The high-speed train issue is sure generating lots of comment and interest these days. With Scott Walker scheduled to take over the reins of state government on Jan. 3, 2011, the train issue has moved to front and center.
It seems like there’s a new development on the train almost every day. The latest was reported on Friday that Gov. Jim Doyle has directed Transportation Secretary Frank Busalacchi to make a temporary pause in any rail projects which are currently under way.
That seemed quite unusual for a governor who had touted the high-speed rail project which would extend Amtrak’s Chicago-Milwaukee Hiawatha service to the west with a stop in Brookfield, Watertown and Madison.
That just leads us to believe the last chapter in this saga has not been written. Although Walker has been adamant that he will stop the project “in its tracks” the minute he is inaugurated, we think this pause will give Doyle a little time to put some economic numbers together to help his case for moving the train forward.
At the same time, if the project is to be killed by Walker, then it doesn’t make sense to spend millions of dollars that will have to be paid back to the federal government. But, that’s where the “squeeze play” comes in. If the amount spent is so high that paying it back will be more costly to the state than simply finishing the project, Doyle is probably hoping Walker will ultimately change his mind.
We can’t help but wonder how much it would cost the state in annual payments to cover the millions already spent and contracted for by the state. For example, if the state is on the hook for $100 million already spent, even at 3 percent interest, the interest alone would be $3 million annually.
We believe there are two major economic points that have not been fully addressed in the high-speed train issue.
First of all, Walker is deeply opposed to the rail plan because he doesn’t want the estimated $7.5 million operating subsidy to be paid by Wisconsin residents.
Amtrak in many instances has picked up much of that operating subsidy for routes which have state support. For example, in the case of the current Hiawatha service between Milwaukee and Chicago, the state of Wisconsin is paying only 10 percent of its operating subsidy. The remaining 90 percent of the subsidy is covered by Amtrak.
If that is indeed the case with the extension to Madison, then the operating subsidy for Wisconsin would be about $750,000 a year. That’s a far cry from the $7.5 million being bantered about. Somewhere there ought to be an answer to the question of whether or not Amtrak would share in those operating costs and to what extent.
Ray LaHood, secretary of transportation for the Obama administration, was in Watertown some months ago to sign some spending authorization documents for the project. Much was made of the announcement here. We were at that announcement, and in his comments and responses to questions, LaHood did make a reference to the fact that Amtrak does offer operating subsidies but then kind of glossed over it by saying something to the effect that’s one of the details to be worked out later.
So, we can’t help but wonder if Amtrak will be willing to put some money behind the operating loss. That would certainly make it more palatable for Walker. And, if it would be willing, this is the time to make that known.
This short pause is also likely to result in some information on just how much income tax revenue is likely to be collected from the people who will be employed to build and renovate the tracks, install the electronics to run the trains effectively at speeds of up to 110 mph, construction of the train stations and the over 125 employees who will be hired to build those Talgo train sets in Milwaukee. There’s also the income tax revenues that will come from the 60 to 75 full-time people that will be needed to operate the trains on a daily basis.
All of those folks will be paid at higher than average wage levels and each one of them will surely produce thousands of dollars of state and federal income tax revenues as well as payments to the Social Security fund, all of which are badly needed.
Then, of course, there’s the multiplier for subcontractors and others who will also be working on the project in one form or another.
This doesn’t even take into account that any new construction near these stations will generate property tax revenues which will be helpful at the local level.
We think this is the kind of information people have been hungry for as part of the debate on the project. It’s always difficult to predict these numbers with 100 percent accuracy, but there ought to be a way to get some solid estimates.
There are people who say no one will ride the trains, but estimates from the federal government indicate there will be plenty of riders. We’re told their figures are based on the popularity of the Chicago-Milwaukee route, taking into account the population along the route, and factoring in that the density is not as great between Milwaukee and Madison as it is between Milwaukee and Chicago. Still, ridership is expected to be high.
Still, those are only projections and the real numbers won’t be known until the train actually runs in 2013, if it does at all.
We hope the short pause in executing the contracts will be an opportunity to collect some additional operating cost data that may help with the final decision-making process.
This has been an interesting topic in recent months. For years Republican Gov. Tommy Thompson was an outspoken supporter of getting the trains back to Madison. He was even named president of Amtrak for several years. Back then, almost everyone you talked to supported the project.
Had this project come up other than in a heated election year there would have been little fanfare and it would have been progressing with little vocal opposition.
But, Walker seized on the issue and made it into a strong example of what he called government waste.
A short halt in the project may be just what is needed to gather better financial information before a final, final decision is reached.
Thomas Schultz is the managing editor of the Watertown Daily Times. Watertown is one of the Wisconsin cities that could receive a high-speed rail station if the project is approved.