New Geography

Tag: high speed rail

  • State Auditor Says Only Part of California High Speed Rail Line May be Built

    The California State Auditor’s report title says it all: High-Speed Rail Authority: It Risks Delays or an Incomplete System Because of Inadequate Planning, Weak Oversight, and Lax Contract Management.

    The report, which can fairly be characterized as “damning,” criticizes the California High Speed Rail Authority on a wide range of issues, some of which go to the very heart of the project itself.

    For example, the State Auditor says that without additional bond funding from the taxpayers, the state “may have to settle for a plan covering less than a complete corridor.” Given the financial and administrative disarray of the California High Speed Rail Authority, this is a distinct possibility, which was raised by the Reason Foundation California High Speed Rail Due Diligence Report, released in September of 2008 (co-authored by Joseph Vranich and me).

    This could produce a system that spectacularly fails to meet the promises of its promoters, while enriching the income statements mostly offshore firms that build trains and of firms that failed so spectacularly in managing the Big Dig in Boston. Martin Engel, who leads an organization of concerned citizens on the San Francisco peninsula frequently notes that the real driving force behind high speed rail is spending the money. In this regard, the California High Speed Rail Authority will deliver the goods. The vendors and consultants will get their money.

    The State Auditor also raises questions about the potential to attract the substantial private investment necessary to completing the project. This is a legitimate concern, since the California High Speed Rail Authority has raised the possibility of government revenue guarantees for private investors. This could lead to “back door” taxpayer payment of the “private” investment.

    The Authority continues to skirt legal requirements. The State Auditor notes that the “peer review” committee, ordered by state law in 2008, is still not fully constituted. This is not surprising for an agency that delayed its publication of a legally mandated business plan from two months before the 2008 bond election to days after it.

    In its response, the California High Speed Rail Authority was relegated to taking issue with the report’s title, characterizing it as “inflammatory” and “overly aggressive.” It hardly seems inflammatory and overly aggressive to point out that an ill-conceived plan is rushing headlong to failure. The State Auditor rightly dismissed the criticism saying: “We disagree. The title accurately characterizes the risks the Authority faces, given our findings.”

    This potential financial debacle could not have come at a worse time for California. California’s fiscal crisis is of Greek proportions. Economist Bill Watkins has raised the possibility of a default on debt. Former Mayor Richard Riordan has suggested bankruptcy for Los Angeles, the nation’s second largest municipality.

    Unlike many in California, Riverside’s Press-Enterprise in high-speed rail in the context of California’s bleak financial situation: The dearth of answers to basic fiscal questions suggests that taxpayers might end up paying for big financial deficiencies in the rail plans. Deficit-ridden California has better uses for public money; no list of state priorities includes dumping countless billions into faster trains.

  • Opposition to High Speed Rail Grows

    The St. Louis Post Dispatch characterizes high speed rail as a “bridge to the 19th century,” in noting its opposition.

    I couldn’t have said it better, though I tried in my Wall Street Journal Oped (“Runaway Subsidy Train”). As usual, some of the best lines in this article fell on the “cutting room floor,” as editors can allow only so many words. The two most important points were:

    • Significant community opposition is developing. Within the last 10 days there have been community and neighborhood protests against new high speed rail lines in France, Italy, Spain and Hong Kong. Further, opposition to the greenhouse gas belching Mag Lev (magnetic levitation) extension from Shanghai to Hangzhou (China) has blocked that project. There is a burgeoning opposition to the swath that high speed rail will cut through the communities on the peninsula south of San Francisco.
    • A traveler using high speed rail from Orlando to Tampa who gets caught at a rental car counter line might not save any time over driving even if the train reached the speed of light.

    The biggest problem with high speed rail is that it requires huge expenditures of public funding in a market (intercity passenger transport) that does not require subsidies. Much of the impetus comes from generous donations to political campaigns by vendors who live off public funding and by a naive cadre of virtual sheep who believe anything that runs on rails walks on water.

  • High Speed Rail: Not One Big Happy Family

    California High Speed Rail Commission member Rod Diridon is chafing at all of the competition that has been created by the billions committed by the federal government to high speed rail. According to a New York Times report, he called many of the proposed systems around the country “vultures” and told an American Public Transportation Association meeting “If I can borrow a term from our good friends in labor, they are a ‘Do not patronize… And I cannot say it any stronger”. Consistent with that view, Diridon urged that the federal government be asked to commit all of its current $8 billion in funds to the California project.

