BuckeyeBlog

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.

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.

The Ohio Senate passed up a major opportunity to stand up for fiscal responsibility when it approved the state transportation bill yesterday. Instead of stripping out the governor’s plan to fund a passenger rail system in the state, the GOP-controlled body merely made it slightly more difficult for that plan to be implemented. For a party that talks about being good stewards of the taxpayer money and which has condemned the governor for his irresponsible spending proposals, the Republican members of the Senate  failed to back up their talk with any action.

Passenger rail is slated to cost taxpayers $250 million to establish it and then $10 million a year in subsidies. Given the unpopularity of passenger rail in most areas of the nation and the high costs imposed on taxpayers by other systems, I’d be willing to bet the actual cost of the rail system will far exceed these figures. Passenger rail may be great in theory but when people actually have to make a choice to put down spend their money to ride it, people generally choose to drive. This is an unneeded project for Ohio and will be a burden on taxpayers for years to come.

The Senate does deserve some credit by changing the way this passenger rail system would be created. The governor wanted its final approval to be made by the Controlling Board (an unelected body with a Democratic majority). The Senate’s bill says that the General Assembly must approve its creation instead. That’s a small step in the right direction.

Although the Republican Senators failed miserably to protect the taxpayer on this bill, they deserve some credit for stopping the governor’s plans to infringe upon your liberty. They removed a provisions backed by the governor and House that would have allowed speed cameras in construction zones and that would have given police authority to stop motorists who are not wearing their seatbelts. Both those moves should be applauded by Ohioans who value their freedom.

Last week the Ohio House approved Governor Strickland’s transportation budget. There are a lot of problems with this budget. For one, it spends too much. I find it hard to believe we need to be spending $7.6 billion on transportation “needs” when the state is facing such dire fiscal problems. This is exemplified by the governor’s push for reintroduction of passenger rail in the state, which is a dream for social planners but which will drain taxpayer money for years to come. Aside from fiscal issues, there are also policy implications from this bill. Its provisions to allow speed cameras and give police power to stop motorists because they aren’t wearing their seat belts will mean a loss of liberty for Ohioans.

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From the Columbus Dispatch:

Rep. Ross McGregor, R-Springfield, asked Transportation Department chief Jolene Molitoris whether the state should spend money on rail service at a time when an I-90 bridge in Cleveland is too dilapidated to carry trucks.

Speaking in a finance committee hearing on the state transportation budget, McGregor called trains “quite a romantic notion” but perhaps not the most practical thing in a recession.

Molitoris, a former federal railroad administrator, disagreed.

“I would call it a good business decision,” she said. “The whole romantic notion is really not one I would apply to this at all.”

Molitoris acknowledged that the passenger rail line would lose money and require a public subsidy. That’s true of all passenger rail systems around the world, she said.

So let me get this straight: a state bureaucrat thinks that a “good business decision” means you operate your business at a loss and require taxpayer subsidies to remain viable? No wonder the state is in such a fiscal mess. Of course, I shouldn’t be too hard on Ms. Molitoris. With all the farmers, auto executives, and other “businessmen” (in less politically-correct times we’d call them welfare recipients) who only maintain viable businesses through government subsidies, I guess it’s easy to see where Ms. Molitoris got her ideas on sound business practice.

I mentioned a Reason Foundation study in a post last week that illustrates the folly of government investment in passenger rail.

Governor Ted Strickland has proposed funding for a passenger rail between Cincinnati, Columbus, and Cleveland. As the Toledo Blade reports, lawmakers are skeptical of it. They certainly should be. While politicians usually love rail projects and claim they have a variety of benefits, they are usually extremely expensive and extremely underused.

As the Reason Foundation wrote back in 2005:

Intercity passenger rail clearly will not have any significant impact on long-distance travel since “rail travel is not time-competitive with air travel.” The only possible congestion relief would be on shorter-distance travel in certain densely populated areas of the country, and even then the impact is likely to be minuscule. According to a GAO report, “[I]n 1995, we reported that each passenger train along the busy Los Angeles-San Diego corridor kept about 129 cars off the highway (about 2,240 cars each day)—a small number relative to the total volume.”

And while the following quote pertains to Amtrak, if you replace “Amtrak” with “Governor Strickland’s rail proposal,” it is just as accurate:

…intercity passenger rail travel declined substantially after World War II and has remained relatively constant since the creation of Amtrak. The development of the Interstate Highway System beginning in 1956 significantly reduced the cost of automobile travel, which also contributed to the growth of suburbs and increased reliance on the automobile for transportation. Technological innovations such as improvements in fuel economy reduced the relative price of automobile travel even further. Air travel also became cheaper, and the reduction in travel time it offered (though you might not know it from the security lines at airports these days) made it a more convenient option for long-distance travel. So, generally speaking, automobiles have become more attractive than rail for short-distance travel and airplanes have become more attractive for long-distance travel. Where does this leave Amtrak? The answer is “nowhere.”

With the state facing a huge deficit, killing this proposal seems like an easy way of saving some money.