President Barack Obama last year outlined an ambitious initiative to get high-speed rail on track in the United States. But while the government's high-speed rail initiative looked good on paper, it runs the risk of being derailed by high costs and political opposition.
"Railroads were always the pride of America, and stitched us together. Now Japan, China, all of Europe have high-speed rail systems that put ours to shame," Obama said last year announcing his plan.
While most passenger trains in the United States travel at the maximum allowable speed of 79mph, trains in Europe and Asia typically travel in excess of 125mph. In France, for example, the Train Ga Grande Vitesse (TGV) travels at an average speed of 133 mph. Another French train actually reached 357.2mph in 2007, setting a new world record.
Japan's high-speed rail network, which first opened in the 1960s, transports more passengers than any other rail system on earth. Its Shinkansen trains travel at an average speed of 180mph. Germany, Spain and China all have trains capable of traveling as fast as 140mph.
Obama's vision was for 10 100-600 mile corridors laced throughout the country, linking major metropolitan areas like Tampa, Orlando, Miami, Sacramento, Los Angeles, and San Diego. The government has allocated a total of $8 billion to 31 states for high-speed rail projects.
"The potential economic benefits of a high-speed rail link between Chicago and Milwaukee, so that people are avoiding I-94, or the link between Chicago, St. Louis, and Detroit – all those Midwestern cities – I think is enormous and is a very real option," Obama, himself a Chicago native, said. "Although gas prices are low right now, it becomes a very meaningful option for people who don't want to take off their shoes (for screening), drive to an airport, pay for parking, and suffer delays."
A high-speed rail line connecting Tampa and Orlando could reduce travel time between the two cities to less than one hour, compared to 90 minutes by car, according to Ronald Utt, who is the Herbert and Joyce Morgan senior research fellow for the Thomas A. Roe Institute for Economic Policy Studies at the Heritage Foundation.
Joe Panyanouvong, an attorney and Florida commuter who regularly makes the 84-mile trip between Tampa and Orlando, told CNN that he would gladly welcome a high-speed option.
"I have made this trip many times during peak hours for work and leisure. It can feel like a parking lot at times," he said. "During heavy traffic it's taken me as long as 2.5 hours to get from Orlando to Tampa."
Panyanouvong's journey along U.S. Route 27 and Interstate 4 has been delayed by countless headaches – including the time traffic was held up by a cow that had wandered into the road.
"I ended up missing lunch because of that cow," Panyanouvong said.
The benefits of high-speed rail go beyond simple convenience. Proponents say such rail lines would reduce oil consumption and carbon emissions, create jobs, and boost commerce.
"Just as the Interstate Highway System transformed the way Americans lived and where they worked in the 1950's, high-speed rail has the same transformative potential today," said Sarah L. Catz, director of California's Center for Urban Infrastructure and author of Thinking Ahead: High-Speed Rail in California.
The California High-Speed Rail Project, linking Sacramento and San Diego, will raise the incomes of southern California workers by $701 million and create 127,000 new permanent jobs in southern California by 2035, according to the report.
It will provide over 57,000 full-time, one-year jobs, and multi-year employment for approximately 15,200 workers. Meanwhile the construction of the Anaheim Regional Intermodal Transportation Center (ARTIC) will create an additional 3,500 to 5,000 jobs in Orange County, based upon estimated project costs of $179 million, it said.
Some of the funds that would typically go toward the construction of parking facilities, estimated to cost as much as $565 million for Phase I – $40,000 per space – could be diverted elsewhere.
The system would reduce CO2 emissions by nearly half a billion pounds annually, while also encouraging commuters to walk or ride bicycles for a portion of their trip. The resulting health savings "would total between $50 million and $132 million in reduced medical costs over a fifteen-year period (2020-2035, discounted in 2010 dollars at 4%), depending on the ridership scenario," said the report.
Indeed, the benefits of high-speed rail are undeniable. The problem, however, is that states are struggling to come up with the necessary funding.