    There may be even more disturbing news for Diridon: new competition has appeared on the horizon. A report (page 23) by the David Suzuki Foundation and the Pembina Institute (both of Canada) suggests that:

    “Using the Edmonton – Calgary example as a template, judgmentally adjusted for distance, geography and relative land values, we estimate that a full high-speed link would cost about $4 billion. If the cost were shared equally between Canada and the United States, the Canadian total would be about $2 billion.”

    Why stop at that? How about getting a quarter each from Zimbabwe and the Honduras? It would certainly make it less expensive for Canadian taxpayers. Perhaps our friends to the North simply made a typographical error, but perhaps not. Stranger things have been proposed.

  • Why the feds should stay out of high-speed rail (and most transportation)

    Set aside for a minute whether high-speed rail (HSR) makes sense or not on a cost-benefit basis. Regardless of whether it does or not (and some smart people are arguing not), I’d like to make the argument that federal funding has no place in HSR. Instead, it should be left to individual states or regional state coalitions.

    The federally-funded interstate system was originally conceived for defense purposes – rapid mobilization – after Ike saw the German autobahns. Freight and people movement were obvious beneficiaries, over short, medium, and long distances. It is a comprehensive network that crosses state lines, which argues for federal involvement. The government made the minimal investment it had to make – road beds – and people/companies paid for vehicles and fuel. Fuel was taxed to pay for it all. If EZ-tag technology had been available at the time, I suspect they would have tolled it all instead to pay for it.

    Airports followed a similar arrangement: government provides the landing strips and terminals while private companies provide the vehicles and fuel. Passenger ticket taxes pay for the infrastructure. As airports are a local decision, they are (mostly) paid for locally, although regulated federally for standardization and safety.

    HSR is targeted at medium distances only, making it more of a state/regional decision (i.e. a small collection of states). It also requires huge subsidies, as the government provides the track, cars, and energy. There is nothing directly related that can be taxed to pay for it (like fuel taxes for roads and passenger ticket taxes for airports). You could try to tax the rail tickets, but if they were fully priced they would not attract nearly enough riders. So no matter how you slice it, in the end the government (i.e. taxpayers) will be paying the majority of the cost of moving each passenger. The infrastructure cost cannot be covered by direct user fees, as demonstrated in other countries.

    Rather than compare HSR to the interstate highway system, the better analogy would be airports. Imagine if California said, “Feds, give us money to build a few airports in key CA cities and provide a subsidized government-run airline to provide frequent intra-state service where tickets are priced way below cost.” Put that way, people would recognize the idea as absurd, and tell California to do it themselves if they think it’s such a good idea.

    The problem is that a simple program that made sense at the time – a federal gas tax to build an interstate highway system – has evolved into a Frankenstein monster of massive federal involvement in enlarged urban freeways, local rail transit, and now high-speed rail – areas where they simply do not belong. Local transportation planners have shifted decision making from “What are the best cost-benefit investments we can make to move people in our area?” to “How to do we grab our ‘fair’ share of the federal pie, regardless of whether or not the project is something we would consider with our own money?” And that is leading to a lot of boondoggles being built around the country, culminating recently in the famous Bridge to Nowhere in Alaska.

    The answer? The feds need to get out of the transportation business beyond minimal maintenance of the interstate highway system (the basic four lanes – not the expanded urban freeways). Let local entities make local decisions on transportation investments, including funding, and a whole lot of waste will magically disappear.

    This post originally appeared at Houston Strategies.

  • Taiwan’s Failing High Speed Rail Line Faces Government Takeover

    According to Railway Technology, Taiwan’s struggling high speed rail line, the only fully private and commercial high speed rail system in the world, will be taken over by the government his week. The line has been plagued by disappointing ridership levels totaling approximately one-third projected levels. The company has generated insufficient revenues to meet its debt obligations and had previously renegotiated its bank credit to substantially lower interest rates. The company lost $770 million in 2008 and has a debt of approximately $10 billion. The cost of the system was approximately $15 billion.

  • High Speed Rail in Springfield: “The Whole City Would Look Like Crap”

    Not every local official is smitten with the romance of high-speed rail. Graphic evidence of this was provided by Springfield, Illinois mayor Tim Davlin, who expressed his concern that the proposed rail overpasses would slice the city in half. Davlin told the State Journal Register that the “Whole city would look like crap.” This is a problem faced not only by historic Springfield, the state’s capital and location of many Abraham Lincoln sites. Citizens and cities on the San Francisco peninsula are concerned that a proposed “Berlin Wall” will divide their communities if construction of an elevated high speed rail wall proceeds through their communities.