HSR: Answering the Critics

Background: After many years of bi-partisan support, Wisconsin’s development of a High Speed Rail network as part of the Midwest Regional Rail Initiative suddenly become controversial after the state won an $810 million federal grant to construct the Milwaukee-Madison extension of the Chicago-Milwaukee Hiawatha Service, the next step in building a high speed rail line to the Twin Cities. Among the first to oppose the project was Milwaukee County Executive Scott Walker, a prominent GOP Candidate for Governor.

The following is the exact wording of a press release issued by the Walker Campaign on March 7, 2010. As you read this piece, you will recognize many of the arguments being used by those who oppose the High Speed Rail project.

http://www.scottwalker.org/press-release/2010/03/icymi-beware-hidden-costs-federal-stimulus

For each section, the release itself is quoted in its entirety following the words, “Walker Campaign:” then followed by the word “Answer:” with specific rebuttal arguments and data for each point in the release. The Answers were written by Scott Rogers, a businessman from Eau Claire, Wis., who is co-chair of the West Central Wisconsin Rail Coalition.

Walker Campaign:

Beware the hidden costs of this federal stimulus

By Scott Walker

Date: Sunday, March 7, 2010

The latest sales pitch for high-speed rail reminds me of those raffles where the grand prize is a new home.

The winners are thrilled until they encounter all the unexpected costs of accepting the prize. They can’t afford to pay the tax on the winnings, let alone the property taxes and upkeep on a brand new house. What they thought was a wonderful prize is now filled with costs they can never afford to pay.

When Gov. Jim Doyle and Milwaukee Mayor Tom Barrett advocate spending $810 million in federal stimulus money on a high-speed rail line from Milwaukee to Madison, they don’t talk about all the hidden costs to Wisconsin taxpayers to operate and maintain the line once it’s built. Maybe that’s because nobody really knows how much it will cost.

Answer: High Speed Rail in Wisconsin is a serious transportation project the state has been planning since Governor Tommy Thompson first proposed it in 1996. Contrary to the implication that winning the federal award was by luck, Wisconsin is getting the money because of its leadership and the advance planning that’s gone into the Milwaukee-Madison extension. In fact, the state got a good deal: The legislature had previously approved the bonding towards the anticipated 20% state share of the capital costs. Instead, Wisconsin DOT was awarded 100% federal funding. (Even earlier, Wisconsin voters back in 1992 approved a constitutional amendment to allow the state to invest in railroads, partly with projects like this in mind.)

There’s been nothing “hidden” about the state’s developing plans for High Speed Rail. WisDOT and the other states involved in the Midwest Regional Rail Initiative have published numerous studies, have had many public forums and hearings, and WisDOT provides a significant amount of information on its website about its plans (like the Chicago-Milwaukee-Madison grant application) for anyone who wants to see it. High Speed Rail is part of the state’s Connections 2030 long range transportation plan, developed with a significant amount of public input.

To suggest that supporters “don’t talk about” the costs or that “nobody really knows” is just plain wrong. Indeed, this whole winning-a-raffle line is an analogy in search of an issue. Perhaps it could apply to some federal programs, but it clearly does not apply here.

Walker Campaign: One thing is certain: Federal stimulus money for high-speed rail is not free; the government is borrowing it from future generations. Accepting this money means obligating Wisconsin taxpayers to spend millions more every year. They say Wisconsin should grab the money before another state gets it and just hope everything will work out. That is just the kind of irresponsible spending that will lead to even bigger state budget deficits and higher taxes down the road.

Answer: Although the federal budget deficit and concerns about spending are real, that is a broader question and does not make the High Speed Rail project any less valuable. The federal government has historically played a key role in funding the capital for transportation projects, like the Interstate Highway System. The total of $8 billion nationally being allocated to High Speed Rail in the 2009 Recovery Act is minuscule compared to the billions spent on highways over the past 75 years. (According to the US Chamber of Commerce, only about 6% of the 2009 Recovery Act funding went to transportation.) Indeed, Wisconsin also qualified for over $500 million in highway funding from the same stimulus program. Does the Walker campaign suggest also sending this money back to Washington? Or accept no federal funding for any program? That would be the logical extension of this argument.

