Finance

Has High-Speed Rail Been Derailed?

Four years after President Barack Obama declared high-speed rail a national priority, the financial hurdles seem higher than ever.
by | May 2013
California's $68.5 billion high-speed rail line is set to begin construction this year. (Photo: California High Speed Rail Authority)

During a congressional hearing late last year, Transportation Secretary Ray LaHood and Rep. Jeff Denham, a Republican representing California’s Central Valley, got into a testy exchange. At issue was the administration’s much-ballyhooed High-Speed Intercity Passenger Rail (HSIPR) program, and more specifically, its marquee project: the federally supported San Francisco-Los Angeles line set to begin construction this year. At speeds of up to 220 mph -- the whole trip would take just two hours and 40 minutes -- it would be this country’s first bullet train.

In the hearing, Denham was skeptical of the state’s business plan. The project costs $68.5 billion, and California officials expect the feds to pick up $42 billion of that total. Where, Denham asked LaHood, would that huge amount of federal funding come from?

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“We’re not going to get one dollar as long as there’s language in appropriation bills that says no federal money can be spent on California high-speed rail,” replied an agitated LaHood, referring to an amendment Denham had championed last year. “That doesn’t help us.”

That amendment, Denham replied, is “not meant to help you.”

That tense exchange is emblematic of the paradoxical position in which high-speed rail finds itself today. True high-speed rail is closer than ever, but its long-term future is in a decidedly precarious position. In a bitterly divided Congress focused on deficit reduction, HSIPR hasn’t received funding since 2010. Even staunch rail advocates concede that another huge infusion of high-speed rail cash remains unlikely anytime soon.

Four years after President Obama declared high-speed rail a major national priority, the financial hurdles seem higher than ever. A recent Government Accountability Office (GAO) report illustrates the challenges. In California, for example, if the feds were to pony up the rest of the $42 billion the state is expecting, it would be more than the federal government spends nationwide on grants for new subway, light-rail and bus rapid transit lines combined. Or take Amtrak’s new plan outlining high-speed rail in its Northeast Corridor. The cost is pegged at $151 billion. For Amtrak to do significant work, the feds would likely have to pick up 50 to 80 percent of the tab, according to the report. At a time when Congress has canceled White House tours in order to reduce spending, it’s hard to envision Washington lawmakers making that sort of long-term commitment anytime soon.

“In this environment, the money isn’t there,” says Emil Frankel, a visiting scholar at the Bipartisan Policy Center who served as assistant secretary for transportation policy under George W. Bush. “Where’s the money going to come from? In balancing the demands of the federal budget -- let alone state budgets -- it’s just impossible to imagine.”

But the administration did imagine a robust high-speed network just a few years ago. Within 25 years, the president frequently proclaimed, 80 percent of Americans would have access to high-speed rail. As part of the federal stimulus package in 2009, about $8 billion went to HSIPR. (The administration says it’s invested $12 billion in high-speed rail, a total that includes other appropriations in 2009 and 2010, as well as separate Amtrak funding.) Supporters touted high-speed rail as a way to create jobs, support the economy, protect the environment and ease traffic congestion in a country whose population is projected to grow by 100 million by 2050.

Today, those high hopes are a dim memory. Last month, Obama released his latest budget touting high-speed rail, which provides $40 billion over five years to fund the development of high-speed rail and other passenger rail programs as part of an integrated national transportation strategy. It’s become a routine occurrence, but such grand proposals for rail expenditures have increasingly rung hollow. In a budget deal struck with Republicans in April 2011, the administration lost funding for its HSIPR program, and it hasn’t come back since. Denham, the staunch critic of the California project, now chairs the House subcommittee overseeing rail. And the recently passed House budget specifically criticizes the administration’s approach to high-speed rail. Meanwhile, despite all his calls for high-speed rail spending, Obama hasn’t developed a concrete proposal on how to provide an ongoing, dedicated revenue stream for those projects, which advocates say is key. Even the nonpartisan GAO warns that counting on future federal funding for projects like the one in California is highly speculative. Joshua Schank, head of the Eno Center for Transportation, says it’s unlikely at this point that the administration will continue to throw its full weight behind high-speed rail because so far the program “hasn’t yielded much dividend politically. Nor,” he adds, “has it yielded much in terms of high-speed rail.”

