By Matthew Falconer

INTRODUCTION

This analysis of Florida´s rail initiatives is based on four years of study into the benefits and drawbacks of rail systems in Florida. Its goal is to give elected officials and taxpayers both sides of the rail argument so they can make informed decisions. Florida´s rail initiative may be the most important policy decision of our generation.

There are a dozen proposed rail projects in Florida but this analysis will focus on three; Tri-Rail in Miami, Sun Rail in Orlando, and high speed rail proposed throughout the State of Florida. Rail proponents suggest rail will reduce traffic, reduce pollution, and create jobs. This analysis will review those claims.

REDUCING CONGESTION

Government officials imagine that they are adding a travel option by building new rail lines. For the most part, though, they are cannibalizing existing bus services. A significant proportion of the “new” rail transit riders turn out to be former bus riders.

In Los Angeles, it is estimated that only 10 percent to 15 percent of the riders on the newly constructed rail lines are attracted from automobiles. The remaining 85 percent to 90 percent were formerly bus riders. This phenomenon is not unique to Los Angeles. It is common wherever new rail lines are implemented. Worse, the high cost of rail construction may lead to cutbacks in bus service. This is what happened in Los Angeles. Now, total transit ridership is about 30 percent lower than it was before the rail lines were opened.

Rail proponents assume people will give up the freedom of their cars and switch to mass transit. But there is clear evidence against this assumption. Despite building a $2 billion heavy rail system, Atlanta’s work trip market share declined by 36 percent. Despite building a $250 million light rail line, Portland’s work trip market declined by 33 percent. Tri-Rail´s ridership was down 21% in 2009. Writing in Transport Reviews, Jonathan Richmond of Harvard University stated, “In no case has new rail service been shown to have a noticeable impact upon highway congestion or air quality.”

In the case of Sun Rail, in central Florida, the rail project will increase traffic congestion. This is because 6000 times a day railroad crossings will be closed and traffic blocked to allow the train to pass. Traffic engineers will confirm ground based rail systems are not a viable transportation solution. Historical evidence suggests new rail systems do not increase the usage of mass transit or reduce traffic congestion.

THE JOBS ARGUMENT

The next argument for rail is it will create jobs. Those are broken down into short term construction jobs and long term jobs created by the operation of the system and peripheral development.

Rail supporters suggest government spending creates jobs, but they are only looking at half of the equation. When government taxes or borrows money they are taking it out of the private sector economy. Government stimulus is at best a zero sum game. They take a dollar out of the economy and they pump it back in.

When we take money out of the private sector and place that money in the hands of government we are actually losing jobs. While some politicians point to Spain as a model for how government subsidies can create jobs, a new study documents that every job created by the Spanish government destroyed an average of 2.2 other jobs. The study was prepared under the direction of Dr. Gabriel Calzada, an economics professor at Juan Carlos University in Madrid. Calzada said; “Spain’s experience (cited by President Obama as a model) reveals with high confidence, by two different methods, that the U.S. should expect a loss of at least 2.2 jobs on average for every job created.”

The study proved mathematically government stimulus projects use capital less efficiently than the private sector therefore taking money out of the private sector results in a net loss of jobs. The higher taxes from the capital costs and operating losses of rail will also reduce the disposable income of consumers and further starve small business of revenue.

Rail proponents also claim the rail projects create jobs from peripheral development around the rail lines. Again, there is no historical proof of this. Using Sun Rail as an example they assume taxpayers will decide to leave their neighborhoods and golf course communities to live along the rail line. The fact Sun Rail will travel on a freight track with diesel locomotives pulling coal all night might be a detriment to residential development.

My research has shown the jobs claims are wildly overstated and the net effect of the spending and higher taxes is a weaker economy.

THE COSTS

The Florida Department of Transportation 2060 Plan stated Florida needs an additional $64 billion for mass transit projects and the figure will “likely be much higher.” The high speed rail project alone may cost taxpayers $100 billion if the statewide network is completed not including the operating losses. Typically rail projects exceed their cost estimates by 50% to 100%.

Ronald Utt of the Heritage Foundation wrote in his article “America´s Coming High Speed Rail Disaster,” our nation has committed to providing a perpetual stream of substantial subsidies to offset the difference between fare revenues and operating costs of HSR and passenger rail in general. Utt´s analysis reveals serious financial problems with the HSR program:

Perpetual massive government subsidies and larger budget deficits;

Wasted money because few passengers will use the system even with the subsidies;

Service provided to only a small fraction of the traveling public in a handful of communities;

Additional burdens imposed on hard-pressed state governments, which will be required to match the perpetual federal subsidies to build the system;

Little or no difference in passenger mobility or environmental quality;

In Japan, where rail ridership is nearly ten times the United States, the highly acclaimed Japanese National Railway is losing $20 billion per year. JNR’s accumulated debt exceeded $300 billion. And with the exception of the northeast corridor of the United States, there is very little demand for inter city business travel which is the core customer of this service.

In Florida there is no demand for inter- city rail service as evidenced by the complete absence of express buses found in the northeast corridor. The entire project assumes the consumer will abandon their cars and take trains despite the fact rail usage has been decreasing and cars are more convenient and often quicker door to door.

WHY RAIL IS A CONSIDERATION

With ample evidence rail systems are not a good use of taxpayer money the question becomes why is our government pressing to build rail systems. Voters rejected high speed rail in 2004, Sun Rail in 2003, and Hillsborough light rail in 2010. So what is the motivation behind rail?

The answer comes in three categories. The first is job security. For government workers rail projects create an endless supply of government work. The second is ideological. Many progressives believe American´s need to give up their cars and take mass transit the way Europeans do. But the main reason rail projects are being pushed in Florida is money.

Rail projects create income for dozens of special interests including engineers, lawyers, lobbyists, contractors and manufacturers. For the past two weeks Siemens has been advertising the benefits of rail. They are the likely contractor for the $3.5 billion high speed rail project. These special interest groups influence our elected officials.

The Sun Rail project in Orlando is a little unique. Sun Rail´s primary objective is to provide “concurrency” so downtown Orlando business interests can build more buildings and make more money. This can be accomplished with a concurrency waiver instead of spending $2.5 billion on a rail system that will lose $100 million a year for 99 years.

ALTERNATIVES

In cities across the nation cost effective transportation solutions are successfully being implemented. From “express buses” to “jitney” services the private sector is providing transportation solutions without taxpayer subsidies. These are not being considered or proposed in all likelihood because they do not provide economic benefit to the supporters of the rail projects.

CONCLUSION

The experts who oppose government rail projects have decades of studies detailing cost overruns, operating losses, and a poor return on taxpayer investment. These experts also have viable alternatives to rail systems.

The proponents of rail systems make inaccurate assumptions on job creation, operating revenues, and overall economic benefits to the community. Florida´s rail initiative is a $100 billion gamble that evidence suggests will damage our economy for decades to come. The statistical proof is our state is better off economically if we leave the $100 billion in the private sector to invest in job creation.

With a multi-billion budget shortfall and public schools facing thousands of teacher layoffs there are higher priorities for the use of tax funds. The elected officials of the great State of Florida are urged not to accept one side of the rail debate and make an informed decision on rail.

For additional research please email [email protected].

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