The state’s passenger rail program is a very small part of the annual transportation budget, and the additional $7.5 million per year that the Milwaukee-Madison line will require in ongoing support is less than two tenths of 1% of the state’s $3.4 billion annual transportation budget. (Interestingly, opponents have now decided to unilaterally round up this number and are claiming the cost will be $10 million/year.)

Walker Campaign: They tell us that spending $810 million on high-speed rail will create thousands of new Wisconsin jobs, but according to the federal government’s own estimate, the total number of permanent jobs created will be 55. That’s more than $14.5 million per job, not including any hidden costs!

Answer: High Speed Rail is not a jobs program per se, but a transportation project. The jobs and other economic benefits come from the new transportation and development benefits it will create. Does anyone suggest that we measure the value of the construction of a freeway only in the number of permanent jobs it creates for highway workers? An economic benefits study conducted for the Midwest Regional Rail Initiative found that development of a regional High Speed Rail System will return over $1.80 in net economic benefits from every dollar invested.

Walker Campaign: As for hidden costs, no one seems able to provide an accurate estimate of what it will cost to operate and maintain the new rail line or who will pay for it. Rail projects in numerous other areas have seen original cost estimates skyrocket once construction begins. For example, California’s new, faster system will be about $65 million per mile.

Answer: This assertion makes claims for which no actual evidence is presented. California, which already has substantial passenger rail ridership using conventional trains, is contemplating a true high speed rail line with speeds of over 200 mph. Comparing the cost of that kind of system with the lower-cost incremental approach Wisconsin is taking — with top speeds of 110 mph and using existing rail rights of way — is comparing apples and oranges.

WisDOT has provided extensive documentation of its plans and reasonable cost estimates based upon reliable industry standards and measures.

Walker Campaign: In addition, study after study shows that rail passenger fares are likely to cover only 20% of the operating costs. That leaves you and me to pick up the other 80% through higher taxes and fees. Now is not the right time to be promoting a major tax or fee increase.

Answer: What “study after study?” The assertion of a 20% cost recovery is an utter fabrication without any attribution. WisDOT’s financial plan for the first year of the service estimates a 62% cost recovery, a conservative estimate that is less than the estimated 65% shown by the current Chicago-Milwaukee Hiawatha trains. [And it should be noted the Hiawatha Service’s farebox recovery ratio has improved from 51% in 2004 as it has become more popular.] What is not mentioned is that all modes receive subsidies from taxpayers, including highways. A recent Pew Foundation study found that, in 2007, just 51% of the costs of highway and street construction and maintenance came from user fees like gas taxes.

Walker Campaign: And just how many people will actually ride the new train? Initial estimates predict 338,000 people will ride the train from downtown Milwaukee to the Dane County Airport in Madison each year. That’s but a fraction of the state’s population.

Answer: Keep in mind that this service is an extension of the already-operating and successful Chicago-Milwaukee route [where ridership has grown 58% over the past 5 years to over 740,000 people last year], and is only the next phase in its planned extension to western Wisconsin and the Twin Cities. Many of the riders will be passengers traveling between various points all along the line. (And what, exactly, is the point in citing this as a “fraction of the state’s population?” Should we apply the same question to funding a county road or bridge in a rural county?) Note: WisDOT recently decided to locate the Madison station downtown, near Monona Terrace.

Walker Campaign: It would take one hour and 20 minutes and cost me between $40 and $66 round trip. I would save time and money driving my 1998 Saturn. I can get there and back on half a tank of gas without making any stops, and I won’t have to pay for parking on the front end or taxi service once I arrive. I think the average person could easily do the math and reach a similar conclusion.

Answer: Just because one person would not use the train does not mean that nobody would. Indeed, this is about giving Wisconsin citizens a choice, especially as energy costs increase in the future, congestion clogs highways beyond what we can solve by adding lanes, and as our baby boomer population ages and becomes less able to drive. Driving a car costs a whole lot more than just the gas. Using the IRS allowed reimbursement for the cost of operating a car (50 cents/mile), it costs about $40 to drive one way from Milwaukee to Madison, making the train very competitive for a single or business traveler. As travelers use the train for longer trips (Madison-Chicago, Brookfield to St. Paul, Eau Claire or La Crosse to Milwaukee), the train becomes even more practical. (By the way, the highway cost cited also does not include the part of the trip picked up by taxpayers, and will go up faster as fuel prices increase in the future, since trains are more fuel efficient.)

