July 24, 2014

Florida is third state to reject high-speed rail funding

Florida has become the third state to reject federal stimulus funds to help create a high-speed rail system.

Florida Gov. Rick Scott Feb. 16 joined Republican governors in Wisconsin and Ohio in saying “no” to the federal funds — all saying state finances are so dire that the states could not afford their share of the money or future subsidies for the new rail passenger service.

At least in the shortrun, this puts an end to efforts to create high-speed rail between Tampa and Orlando.

Scott provided three reasons for rejecting the federal funds:

  • “Capital cost overruns from the project could put Florida taxpayers on the hook for an additional $3 billion.
  • “Ridership and revenue projections are historically overly-optimistic and would likely result in ongoing subsidies that state taxpayers would have to incur — from $300 million to $575 million over 10 years.
  • “If the project becomes too costly for taxpayers and is shut down, the state would have to return the $2.4 billion in federal funds to D.C.”

Said Transportation Secretary Ray LaHood in response to Scott’s decision:
 
“We are extremely disappointed by Governor Rick Scott’s decision to walk away from the job creating and economic development benefits of high-speed rail in Florida. We worked with the governor to make sure we eliminated all financial risk for the state, instead requiring private businesses competing for the project to assume cost overruns and operating expenses.

“Nevertheless, there is overwhelming demand for high speed rail in other states that are enthusiastic to receive Florida’s funding and the economic benefits it can deliver, such as manufacturing and construction jobs, as well as private development along its corridors.”

The Ft. Lauderdale Sun-Sentinel newspaper reports that U.S. Sen. Bill Nelson (D-Fla.) talked Feb. 16 with LaHood about pursuing a plan that would create another Florida entity that could serve as proxy to accept the federal money, rather than the state. “This might involve a team of cities such as Orlando, Lakeland and Tampa, maybe even with private partners, the newspaper reported.

Railway Age magazine reports that House Transportation & Infrastructure Committee Chairman John Mica (R-Fla.) is upset with Gov. Scott’s decision.

“I have urged the governor to reconsider going forward and allow the private sector to assume the risk and any future costs for the project,” Railway Age quoted Mica as saying. “With the federal government assuming 90 percent of the cost of the project, I am disappointed the private sector will not have an opportunity to even offer innovative proposals to help finance the balance of the costs and to construct and operate this system.”