Who Wants Florida’s $2.4 Billion in High-Speed Rail Funds?

Gov. Rick Scott got to say no, yet again, to Florida’s dreams of high-speed rail.

The attorney for the state senators argued in Florida's Supreme Court to save high-speed rail funding.

Florida’s Supreme Court ruled this morning that Gov. Scott doesn’t have to accept federal money to build a high-speed rail line between Tampa and Orlando. Two state senators had filed a lawsuit, claiming Scott had “overstepped his authority” by turning down the money, since the state legislature had voted to authorize the project. (Check out Transportation Nation’s chronology of events.)

Scott put the final nail in the coffin this morning when he formally told Transportation Secretary Ray LaHood, for the last time, he was rejecting the federal funds for the project. LaHood had been trying for weeks to assuage Scott’s concerns by assuring him that Florida would not be held responsible for cost overruns and that private investors would assume most of the risk.

A USDOT spokesperson said the department had “addressed every legitimate concern Governor Scott has raised” and “repeatedly and clearly told Governor Scott and his staff that Florida would not bear financial or legal liabilities for the project.” Florida Senator Bill Nelson and Rep. John Mica begged him to change his mind. Still, no dice.

This morning, after talking to Scott, LaHood issued a statement saying, “The Obama Administration’s bold high-speed rail plan will not only create jobs and reinvigorate our manufacturing sector in the near term, it is a crucial and strategic investment in America’s future prosperity. I know that states across America are enthusiastic about receiving additional support to help bring America’s high-speed rail network to life and deliver all its economic benefits to their citizens.”

He’s right about that – politicians from around the country – and especially the Northeast – have been lining up to ask for Florida’s hand-me-downs.

  • jon

    Hi, send that money to us in the Pacific Northwest. We want it, we ride the train already, we’ve put $600 million into the line in the last 15 years and we have politicians who actually support the train including best of all our governors (both D’s).

    Stop taking a chance in these other states where you’ll get and have already gotten stung… FL, NJ, OH, WI, etc. Talgo should have built their rail car factory in OR where they already make streetcars, freight rail cars, barges, trucks, RVs, etc instead they took a risk opened in Wisconsin and got left holding the bag when this radical Koch-owned governor took power and killed it.

  • MAT

    Dear Secretary LaHood,

    Please send $35 million of Florida’s returned HSR funding to Rochester for its new Intermodal Transportation Center, please. The rest can go to CA, NEC, and Cascades.

    Thank you.

    MAT

  • Many of us here in Minnesota would like to see some of the money, despite the situation in Wisconsin. We might have to make an end run around them and go through Iowa instead.

  • robo-sfo

    Can a governor be impeached for stupidity? It seems that we don’t need to argue with republicans anymore. They will implode soon enough.

  • Governor Scott is only acting responsibly on behalf of Florida’s taxpayers. All the politicians lining up for that money will be long out of office when the bill comes due both for the inevitable construction overruns and to operate the system after it’s built. There’s no way the Feds would give governors a guarantee to pay those costs.

    See an interesting book on the subject of megaprojects: “Megaprojects and Risk,” by Bent Flyvbjerg:

    “Cost underestimation and overrun cannot be explained by error and seem to be best explained by strategic misrepresentation, namely lying, with a view to getting projects started.”

    “The persistent existence over time and space and project type of significant and widespread cost overrun is a sign that an equilibrium has been reached: strong incentives and weak disincentives for cost underestimation and thus for cost overrun may have taught project promoters what there is to learn, namely that cost underestimation and overrun pay off. If this is the case, cost overrun must be expected and it must be expected to be intentional.”

    On the California HSR, a 20-page critique:
    http://www.cc-hsr.org/assets/pdf/atraintonowhere.pdf

  • jon

    rob, if its too much of a risk lets just not have any infrastructure. for that matter lets not have a prosperous first world country either as its too complicated. god forbid a public works project encounter any problems.

  • My point is that we already have an infrastructure that needs money. In SF our Muni system has a $20 million deficit, and Caltrain has a $30 million deficit that’s 33% of their budget. These are proven systems; we know they can carry a lot of people, both to work and for other reasons. California HSR will be a very expensive—to build and to operate—luxury system for a relatively small number of people. SF’s Muni system has 672,000 boardings every weekday. That’s where the money should be spent, our existing infrastructure.

