BuckeyeBlog

In the push to reintroduce passenger rail in Ohio, it is often claimed that passenger rail has strong support from the public. As recent data by the Pew Charitable Trust shows, where passenger rail already exists it isn’t all that popular:

Forty-one of Amtrak’s 44 routes lost money in 2008 with losses ranging from nearly $5 to $462 per passenger depending upon the line, according to analysis by Pew’s Subsidyscope.

The line with the highest per passenger subsidy—the Sunset Limited, which runs from New Orleans to Los Angeles—carried almost 72,000 passengers last year. The California Zephyr, which runs from Chicago to San Francisco, had the second-highest per passenger subsidy of $193 and carried nearly 353,000 passengers in 2008. Pew’s analysis indicates that the average loss per passenger on all 44 of Amtrak’s lines was $32, about four times what the loss would be using Amtrak’s figures: only $8 per passenger. (Amtrak uses a different method for calculating route performance).

The Northeast Corridor has the highest passenger volume of any Amtrak route, carrying nearly 10.9 million people in 2008. The corridor’s high-speed Acela Express made a profit of about $41 per passenger. But the more heavily utilized Northeast Regional, with more than twice as many riders as the Acela, lost almost $5 per passenger.

As I explained here, when taxpayers have to pick up the tab for part (or in Ohio, most) of the cost of your ride, then it’s there just isn’t the demand for passenger rail that supporters claim.

Yesterday Transportation Secretary Ray LaHood came to Ohio to extol the virtues of passenger rail. I hope he offered something in his talk that was more  insightful than his comments as reported in the Dispatch: “if you build it, they will come” and “people like to ride trains.”

His platitudes are not only lame but they are also wrong. If you build it, they may come to the train station, but they won’t ride it unless taxpayers pay the majority of their ticket price and fully subsidize the initial start up costs. And, yes, people like to ride trains. They just don’t want to pay the full cost to do so.

I have nothing against train travel. As I explain here, I just don’t want taxpayers to subsidize it.

Did you know today is “World Car Free Day“? I didn’t either until a few hours ago. I learned this after my latest Viewpoint was published on the Buckeye Institute main page. The topic of my Viewpoint? The waste of taxpayer money that is passenger rail. Those who are celebrating World Car Free Day almost certainly love the idea of passenger rail. It’s a beautiful coincidence that couldn’t have been planned better if we tried.

Gongwer News Service($) reported on a press conference by passenger rail advocates yesterday that had this astonishing claim:

Creation of a rail line from Boston to Portland, Maine produced a 220% return on the $100 million in public spending, according to real estate developer Robert Martin.

The project has generated more than $7 billion in construction investment, 17,800 new jobs in the region, $76 million in tax revenue, and $2.4 billion in consumer purchases, he said during a news conference.

That seemed quite shocking to me as the evidence I’ve heard about passenger rail indicates that its economic development benefits are pretty paltry (if they exist at all). So I did some searching to see if I need to revise my opinion. A quick Google search shows that I don’t.

The numbers quoted by Gongwer aren’t the economic benefits of the Maine railroad. They are, in fact, merely an estimate from a pro-rail group that are estimated to occur by 2030. Either the Gongwer reporter got it wrong or the pro-rail advocate who said these things was misinformed. Regardless, even this estimate of the thirty-year benefits from the Maine railroad are inflated and unrealistic.

The moral of the story — don’t believe everything you hear about how great passenger rail is.

Gongwer News Service($) reports that Ohio’s passenger rail plans are already costing more than anticipated. In a split vote, the Controlling Board approved a $200,000 increase in the amount being paid to a California consulting firm to analyze the feasibility of passenger rail service. The Controlling Board  approved $450,000 in March to pay for this contract.

The amount approved for this contract is the first in many expenditures by the state on passenger rail service. It’s a pretty bad sign for taxpayers when this first expenditure has to be increased by 44% in only five months. It is a good example of exactly how this passenger rail push will work, though. As various parts of the plan unfold, the government will say each costs a certain amount and then that amount will be revised upwards later. It’s pretty clear this project will require far more from state taxpayers than the current estimates of $10 million in yearly subsidies.

Harvard economics professor Edward Glaeser has a series of posts on the New York Times Economix blog taking apart the case for high-speed rail. This series should be required reading for all Ohio policymakers, especially those like Governor Strickland who are so enamored with high-speed rail.

What were Glaeser’s conclusions? Costs are high and benefits are minimal. That is, high-speed rail costs a lot to construct and operate and it offers little in the way of environmental benefits nor will it do much to help “sprawl” (if you think that’s a problem).

Crunch the numbers any way you want, but it’s hard to make a case that the benefits of high-speed rail are worth the costs.

According to Gongwer($), the Ohio Rail Development Commission is excited that driving between Ohio’s cities will take less time than passenger rail. Yes, even though they admit that driving will save you a lot of time, the ORDC thinks that rail travel is competitive.

