Policy Brief

The Tampa to Orlando High-Speed Rail Project

A Florida taxpayer risk assessment

Governor Rick Scott is evaluating whether to proceed with construction of the proposed Tampa to Orlando high-speed rail project. The potential cost to Florida taxpayers is a principal factor in this evaluation. Capital cost escalation, revenue shortfalls and higher than projected operating costs are common in high-speed rail projects. Governor Scott Walker of Wisconsin and Governor-elect John Kasich of Ohio have cancelled projects funded by the Obama administration’s high-speed rail program and foregone the federal funding because of cost concerns such as these.

Construction cost escalation recently led New Jersey Governor Chris Christie to cancel a federally funded tunnel to avoid up to $4 billion in projected cost overruns that would have been the responsibility of the state’s taxpayers.1 Perhaps the ultimate example of an over-budget megaproject is the Boston “Central Artery” (“Big Dig”) highway project, which exceeded projected costs by $16 billion, including interest.2 While there was considerable federal funding in the project as originally planned, much of the cost overrun became the responsibility of Massachusetts taxpayers.

Florida taxpayers face two potentially significant financial risks from the project:

1. Capital Cost Escalation: If construction cost projections prove overly optimistic, costs could increase substantially from the current estimates. The state of Florida would be responsible for virtually all of any such increase. This report estimates that the cost to Florida taxpayers could be $3 billion more than currently projected.

2. Operating Subsidy Liability: If ridership and revenue projections prove overly optimistic, it could become necessary for the state to provide an annual operating subsidy for the service. A state operating subsidy could also be necessitated by operating costs that are greater than projected. This risk could easily run into the hundreds of millions of dollars per year.

Wendell Cox is principal of Demographia, a St. Louis region-based public policy firm. Mr. Cox was appointed to three terms on the Los Angeles County Transportation Commission by Mayor Tom Bradley, where he introduced the amendment to Proposition A (1980) that established the local funding set-aside for the Los Angeles light rail and metro lines. He was also appointed to the Amtrak Reform Council by Speaker of the House Newt Gingrich to complete the unexpired term of New Jersey Governor Christine Todd Whitman. There, he was instrumental in forging the final financial self-sufficiency plan that was required by the U.S. Congress.

He served for nine years as a visiting professor at the Conservatoire National des Arts et Metiers in Paris, where he lectured on transport and demogaphics. He lectures widely and is a frequent op-ed commentary contributor. His regular "newgeography.com" column includes "The Evolving Urban Form" series, consisting of profiles of world urban areas.

Mr. Cox's professional endeavors on urban and intercity transport have the objective of ensuring that riders and taxpayers receive fair value in return for their funding and that scarce public resources are directed to the most beneficial projects and programs.

Demographia's "Public Purpose" website (www.publicpurpose.com) was designated twice by the National Journal as a "Top Transport Internet Site." Demographia's principal website (Demographia.com) is home of the Annual Demographia International Housing Affordability Survey, with metropolitan area data in six nations and Hong Kong and Demographia World Urban Areas, the only annual compendium of population, land area and density data for identified urban areas with more than 500,000 population.

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.