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Some U.S. states balk at costs of high-speed rail projects

(Dow Jones Newswires circulated the following by Josh Mitchell on August 20, 2010.)

WASHINGTON, D.C. — Some states that participated in the Obama administration's plans for building high-speed rail networks are now balking at those projects, halting or scaling back development because the federal government won't foot the entire bill.

The latest round of federal funding for high-speed rail carries a requirement that states chip in 20% of a project's costs. States say that is forcing them to choose between putting money toward what they see as more pressing short-term needs and devoting funds to projects that will take years to complete.

The Obama administration and Congress set aside $8 billion in the economic-recovery act last year to build 13 regional, high-speed rail networks. States submitted applications totaling $102 billion in requests for grants. The administration announced awards earlier this year, with projects in Florida and California getting the biggest awards, but scores of projects in other states also were approved for funds.

Congress added money to the program in- this year's budget, but attached the 20% match requirement. Applications, which were due earlier this month, dropped sharply, totaling only $8.5 billion in requests.

The cost of completing high-speed rail links has become a campaign issue in governor's races, with Republican candidates in California, Ohio and Wisconsin criticizing the projects as wasteful spending.

Scott Walker, a Republican gubernatorial candidate in Wisconsin, has run a campaign advertisement criticizing plans to build a 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.

Gov. Jim Doyle, who isn't running for re-election, has said high-speed rail would bring "tremendous economic benefits" to the state, including construction jobs.

Pennsylvania has put off plans for various rail projects, including construction of a line that would provide 100-mph service between Scranton and Hoboken, N.J., because the state is facing an immediate shortfall of $472 million in its transportation budget.

Virginia, which proposed high-speed service between Washington and the Richmond area, is for now largely limiting its efforts to improving a bridge and doing preliminary environmental studies.

"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," says Thelma Drake, Virginia's director of rail and public transportation. "We don't have $375 million to put into our match."

Oregon has delayed rebuilding a train line between Eugene and Portland after failing to find the $3.3 million in needed matching funds just to do preliminary studies. It's now going to upgrade a train station in Portland.

"You're competing against all the other needs of the state," said Betsy Imholt, Oregon's rail study director. "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."

U.S. Transportation Department officials said 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.

But state and railroad officials say a primary reason is that states are unable to find funds to meet the new matching requirement.

Such matching requirements aren't unusual. States have long been required by federal law to contribute 20% of the cost of highway and transit projects funded by the federal government.

But many states lack a dedicated source of funding for passenger rail. That is forcing some states to take on additional costs that haven't been traditionally part of their budgets.

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 said, adding that the 20% match is written into law. "Congress mandated this and we're just doing what they tell us."

Wednesday, August 25, 2010

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