According to ORDC numbers, it would take three hours by rail to get from Cleveland to Columbus. Driving takes two-and-a-half hours. From Cincinnati to Columbus you’ll be on the train for three hours as opposed to two hours and twenty minutes in a car.

These estimates don’t include other factors which will make rail travel even longer. Unless your house is right next to the train station, you’re going to need to spend time getting to the train. Similarly, unless your destination is right next to the train station, you’re going to spend time getting from the station to where you are ultimately going. And you’re going to spend time buying tickets, waiting for the train, boarding the train, waiting for the train to leave, waiting to get off the train, etc. Factor in all of these things and it’s clear that, time-wise, driving is a far better option for inter-city travel.

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Sam Staley, a senior fellow at the Buckeye Institute, has an article in Reason magazine about why the job creation potential of high-speed rail is not as great as some politicians claim:

Ultimately, high-speed rail’s impacts on American travel patterns and employment productivity are going to be negligible, and the actual job creation potential for high speed rail is much more modest than proponents admit.

Take, for example, the Ohio Hub corridor linking Cincinnati, Cleveland, Columbus, and Toledo to regional destinations such as Chicago and Toronto. Ohio is one of the nation’s largest state economies, employing 5.3 million people. As an old-line manufacturing state, Ohio has lost 300,000 jobs just in the past year. Needless to say, Ohioans will be attracted to the optimistic rhetoric of rail’s job creation potential. Moreover, preliminary estimates by independent consultants suggest the Ohio Hub may actually cover its annual operating costs (although supporters are counting on the federal government covering 80 percent of capital costs of the $3.7 billion project).

Yet, even with these federal subsidies the consultant reports suggest that a $2.3 billion investment in building the rail corridor would generate only 54,540 jobs over the projected nine-year construction phase. That works out to 2,635 jobs per year at a cost of $42,170 per job. Further analysis found 16,700 permanent jobs would be created by the system once the system was up and running, assuming optimistically that ridership reaches forecasted levels and fares are set to cover its operating costs. While that might seem like a lot of jobs, the effort will do little to stem the economic tide turning against Ohio and other states facing the headwinds of global competition and a rising services-based economy.

For transportation investments to have a meaningful economic impact, they will need to cost-effectively improve America’s ability to move goods, services, and people from one place to another. High-speed rail doesn’t do that. It is an extremely costly way to achieve limited portions of these goals, and it inevitably fails as a broad-based solution to the country’s transportation challenges.

It’s not even a certainty to be built yet, but already politicians are jockeying to turn the proposed passenger rail network into even more of a pork barrel project than it already is. Officials in Butler County (and other Ohio counties) are trying to make sure any passenger train includes stops in their jurisdiction. These officials make grand promises that such stops will produce jobs, economic development, tax revenue, and cotton candy for everyone in the area (OK, so no one has promised the cotton candy … yet).

These promises are often based on nothing more than wishful thinking and overly-optimistic economic development “studies” that predict exactly what policymakers want, not what is actually likely to happen. A great example of this is found in Cincinnati’s Riverfront Transit Center, where, at its “May 2003 dedication, local, state and federal officials proudly predicted it soon would handle up to 500 buses and 20,000 people per hour during sporting or other riverfront events. The day was coming, they added, when passenger trains tied into the center also would zip along the riverfront.” Did any of that happen? Nope: “One day last week, however, the midday volume at the center was zero buses – the same as it is most hours of most days. Anyone waiting for a train would have a long wait, considering that there are no tracks yet.”

It’s a pretty safe bet than any passenger rail stop in Butler County or any other Ohio county will be more akin to the Riverfront Transit Center than the bustling economic center predicted by county officials.

As Randal O’Toole’s report shows, passenger rail is a boondoggle in and of itself. Once you get local politicians trying to steer pork to their jurisdictions, it will cost taxpayers even more.

Governor Ted Strickland returned to Washington, D.C., to beg federal officials to spend more money in Ohio. You can’t really blame him, since his begging earlier this year helped result in the federal “stimulus” bill that allowed him and the General Assembly to (largely) escape dealing with Ohio’s budget problems. Of course, this trip’s begging was to try and convince the feds to allow a passenger rail system to be built in the state, something which would likely exacerbate Ohio’s spending mess.

The governor says it’s “intolerable” that Ohio doesn’t have much passenger rail service. That’s like saying it’s intolerable that Ohio doesn’t have a vacuum tube industry or that there aren’t enough Calecovisions being played in the state. The fact is that people have chosen through how they spend their money not to take passenger rail, whether in Ohio or around the nation. Passenger rail is a relic of days when there wasn’t low-cost and reliable air transportation, many people lived in cities instead of suburbs, and cars were more scarce. Today, though, passenger rail makes little economic sense. Those who do use it are heavily subsidized by those who don’t. But politicians love it because there is a romantic notion in our nation about “taking the train” (even though most of us never do so).

The Buckeye Institute will be releasing a report soon about the folly of high-speed rail plans. Keep checking back for a detailed analysis of why this infatuation with passenger rail is just a waste of taxpayer dollars.