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 size—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