Should Fed grants cover economically/logistically doomed projects like High-Speed Rail?
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$3.073B in grant funds to CA HSR is sure a big hunk of cash—remarks Cato Institute's Marc Joffe—but let's be real: it'll barely dent HSR's back-breaking budget. In a thoughtful LA Daily News article, Joffe wonders if the federal gov't should continue using taxpayer money to prop up long-delayed, fiscally dubious projects, and he contrasts California's with Florida's (more successful) High-Speed Rail.
The Federal Railroad Administration (FRA) has announced a set of intercity passenger rail grants funded by the 2021 bipartisan infrastructure law. The California High-Speed Rail Authority (HSRA) received a $3.073 billion grant, bringing total federal support for the project since 2012 to almost $7 billion.
But that’s not enough to complete the 171-mile Initial Operating Segment connecting Bakersfield to Merced, let alone the full Phase I project intended to run from San Francisco to Anaheim. Further, high-speed rail is facing more competition for intercity rail grant funds within California and beyond.
FRA also granted $3 billion to the private rail provider, Brightline, which hopes to build a line connecting Rancho Cucamonga in the Inland Empire to Las Vegas by 2028. Given Brightline’s previous success building a new rail system in Florida and a lack of land acquisition challenges, Brightline West is more likely to be successful than HSRA.
In Florida, the company recently completed an extension of its South Florida passenger service to Orlando Airport. It is now working on adding a connection to Tampa. Brightline has been relying almost entirely on existing transportation corridors. Although that construction choice means that tracks are not straight enough to allow true high-speed service, it allowed BrightLine to finish the Orlando link in a timely manner and provide operating speeds of up to 125mph.
Brightline West will mostly run in the median of I-15. Although this route is not straight enough to accommodate the 220mph operation sought by HSRA, it still promises to top out at a respectable 186mph.
These advantages notwithstanding, the Brightline West project is hardly a win for free market thinking. Brightline was already going to benefit from Nevada’s decision to let it issue “private activity bonds,” which pay interest that is exempt from federal taxes. As a result, Brightline’s financing costs will be lower than otherwise. Now, on top of that implicit subsidy, the company is getting a $3 billion check from federal taxpayers covering one-quarter of its estimated construction costs.
This article originally appeared in the Los Angeles Daily News. Read the whole thing here.
Related:
Transit expert: CA HSR in too deep to admit project is “stupid,” “impossible”
Libertarian president hopefuls on CA HSR: “Cut and run” the only option left
CA HSR advances at snail’s gallop, leaving trail of wasted taxpayer dollars
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