President Obama announced $8 billion in high-speed rail grants today. (As a quick aside, that $8 billion is part of the $787 billion stimulus package that simply HAD to be passed immediately last year to help improve the economy in 2009. The $8 billion is part of the majority of the $787 billion that wasn’t spent in 2009. But I digress.)
Who can be against high-speed rail? It brings distant cities closer together, making for more mobile populations, and presumably, easier access to high-job-growth areas from population centers; it’s greener than driving or flying; and of course, the point of the stimulus, it creates jobs.
The first point is true, the second not as true as it first appears, and the third true mainly in the short term. But as the states continue to fight their way through a persistent economic slowdown, let’s focus on the cost of these projects, which is enormous.
Florida received a $1.25 billion grant. That should cover half the cost of an HSR link between Tampa and Orlando. The White House Web site touts the project as linking the 78-miles-apart cities in less than an hour, “compared to around 90 minutes by car.”
Florida faces a 2010 budget deficit that could reach $2.6 billion. But it’s going to have to fund the other half of this project itself, and as with most public-works projects, it’s safe to assume the $2.5 billion target is a floor, not a ceiling. Once the line is done, it’s supposed to result in 600 permanent jobs. That sounds high, though – perhaps that estimate counts the full HSR line, once it’s linked to Miami. The Miami link will cost another $10 billion, and is slated for completion by 2017. Maybe Florida will finally institute a state income tax to pay for it, because I don’t see how else they can afford it . For 600 jobs.
More fun in all respects is the California HSR project, a marvelously ambitious plan to link San Diego to Sacramento, with San Francisco, Los Angeles and other major cities in between also connected. Obama gave California $2.344 billion to get this project moving. Of course, the California project is estimated to cost $40 billion, and that’s surely a floor – the conservative Reason Foundation estimates the cost between $65 billion and $81 billion.
The White House Web site touts an LA-SF trip taking less than 2 hours, 40 minutes, compared with 6 hours by car. There are a two few problems with that statement. First, it’s a false comparison – people fly, not drive, between those cities, adn the flight takes just over an hour. Second, it’s completely false. Transit time of 2 hours, 40 minutes requires an average speed of 197 miles an hour. The world’s fastest established HSR lines don’t go anywhere near that fast – France’s TGV averages 174, and Japan’s shinkansen averages 159. Add in that the SF-LA line will go through densely built-up areas, meaning it will have to slow down, and the White House is advertising an obviously false outcome.
Let’s compare again the two crucial numbers: $2.344 billion granted, and the $40 billion (or $81 billion) total cost. California’s budget deficit is $20 billion already. How can it possibly afford to embark on this project?
That’s a question the Legislative Analyst’s Office, a non-partisan fiscal and policy advisor that’s part of the state government, would like answered as well. Two weeks ago, the office released a report critical of nearly all aspects of the proposed HSR plan. Here are a few: no risk management strategy; unknown confidence (and lack of documentation) in cost, revenue or ridership projections; uninformative timeline (few deliverables or milestones); and a funding strategy that appears to violate the law.
According to LAO, the plan expects $17 billion to $19 billion in federal funds by 2016, or nearly $3 billion a year for the next six years. California got 80% of its annual target for this year, but with the Obama administration floating a three-year freeze on discretionary federal spending, California’s HSR planners shouldn’t hold their breath that any more of the funding is forthcoming.
HSR is a fine idea. But now is not the time to embark on such an expensive series of projects, and it’s debatable whether the U.S. is or ever will be the place for HSR to happen on a large scale.