And like any transportation carrier, it can be expected that the Madison extension will offer many opportunities for reduced off-peak and other special fares like those on the Hiawatha trains — seniors, students, veterans, AAA, multi-ride and free kids rides on certain days.

Walker Campaign: We need to know where the state will get the money to fully fund high-speed rail when it can’t even afford to maintain our current transportation systems.

Over the past few years, Doyle and the Legislature have raided $1.3 billion from the segregated transportation fund. That money was supposed to be dedicated to fixing and expanding our existing roads and bridges. Now they can’t even keep up with the potholes.

Think about how much more stress rail will put on our already scarce transportation dollars. These are dollars that fix the roads and bridges used by the vast majority of Wisconsin residents.

Answer: The raiding of transportation funds for other uses is of concern to all transportation advocates. However, this does not diminish the need to create transportation alternatives that will serve our citizens in the future, and create less wear and tear on the highways. To put the $1.3 billion in perspective, it would fund the annual cost of the Milwaukee-Madison extension for 173 years. It is completely out of proportion to assert that the relatively small ongoing cost of the high speed rail program is keeping needed highway programs from being funded.

Walker has been quoted as saying he favors a constitutional amendment to prevent future raids on the transportation fund, and might favor putting sales tax revenues from new car sales into the transportation fund. It is true that current funding sources for transportation are not keeping up with state’s needs, so those are solutions worth considering.

Walker Campaign: Too many politicians confuse more government spending with economic recovery. Despite the claims of Doyle and Barrett to the contrary, this project is not a silver bullet to create jobs.

Committing to more government spending without the revenue to pay for it will only lead to higher taxes and bigger budget deficits. And that will drive jobs away when they are needed most.

Wisconsin deserves a government that looks for ways to do more with less, not one that looks for new ways to tax families and employers when they can least afford it.

Answer: On the contrary, building High Speed Rail is the kind of innovation and forward thinking that will well serve Wisconsin’s economy going into the future. Scott Walker has been quoted as saying the Tommy Thompson administration is a model he would like to emulate for creating a positive economic environment that is business friendly and creates jobs. Just remember that it was Thompson who originally looked into the future and proposed the High Speed Rail project. Likewise, Republican Governors Tim Pawlenty of Minnesota and Mitch Daniels of Indiana were among the eight Midwest Governors (including Governor Doyle) who signed an April 2009 letter to the US DOT encouraging the awarding of High Speed Rail funds from the Recovery Act to the region’s projects, like Milwaukee-Madison.

Walker Campaign: Ignoring the hidden costs associated with the “award” of federal funds is like winning the raffle for a house but ignoring the true costs of the “prize” – and that’s just not a good way to balance any budget.

Scott Walker is the Milwaukee County executive and a candidate for the GOP gubernatorial nomination.

Answer: Since the release of this statement, Walker has been quoted many times asserting that, even if construction starts, he would stop the project if elected Governor. He has also been quoted as saying he would try to persuade the federal government to reallocate the $810 million award to highways.

The latter suggestion is unrealistic. States seeking High Speed Rail grants submitted applications that totaled several times more than the available funds, which are still a drop in the bucket compared to annual federal spending on other transportation programs. Clearly, these funds would go to another state, and Wisconsin would lose its leadership position in High Speed Rail – and its economic competitiveness – as the 21st Century continues to unfold. And to stop the project in its tracks would likely mean Wisconsin would not only have to forgo any federal funding, but absorb any costs already incurred. That’s hardly a prudent or fiscally conservative position.

Mr. Walker (and other critics) should show some true political courage and reconsider his position on this entire issue… to look fully and fairly at the costs, value, return on investment and priority of building a high speed rail system for Wisconsin. By doing so, he would reach the conclusion that this is a good deal for the state of Wisconsin and a project important to our future economy.

4 responses to “HSR: Answering the Critics

  1. Pingback: Coalition releases analysis debunking anti-rail arguments | West Central Wisconsin Rail Coalition

  2. Pingback: Just the facts | West Central Wisconsin Rail Coalition

  3. Pingback: Rail Coalition Supports Constitutional Amendment to prohibit Transportation Fund transfers | West Central Wisconsin Rail Coalition

  4. Pingback: What’s the future of rail passenger service in Wisconsin? | West Central Wisconsin Rail Coalition

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