Commentary

Florida’s High-Speed Rail Route Is Going to be Very Costly for Taxpayers

The old saying about not looking a gift horse in the mouth should be challenged by Florida taxpayers, when it comes to today’s announcement of a $1.25 billion grant to start development of a high-speed rail line between Orlando and Tampa. If Florida accepts this money without figuring out how to pay for the rest of the project, there could be very serious consequences for hard-pressed taxpayers.

Unlike most of the other “high-speed” rail projects receiving federal grants, this one is not to upgrade an existing rail line for a top speed of 110 miles per hour (mph) vs the current 79 mph trains. No, the Florida project is for brand new, truly high-speed rail on exclusive, new right of way, along the I-4 highway corridor. This is by far the most expensive form of high-speed rail. A 2009 GAO report that looked at recent high-speed rail projects in France, Spain, and Japan shows them averaging $51 million per mile (excluding one very high-cost Japanese line). For the 84 miles of the Tampa-Orlando route, that totals $4.28 billion. So merely to build this project is going to require another $3 billion from somewhere. Florida is facing a several billion dollar budget deficit this year, so it’s hard to see where the extra money could come from.

It definitely won’t come from private investors, since these kinds of projects do not make a return on their investment. Indeed, a December 2009 report on high-speed rail from the Congressional Research Service (CRS) helpfully points out that of all the dozens of high-speed rail projects build worldwide over the last several decades, only two are “estimated” to have paid for their capital cost out of farebox revenues. All the rest, in Japan, France, Spain, and elsewhere have been largely paid for by general taxpayers.

Then there’s the little matter of operating and maintenance costs. Both GAO and CRS note that whether such a line can cover those costs out of passenger revenues is highly dependent on ridership. The ideal situation is a corridor several hundred miles long anchored by two large, centralized metro areas. The federal fact sheet on the Florida line claims that both Tampa and Orlando are among the largest 20 metro areas; in fact, while Tampa ranks 17th, Orlando is 32nd in sizeā€”and both are very spread-out, low-density areas. This corridor does not make CRS’s list of the top 12 city-pairs for potential high-speed rail ridership. In fact, CRS estimates that the train in this corridor would likely reduce traffic on I-4 by less than 2 percent. That doesn’t bode well for high-speed rail ridership, especially since 84 miles is way too short for people to fly, so all potential riders must come from those who would otherwise drive.

Given all this, I estimate that Florida taxpayers will get stuck with an annual operating deficit that they will have to pay for, indefinitely.

Bottom line: this gift horse looks to me like a gift that will keep on taking.

Related: Reason’s Report on the California High-Speed Rail Plan

Robert Poole is director of transportation policy and Searle Freedom Trust Transportation Fellow at Reason Foundation. Poole, an MIT-trained engineer, has advised the Ronald Reagan, the George H.W. Bush, the Clinton, and the George W. Bush administrations.

Surface Transportation

In the field of surface transportation, Poole has advised the Federal Highway Administration, the Federal Transit Administration, the White House Office of Policy Development, National Economic Council, Government Accountability Office, and state DOTs in numerous states.

Poole's 1988 policy paper proposing privately financed toll lanes to relieve congestion directly inspired California's landmark private tollway law (AB 680), which authorized four pilot toll projects including the successful 91 Express Lanes in Orange County. More than 20 other states and the federal government have since enacted similar public-private partnership legislation. In 1993, Poole oversaw a study that coined the term HOT (high-occupancy toll) Lanes, a term which has become widely accepted since.

California Gov. Pete Wilson appointed Poole to the California's Commission on Transportation Investment and he also served on the Caltrans Privatization Advisory Steering Committee, where he helped oversee the implementation of AB 680.

From 2003 to 2005, he was a member of the Transportation Research Board's special committee on the long-term viability of the fuel tax for highway finance. In 2008 he served as a member of the Texas Study Committee on Private Participation in Toll Roads, appointed by Gov. Rick Perry. In 2009, he was a member of an Expert Review Panel for Washington State DOT, advising on a $1.5 billion toll mega-project. In 2010, he was a member of the transportation transition team for Florida's Governor-elect Rick Scott. He is a member of two TRB standing committees: Congestion Pricing and Managed Lanes.

Aviation

Poole is a member of the Government Accountability Office's National Aviation Studies Advisory Panel and he has testified before the House and Senate's aviation subcommittees on numerous occasions. Following the terrorist attacks of Sept. 11, 2001, Poole consulted the White House Domestic Policy Council and the leadership of the House Transportation & Infrastructure Committee.

He has also advised the Federal Aviation Administration, Office of the Secretary of Transportation, White House Office of Policy Development, National Performance Review, National Economic Council, and the National Civil Aviation Review Commission on aviation issues. Poole is a member of the Critical Infrastructure Council of the Los Angeles Economic Development Corporation and of the Air Traffic Control Association.

Poole was among the first to propose the commercialization of the U.S. air traffic control system, and his work in this field has helped shape proposals for a U.S. air traffic control corporation. A version of his corporation concept was implemented in Canada in 1996 and was more recently endorsed by several former top FAA administrators.

Poole's studies also launched a national debate on airport privatization in the United States. He advised both the FAA and local officials during the 1989-90 controversy over the proposed privatization of Albany (NY) Airport. His policy research on this issue helped inspire Congress' 1996 enactment of the Airport Privatization Pilot Program and the privatization of Indianapolis' airport management under Mayor Steve Goldsmith.

General Background

Robert Poole co-founded the Reason Foundation with Manny Klausner and Tibor Machan in 1978, and served as its president and CEO from then until the end of 2000. He was a member of the Bush-Cheney transition team in 2000. Over the years, he has advised the Reagan, George H.W. Bush, Clinton, and George W. Bush administrations on privatization and transportation policy.

Poole is credited as the first person to use the term "privatization" to refer to the contracting-out of public services and is the author of the first-ever book on privatization, Cutting Back City Hall, published by Universe Books in 1980. He is also editor of the books Instead of Regulation: Alternatives to Federal Regulatory Agencies (Lexington Books, 1981), Defending a Free Society (Lexington Books, 1984), and Unnatural Monopolies (Lexington Books, 1985). He also co-edited the book Free Minds & Free Markets: 25 Years of Reason (Pacific Research Institute, 1993).

Poole has written hundreds of articles, papers, and policy studies on privatization and transportation issues. His popular writings have appeared in national newspapers, including The New York Times, The Wall Street Journal, USA Today, Forbes, and numerous other publications. He has also been a guest on network television programs such as Good Morning America, NBC's Nightly News, ABC's World News Tonight, and the CBS Evening News. Poole writes a monthly column on transportation issues for Public Works Financing.

Poole earned his B.S. and M.S. in mechanical engineering at Massachusetts Institute of Technology (MIT) and did graduate work in operations research at New York University.