    Nevertheless, the Obama adinistration is seriously talking about investing $500 billion in high-speed rail over time! That’s just madness.
    http://www.houstontomorrow.org/livability/story/lahood-imagines-500-billion-in-high-speed-rail/

  • egk

    Isn’t it just wonderful that California will get to build more of its project, bringing us closer to the day when a profitable private sector industry pays for the upkeep of much of the infrastructure used by commuter rail lines, and those rail lines benefit from the synergystic effect of also serving stations for the major Bay Area-Southern California transportation system?

    And what is more we manage to save on the $100 billion or so in airport or highway expansion needed to provide the transportation capacity needed for CA in the future.

    And isn’t it great that we will have an intercity transportation system most of whose operating costs (which are already low – in the 20-40 cent/passenger mile range) are not fuel costs, meaning that they stimulate the CA economy, rather than sending petro-dollars outside the state?

    It is win-win for everybody in California. Except maybe the few high income residents on the SF peninsula who fear for their property values.

  • California’s Treasurer, Bill Lockyer can’t even sell the $9.95 billion in state bonds voters authorized in 2008, as he told the San Diego Union-Tribune last year:

    Given the many outstanding questions about the project,“I would be reticent to try to go to market to issue bonds to finance the state’s share,” the treasurer said.This doesn’t mean Lockyer would or could block their issuance. “The only discretion I have is to say,‘You can’t sell this.No one will buy this bond, certainly not at any reasonable price.’”
    http://www.signonsandiego.com/news/2010/jul/14/u-t-editorial-lockyers-straight-talk/#

    It’s been more than two years since California’s voters passed the high-speed rail measure, and there haven’t been any private investors stepping forward to invest in this boondoggle. Why? Because they understand that the project will never make any money, and the measure passed by voters promised that the system would be self-sustaining, that state taxpayers won’t have to subsidize it if/when it’s built.

    Even if the bonds were marketable, the annual payments on 30-year, $9.95 billion would be $647 million a year! For a state that now has a $26 billion deficit and is getting ready to cut school funding!
    http://www.voterguide.sos.ca.gov/past/2008/general/pdf-guide/suppl-complete-guide.pdf#prop1a

    Here’s what the California High-Speed Rail Authority says in its own business plan about financing just building the system:

    Federal Grants $17-19 billion
    State Grants (Prop. 1A bonds) $9.95 billion
    Local Grants $4-5 billion
    Private Investment $10-12 billion

    The Feds have given California around $3 billion of the $19 billion, but how likely is it that the rest of it will be forthcoming? The state bonds are unmarketable, “local grants” means cities and counties—not going to happen,since they too are virtually bankrupt—and there’s been no “private investment” at all. And this non-existent financing is supposed to just get the system built, not pay to operate it.

    Of course the high-speed rail boosters and CHSRA itself have wildly inflated future ridership estimates to make the project seem plausible, just as they’ve lowballed the operational expenses after it’s built.

    These are the kind of realities that the governors of Wisconsin, Ohio, and Florida were facing when they rejected federal money. As a Californian, I only hope that Governor Brown also takes the bull by the tail and looks facts in the face.

  • Glen

    Stop your NIMBY BS spin facts… we are going to build the system here if you don’t like it deal with it.. or move

  • Where are you going to get the money?

  • Alan

    We can’t judge a 15-year project using as the criteria the current-year budget woes. Where would we be without CA’s HSR in the 2020’s?

    A little vision is NOT illegal.

  • High-speed rail seems more like intoxication and hallucination than visionary.

    High-speed rail is not about current budgets; it’s about foolish financial commitments in the future. For example, if California gives investors a guaranteed return on the $9.95 billion in HSR construction bonds to make them marketable, the annual payments from state taxpayers to bondholders will be $647 million to service the bonds. And the total payout over 30 years will be $19.4 billion. Those numbers don’t include the cost of operating the system, for which state taxpayers will also be responsible.

