would likely cost at least $50, according to Wendell Cox, an adjunct fellow at the National Center for Policy Analysis.
On the New Geography website, he notes: “Only in America does anyone call a train that averages 45 miles per hour ‘high-speed rail.’”
Iowa would be required to provide the subsidies to match federal funding and buy trains, then spend more to operate them.
Even worse, the state funding would provide for only the first section of a planned rail line that would traverse Iowa and connect Chicago with Omaha, Neb., and in the long run this could cost the state hundreds of millions of dollars. The estimated cost of a similar line from Chicago to St. Louis has skyrocketed from $400 million to $4 billion.
Cox concludes: “The Federal government is again offering money it does not have to entice a state to spend money that it does not have on something it does not need.”

While the Obama administration continues to focus on the need for high-speed rail, for the third year in a row intercity bus service has been the fastest growing mode of intercity travel, outpacing air and rail transportation.
New Geography observes: “The comeback of the intercity bus is noteworthy for the fact that it is taking place without government subsidies.”

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