Nov/Dec 2009

State News: August 2009



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Stimulus Rail Funding Won't Fund It All

By Mikel Chavers, CSG Associate Editor
People in the Midwest are getting excited about high-speed rail and the more than $8 billion in stimulus funding available for it this year—but is that going to be enough money to prove the concept?
It’s exciting, for sure. Plans for high-speed trains will cut the trip from Chicago to Cincinnati in half—from eight hours to four hours, according to the Midwest Interstate Passenger Rail Commission. An entire network radiating from a Chicago and an Ohio hub is planned for fast trains in the region.
And the Midwest, like other states, is competing for a portion of the stimulus funds for high-speed rail—but competition is steep.
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Competing are 40 states and Washington, D.C., with grant applications for projects totaling a whopping $102.5 billion, according to the Federal Railroad Administration. Those applications include plans for more than 270 projects, according to the Federal Railroad Administration. The first deadline was Aug. 24 for the first phase of high-speed rail stimulus funding.
The overwhelming response to the grants “demonstrates the pent-up demand for passenger rail service,” Joe Szabo, an administrator with the Federal Railroad Administration said at The Council of State Governments’ Eastern Regional Conference annual meeting in August.

Trouble is, the American Recovery and Reinvestment Act only includes a limited pot of money—$8.8 billion in the first year and another $5 billion in coming years. That’s not enough money to build out all the high-speed rail networks in the U.S. those in the states say.
A national high-speed rail network won’t be completed under the stimulus funding, said Patrick Simmons, rail division director for the North Carolina Department of Transportation. “The recovery bill is not going to build all these systems. We understand that,” Simmons said.
The states will have to continue the effort—a process that could take years if dollars are found either through state funding or by leveraging private cash through public-private partnerships. In California, for example, the first high-speed passenger service could be available at the earliest by 2015, according to Curt Pringle, chairman of the California High-Speed Rail Authority.
For high-speed rail, “there needs to be a tremendous amount of public dollars invested up front,” said Pringle, who is also the mayor of Anaheim, Calif. “The public investment is that first step,” Pringle said.
While states struggled in the past to garner public funding for high-speed rail, even private companies weren’t fronting the money. “It’s very hard to get companies saying ‘yeah we’re going to take all that risk of time, and environmental clearance and purchasing of right-of-way and all of that,’” Pringle said.
Consider this: The entire California system is more than $40 billion when you contemplate building it all out, Pringle said. And even though California voters approved Proposition 1A last year, providing $9.95 billion in bonds to fund high-speed rail, it still won’t be enough.
“So you take $9 billion worth of bonds and generous applications of federal dollars, that still doesn’t get you there; it barely gets you halfway,” Pringle said. California also applied for the most in stimulus funding. Preapplications from the state asked for a total of $24.2 billion in stimulus funds for various projects.
But California, like other states seeking to build high-speed passenger rail corridors, hopes once the process gets started, funding for entire networks will follow—funding that will exceed what’s available in the federal stimulus act.
“There are points at which, as you cover distances (and) as you get the volumes of passengers, our business model shows a revenue generation that comes off of the system,” Pringle said.  “And with that, you can borrow against the streams of revenue; you can use those future earnings to expand the system and grow it and make sure you cover beyond that initial segment.”
State officials in the Midwest don’t expect the federal stimulus to carry out an entire high-speed rail system radiating from a Chicago hub, either. Illinois officials are first focusing on the proposed high-speed segment from Chicago to St. Louis.
It will cost $2.3 billion to fully build that route figuring in trains that can run up to 110 miles per hour, according to George Weber, bureau chief of the Illinois Department of Transportation Bureau of Railroads.
That price tag is to pay for upgrading track and adding more train trips—what Illinois is anticipating will be eight roundtrips a day for passengers traveling from Chicago to St. Louis, Weber said. There are currently three roundtrips subsidized by the state and two more that are a part of Amtrak’s basic system trains, Weber said.
The rest of the system will come later.
But as for a national high-speed rail network, the kind that European countries can boast about, that still is a long way off, said Laura Kliewer of the Midwest Interstate Passenger Rail Commission, a part of The Council of State Governments Midwest office, the Midwestern Legislative Conference.
“The states have led the way in paying for increased frequencies and creating plans for significant passenger rail improvements even when there was no federal partnership for passenger rail development,” Kliewer said.
“Yet even with all the attention it has received, and the wonderful boost of the $8 billion in stimulus funding, passenger rail is still only the only major mode of transportation that does not have a dedicated source of federal funding,” she said.
For more about the stimulus for high-speed rail and what the states are planning, check out the September issue of State News. The magazine will also include a look at magnetic levitation high-speed train technology, which is new to the U.S.

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