High-Speed Trains Delayed by State Deficits
The latest round of federal funding for high-speed rail carries a requirement that states, many of which are already under strict budget constraints, chip in 20% of a project's costs. That's forcing policy makers to choose between putting money toward more pressing short-term needs and devoting funds to long-term projects that will take years to complete.
Scott Walker, a Republican gubernatorial candidate in Wisconsin, has run a campaign advertisement criticizing plans to build the high-speed train line linking Milwaukee to Madison that he said would cost taxpayers $810 million to build and $10 million a year in operating expenses.
"I'd rather take that money and fix Wisconsin's crumbling roads and bridges," Walker says in the ad.
However, analysts have pointed out the federal stimulus money that was awarded to the state for high-speed rail can't be used for any other purpose. Also states have long been required by federal law to contribute 20% of the cost of highway and transit projects funded by the federal government.
So it's unclear how Walker would finance his infrastructure revitalization plan – especially since Wisconsin is currently facing a $2.7 billion budget deficit.
Other states are facing budget crises of their own, and that more than anything else is what's threatening to derail the President's high-speed rail initiative.
Since virtually all states are required to balance their operating budgets each year, they cannot maintain services during an economic downturn by running a deficit, as the federal government does. At least 46 states are facing budget shortfalls for the 2011 fiscal year, which in most states began July 1.
States have projected total budget deficits of $127 billion through 2012, according to a June report by the governors association and the National Association of State Budget Officers. But the Center on Budget and Policy Priorities (CBPP) says the numbers could actually be much worse.
Counting year-to-date deficits, 48 states still face shortfalls in their budgets for fiscal year 2010 totaling $200 billion or 30% of state budgets – the largest gaps on record.
And states' fiscal problems will continue into the next fiscal year and likely beyond. The numbers suggest that when all is said and done, states will have to deal with total budget shortfalls of some $260 billion for 2011 and 2012.
"You're competing against all the other needs of the state," Betsy Imholt, Oregon's rail study director, told The Wall Street Journal. "When we're talking about cutting school days and cutting seniors' programs and closing prisons, you kind of have to weigh the timing of all this."
Applications for government funding, which were due earlier this month, dropped sharply, totaling only $8.5 billion in requests. More than 40 states submitted 278 pre-applications for stimulus-funded high-speed rail projects, when the program was announced last year. The total amount of funds requested in the first month alone was $102.5 billion.
U.S. Transportation Department officials say the drop in applications by states for the latest federal funding was due to several factors. The government's pot was smaller, at about $2.34 billion, they said, and states hadn't yet spent the stimulus funds for high-speed rail.
Still, state policymakers stress the fiscal issue.
"We've got some good things that are going, but if the commitment in America is to get to these higher-speed rail programs, then there's going to have to be more help," Thelma Drake, Virginia's director of rail and public transportation, told The Journal. "We don't have $375 million to put into our match."
Rob Kulat, a spokesman for the Federal Railroad Administration, said the agency was aware of states' concerns and will look into whether waivers can be granted in next year's round of funding to get around the matching requirement.
"It is an issue and on our radar," Kulat told The Journal, adding that the 20% match is written into law. "Congress mandated this and we're just doing what they tell us."
In the mean time, commuters like Florida attorney Joe Panyanouvong will have to patiently wait in traffic, because high-speed rail cars won't arrive until at least 2015.
"Given the funding, I would say that it is fairly likely that at least a few moderate-speed rail projects will eventually be completed," Randal O'Toole, a senior fellow with the CATO Institute told CNN. "But the California high-speed rail project remains fairly unlikely, considering that more than three-fourths of its costs are not yet funded. Florida probably has a 50-50 chance of completion since about half its costs are funded."
Related News and Story Links:
- Money Morning:
High-Speed Rail Puts Investors on the Fast Track to Profits in China, but Languishes in the U.S.
- California Center for Urban Infrastructure:
Thinking Ahead: High-Speed Rail In Southern California
- Money Morning:
State Budget Crises Threaten U.S. Economic Recovery
- Wall Street Journal:
US States Balk At Costs Of High-Speed Rail Projects