Out of Control Policy Blog

Fiscal Reality Check Stops Louisiana Rail Boondoggle in Its Tracks

Having lived in New Orleans for several years and having visited Baton Rouge periodically this year, when I first heard that rail advocates were pushing a new passenger line between the two cities, my first reaction was, "why?" It only takes 75-90 minutes to drive it by car, and if Amtrak would have thought there was any serious demand they would not have routed their Sunset Limited rail route out of New Orleans to bypass Baton Rouge entirely on its way to Lafayette, Houston and beyond.

Further, why would a state facing a massive, looming budget deficit invest precious resources into a heavily subsidized transportation project that will only benefit relatively few people at a tremendously high cost? And set the stage for an even bigger potential boondoggle if that new segment ultimately became part of the utopian Gulf Coast high speed rail project.

That's apparently the conclusion Louisiana Governor Bobby Jindal's administration came to as well, according to The Advocate. Despite rail backers' fanciful claims that "if you build it, they will come," the administration is acknowledging the larger fiscal handwriting on the wall—"if we build it, the state would have to subsidize it and there's no money."

Backers of a push to revive passenger rail service between Baton Rouge and New Orleans made a pitch for the project to Gov. Bobby Jindal’s aides but failed to change any minds.

The Jindal administration said on Aug. 21 the state was dropping possible plans to seek about $300 million in special federal aid for the rail line.

"Nothing has changed from our perspective," Stephen Waguespack, Jindal’s deputy chief of staff, said Wednesday. [...]

Jindal's office has said no money would be sought because it would be a waste of tax dollars. [...][W]illiam Ankner, secretary for the state Transportation and Development, said in August the state could not figure out how to come up with $18 million in yearly operating costs amid continuing state budget problems. [...]

Waguespack noted that the $18 million in annual state costs would have been in addition to the revenue raised by a $20 per ticket cost to ride the train. "And I assume that the number would only go up," he said of the $18 million.

That's a safe assumption. We've done a great deal of research on mass transit and high-speed rail, and despite the allure of "free" federal money on the upfront capital cost side, there is no rail system in the U.S. where fare box collections cover operational and maintenance costs. Just ask New Orleans how much it's subsidizing its streetcar (light-rail) system, then scale it up from there.

However, rail backers are a persistent lot. This and other rail ideas (like a fantasy MagLev train across Lake Pontchartrain about a decade ago) have been floating around in Louisiana for a long time and never seem to die away. The point that rail makes utterly no sense and would be a fiscal drain in a fiscal crisis doesn't seem to dawn on proponents however, who are vowing to fight on despite this latest setback:

[State Rep. Michael] Jackson said U.S. Rep. Anh "Joseph" Cao, a New Orleans Republican, who had a representative at the meeting, planned to see if a request for aid could be filed by someone other than the Jindal administration or if the deadline for applications could be extended. Cao is a member of the U.S. House Transportation and Infrastructure Committee.

Helping to pay for railroad operational costs through higher property taxes along the corridor is another option, Jackson said.

"They are putting a great deal of the burden on the locals, on somebody else other than the state," he said of Jindal’s office.

This assertion is laughable—who exactly is putting a "great deal of burden on the locals"? Is it the Governor who says no because this would be a waste of taxpayer money, or is it the rail backers so bent on this boondoggle that they are proposing to hike the property taxes of folks along the corridor to help subsidize it? In the words of Homer Simpson, "Doh!"

There's a similar tale from Georgia that's relevant here, where a few years ago Atlanta-area southern exurbs were clamoring for state rail dollars to extend rail service to their unpopulated areas. But when the state said no and told the locals to pay for it themselves if they really wanted it, local officials balked. See my 2005 blog post on this here.

Here's a thought—if there's such a demand for BR-to-NOLA rail, then let the locals make the decision to fund it themselves. If it's that high of a priority, they'll certainly be willing to find the funds to make it happen, right? Doubtful at best. When the rubber meets the road, local officials know that if they were to cast a vote for a property tax hike, they would face an irate citizenry demanding to know why their property taxes were going up in a recession to fund a unnecessary project that they will rarely, if ever, use.

Let's hope that more policymakers (like those in Iowa, per Sam's post yesterday) realize that rail is not just bad transportation and mobility policy, generally speaking, it's also bad fiscal policy.

UPDATE: Sam and I must be on the same page today. Here's what he had to say about Transportation Secretary Ray LaHood's "if you built it they will come" comments yesterday, which are as relevant in Louisiana as they are anywhere else:

Secretary LaHood should read the reports from his own agency, or, more specifically, the Federal Transit Administration. In a 2007 "Contractor Performance Assessment Report," the FTA found that 40 percent of New Starts transit project ridership was below two thirds of the forecast used to justify federal investment. About half were within 80 percent of forecasted ridership or higher. This is an incredibly high "margin of error" and really reflects the dismal performance of most of these projects (the lionshare of which are rail projects). Five were within 10 percent (over or under) of their forecasted ridership. Only one (St. Louis St. Clair rail extension) was significantly over forecasted ridership.

Real-world performance certainly doesn't support the idea that if cities and states build new rails systems the riders will simply materialize to take advantage of them (even with massive public subsidies).

Of course, most of these projects are intracity rail projects, but intercity train ridership has fared even worse historically.

Leonard Gilroy is Director of Government Reform


« Denver School Closures Improve Outcomes… | Main | Occupational Licensing and the Beard… »

Comments to "Fiscal Reality Check Stops Louisiana Rail Boondoggle in Its Tracks":

jiji | November 16, 2009, 10:51pm | #

Until the nineteenth century, all Patek shop cloth was made by hand. It took a great deal of time and effort to gather fibers from plants or animals to make into yarn which Longines shop could then be made into cloth. Humans probably first made textiles casio shop to meet important needs. These include textiles for keeping warm, creating shelter, and holding goods. But cultures Patek Philippe shop around the world also developed methods of making cloth that were artistic, creative, and beautiful.



Out of Control Policy Archives