Still, those involved with the program say the work up until now hasn’t been for naught. In fact, they say, 2013 will likely prove to be a banner year for high-speed rail. Nearly $3.6 billion in federal funds are being spent on projects under construction or scheduled to be within the next six months. Close attention is being focused on the Midwest, where trains on the Chicago-Detroit and Chicago-St. Louis routes already have reached 110 mph on some stretches, and those sections will be extended over the next few years. “Significant progress is being made with these initial investments,” says Joseph Szabo, head of the Federal Railroad Administration. And in the Seattle-Portland corridor, there will soon be six round-trip trains per day, up from four; officials there say the uncertain future of federal funding won’t undo that work. “It’s not to say we don’t want or need federal money,” says Paula Hammond, Washington’s former Department of Transportation secretary. “But our system and service isn’t at risk. We’ve already made the commitment within our state.”

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Critics point out that these projects, like the majority of the HSIPR lines, aren’t truly “high speed.” In fact, of all the planned routes in the near future, only the San Francisco-Los Angeles train would hum along at speeds comparable to bullet trains in Europe and Asia. Nonetheless, rail advocates say the proposed network is a good start, and that progress -- however slow -- is being made.

But is the bigger dream dead? Is the vision of a national high-speed network still a possibility? Advocates say not to count the program out. Once the current batch of projects is online, they believe, passengers will witness the advantages of high-speed rail and pressure elected officials to invest more dollars. In other words, they think rail will speak for itself. “We’re in the early stages of still fighting and debating this,” says Andy Kunz, president and CEO of the U.S. High Speed Rail Association. “That’s going to be a limited time. We’re going to get past this.”

Schank says he expects states and localities to start picking up an increasingly large share of high-speed rail work that might have otherwise been funded by the feds. Such a move would mirror a larger trend in transportation, as lower levels of government are working to improve -- or at least preserve -- infrastructure by finding their own revenue sources. Indeed, many rail officials say the stimulus’ greatest legacy might not actually be the work done with this round of funding, but instead the role it played in prompting states to start seriously thinking about improving rail service. (About 100 planning and environmental studies were funded at least in part by the stimulus.) In Washington state, for example, officials are developing a long-term rail plan that will be complete later this year. It could call for as many as 13 daily round trips between Seattle and Portland. “We just want to be ready for when [funding] ebbs and flows our way so we can be in position,” says Ron Pate, the state’s acting rail director.

Szabo, for his part, says federal leaders tend to follow the lead of state and local leaders. That’s why he thinks the program could be revived in the future. “I’m still very bullish and optimistic,” he says.

John Robert Smith, a former member of Amtrak’s board, sees another dynamic that could encourage federal investment in rail: aging baby boomers. “We’re going to be mobile,” Smith says. “We’re going to be engaged in life and with our families. You don’t want us all on the interstate in the next 20 years.” (Some observers say the calculus of federal rail funding is even simpler: If Democrats take control of the House, or at least shrink the Republicans’ majority, the high-speed rail program is likelier to gain support.)

More immediately, the federal legislation that deals with rail, the Passenger Rail Investment and Improvement Act, expires this year. Many in the rail community believe that will force a more serious discussion about how -- or whether -- high-speed rail gets federal support going forward. Robert Healy, vice president of government affairs for the American Public Transportation Association, says nobody “expects to have manna from heaven in the next six months.” But, he says, that’s OK for now. “Even if you don’t soon get the kind of investment levels that we’d like to see, we believe there’s an opportunity to continue the program and continue to move it ahead. If it’s more modest than we’d like, we’ll do our best to build on that.”

Talk to an advocate of high-speed rail, and at some point he or she invariably will invoke the parallel between rail today and the early days of the interstate highway system. The interstate system didn’t take years to build -- it took nearly four decades and eight presidencies. California in 2013, they say, is merely like Kansas in 1956, when the first pieces of the highway system were paved.

“Let’s pretend we’re Dwight Eisenhower and we’re just beginning to build the interstate highway system,” says Rod Diridon, executive director of the Mineta Transportation Institute and a former board member of the California High-Speed Rail Authority. “There’s no money. You don’t know where to start. But you now need to link this huge nation together, so you scrap together a few bucks ... and you get it started with no expectation there’s going to be a huge grant of funds.”

That’s where the country is today with high-speed rail, he says. “Sometimes great, extensive portions of it were built. Other times, when there wasn’t as much money, nothing was built or only small portions. They built what they could when they got the money. What we have is a start.”

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