    It’s just a bad deal, especially when existing transit systems, like the Bay Area’s Caltrain system, has a $30 million deficit—a financial drip in the bloated CHSR #43 billion construction bucket—and will soon have to close stations and cut service.
    http://www.sfexaminer.com/local/bay-area/2011/03/caltrain-stations-set-closure-transit-options-running-thin#

    Caltrain has 36,778 boardings every weekday.
    http://www.caltrain.com/Assets/Stats+and+Reports/Ridership/2010_Caltrain_Ridership_Counts.pdf

  • Reggie

    Rob,
    This is all why LaHood said that Florida would not be held liable for any construction overruns. High speed rail is something that any unforeseen costs are being taken care of on a shared basis.

    Also, some California public transits do indeed operate on a deficit, it’s not really something that can produce a high profit in its own balance sheets. It’s something that produces a higher profit in other areas: more jobs come to places with public transportation, people have more choices of where they can work with public transportation (imagine a person in Riverside deciding they can work in LA or San Diego because the commute is only 45 minutes!), less traffic accidents, less wear and tear on highways. Not to mention the environmental impact and the lower healthcare costs derivative from people either having to get up and move a little bit more each day or being less stressed because they aren’t fighting to merge from the 78 to the 15 twice a day during rush hour. And the savings from no longer having to buy all that petrol! That’s going to help out consumer spending pretty darn quick!

    Your style of tunnel vision is exactly what we don’t need from leaders in this country.

  • That’s all pie-in-the-sky stuff, Reggie. Even if all those alleged benefits are realistic expectations—and they aren’t—we still have to calculate the costs to achieve them. Interesting that you have nothing to say about the numbers I provided. Like Chinese peasants, workers in California will find HSR fares pretty expensive. The CHSRA has already boosted estimated ticket prices from LA to SF from $55 to $107—one way!

    LaHood couldn’t reassure Governor Scott on the costs to Florida’s taxpayers for the inevitable cost overruns and to operate that system, because he at least understands that the states will be responsible for those.

    Again, we have transit systems in place that need money just to keep operating. LaHood refused to let the governors of Ohio and Wisconsin use the HSR money for other transportation projects!

  • Kelvin

    Dear Secretary LaHood,

    In Puerto Rico we need a High-Speed Train so we can improve our infractructure. Puerto Rico is 100 miles by 35 miles so that 2.4 Billion will have a notable impact here. Remember with had been part of the US for more than 100 years. We pay most of the Federal Taxes (Social Security, Medicare,..) but we don’t have a real representation in the US Congress. Moreover, Puerto Rico has been sending thousands of men and women to the US Army.

  • Kenny

    I notice that Chuck Schumer didn’t sign that letter, but all the Democratic senators of Maryland, Delaware, New Jersey, New York, Connecticut, and Massachusetts other than him did. I can see why the Rhode Island senators might not have signed on (since the train hardly serves that state), and possibly why Bob Casey didn’t in Pennsylvania (he’s a relatively conservative Democrat, and Democrats have been having issues in PA lately), but Schumer has no political reason to. Does it have anything to do with the fact that his wife was causing trouble for transit and bikes in NYC, until she was replaced?

  • Maybe he just thinks it’s a bad deal for the states. I wonder how many of the politicians who signed the letter will be around when the cost overruns start after the Federal money runs out. Not to mention the operating costs once a system is built.

    Obama needs a Democrat who will give him the bad news on high-speed rail, that it’s not going to happen, that it’s a waste of money, that it will only exacerbate the financial problems states already have.

    Maybe Andrew Weiner is the one for the job. He had some choice words for Mayor Bloomberg on the bike lanes in New York:
    http://www.nytimes.com/2011/03/06/nyregion/06sadik-khan.html?_r=2&partner=rss&emc=rss&pagewanted=all

  • I meant to write “Anthony” Weiner, of course.

  • Instead of Tampa to Disney, what about Miami to Jacksonville HSR along theat far higher populated I-95 corridor?

  • Michigander

    Hey Tonya Snyder you didnt mention that Michigan Governor is the only Republican governor who has been seeking after high speed rail he just got into office and btw his last name is also Snyder

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