Comments posted March 2-7, 2011 St. Petersburg Times “Facts Don’t Phase Scott’s World”
Andrea Castillo, FSU Senior in Political Science & Economics:
Although the title of this article rebukes Gov. Scott for his inattention to the “facts,” I was disappointed to see surprisingly little actual evidence that supports the claims that the author makes about the high-speed rail project. As a student of economics at Florida State University and an intern at a Florida policy think tank, the James Madison Institute, I have taken great interest in following the gradual developments of the high-speed rail project for some time now. Being a proud Tampa resident for most of my life, I originally supported the proposal out of a belief that high-speed rail would bring jobs and growth to my beloved city; however, after going away to college to study economic theory, I have since changed my mind. Given my previous support for the project, I can certainly understand people’s current frustration with the governor – on paper, the high-speed rail proposal almost seems too good to be true. After a more thorough analysis of the current high-speed rail proposal and a review of the relevant comparative studies, I have personally concluded that in this case, unfortunately, the high-speed rail project is too good to be true. One of the largest details of the high-speed rail project that is overlooked is that the total travel time from Tampa to Orlando will actually take longer by high-speed rail than by car – it takes 90 minutes by car to get from the residential Orlando area to downtown Tampa but it would take 155 minutes to do so by the proposed high-speed rail system. It is clear that the high-speed rail project is an inefficient way to alleviate transportation problems.The author of this article also blows away any mention of any other significant criticisms of the high-speed rail project, like projected capital cost escalation and operating subsidy liabilities, by pointing to the federal government’s promise that our state will be “financially protected.” This condition was, in fact, one of the primary suggestions that was offered by that “study by a libertarian think tank.” The Reason study suggested 5 specific provisions that could be drafted into the final contract that would enact strict financial controls on the project and shield the taxpayer’s liabilities from any potential losses. Beyond any vague promises that the media overhears behind those closed-door meetings, Dept. of Transportation Secretary Ray LaHood has given Floridians very little reason to feel relieved.Until and unless Gov. Scott receives certain proof that the taxpayers of both the local governments that are involved in the high-speed rail project and the entire state of Florida are shielded from the threat of another federal boondoggle gone awry, he should be commended for his dedication to fiscal prudence and his foresight in scrutinizing the possible unintended consequences that too often come with federal grants.The Florida Times Union “Rick Scott Slams High-Speed Raid Lawsuit”
The Palm Beach Post “Scott, Senators Exchange Fire over High-Speed Rail Suit”
George Johnson, FSU Senior in Economics:
A lot of my research at the James Madison Institute has dealt with Florida’s high-speed rail project, and right now I’m definitely pulling for Governor Scott to come out on the winning side of this lawsuit. This project is putting way too much risk on the shoulders of taxpayers. Due to the nature of government projects, and this is very much a government project, I can’t reasonable believe that there will not be enormous overrun costs for construction beyond the projected $2.7 billion. Nor do I have any reason to believe that this sweet new train, borne more from government obsession than consumer demand, will pull enough money from ridership/advertisements/etc to cover operation costs.Sen. Dockery and others assure us that this is no reason to worry, because the overrun and operation costs will lie entirely with the private sector. Yeah? Really? Some private company is going to foot an open ended bill to cover all cost overruns no matter how great they are? Sorry, but this just does not happen. Unless they are backed by the government, private companies do not have unlimited funds standing by to cover the costs of expensive, risky projects.Even if a private group did want to take on the risk, once they run out of money and go belly-up the tax payers will be the only ones left to foot the bill. You can bet that neither the state nor federal government is going to allow an enormous half-finished project like this to just sit there, taxpayers be damned. This project needs to remain suspended.The Miami Herald “Scott, Again, Slams High-Speed Rail Plan”
Holden Harrell, Chiles High School Senior:
Governor Scott’s sensible decision to reject HSR funding was made with the Florida taxpayer in mind. By refusing federal funds, he has gotten Florida “off the hook” in terms of monetary liabilities that would certainly weigh down both current and future generations.Central to the venture is the issue of over ambition. According to a report from the Reason Foundation, research has shown that final costs are underestimated on 90 percent of large passenger rail transportation projects, with actual cost overruns averaging 45 percent higher than previously anticipated. In the case of the Tampa-Orlando rail, this makes the $2.4 billion projection seem eerily low.As the state of Florida is only guaranteed $2.4 billion from the federal government, any additional costs (including those of operation) will fall to the taxpayer. Many proponents argue that if private companies are allowed to take responsibility for the project, then the burden will be lifted from the citizenry. Unfortunately, this argument simply isn’t airtight – there aren’t many private companies around who are willing to write a blank check for what has historically been a financially unsuccessful enterprise, especially in current economic times.Excessive ambition rears its head again in ridership projections. Some contend that with the presumed ridership count, the revenue generated by the train system will be enough to cover any and all additional costs. However, the current projection at 2.4 million (annually) is unreasonably high, as it is two-thirds of the actual ridership seen by the Amtrak Acela Express, which services a group of cities that have a combined population that is eight times greater than that of Tampa and Orlando. In addition, the argument for job creation is weak, as the actual numbers will be a fraction of what is expected as soon as the construction phase ends.It’s clear that the Tampa-Orlando rail project just isn’t a project worth undertaking. With unreasonable assessments stemming from those in favor coupled with the many risks inherent in the proposal, Governor Scott’s tough verdict is clearly for the best.The Orlando Sentinel “LaHood Gives Florida Another Week for High-Speed Rail”
Signe Thomas, FSU Junior in Economics & International Affairs:
I support Governor Scott’s decision of rejecting the proposed $2.4 billion of federal money for a high speed rail in Florida. Remember, there is no such thing as a “free lunch”. So if a high speed rail with no strings attached sounds too good to be true, it probably is! According to Florida Senator Bill Nelson, “…the state will have no financial responsibility in high-speed rail.” However, Governor Scott has yet to have anyone propose to him a method of how this project would be paid for if it were to go over the proposed $ 2.4 billion without it falling as a burden on Florida taxpayers. Even if the project didn’t exceed the estimated $2.4 billion, there’s no way to be certain that there is even enough consumer demand for such a high speed rail to be successful and profitable in this area of Florida. No one has proposed to Governor Scott an anterior method of who would accept responsibility if the high speed rail turns out to not be profitable and ends up needing to be subsidized. Florida taxpayers already subsidize other train systems in Florida, so it is not illogical to anticipate that this project would result in needing to be subsidized as well. Gov. Scott is looking out in the best interest of Floridians as a whole (the taxpayers) by rejecting the $2.4 billion from the federal government for a high-speed rail, because the state of Florida simply does not need it. Sure, some people might want the high speed rail and it might be beneficial to them if they live in Orlando and Tampa and plan on using it. However, consumers as a whole don’t need/want the high speed rail because there simply isn’t enough demand for it. If there was enough demand, then the free market would provide it: If there were enough consumers wanting this and they made up a significant demand, then the supply side of this economic equation (companies/producers in the private sector) would realize what a huge demand there was for such a project and they would get to work building a high speed rail in order to profit from it. Since the market hasn’t provided a high speed rail between Orlando and Tampa, there clearly isn’t a significant demand that would make the high speed rail profitable, so why should government spend billions of tax-paying dollars to fund such a project? The government needs to keep its nose out of our state’s economy and stop trying to fund money toward projects that aren’t necessary when our country is 14 trillion in debt—and counting!I understand that rejecting large sums of supposedly “free” federal $ is really tough, esp. when those benefiting from such “free” $ are lobbying the state capital for it to take place, while those that don’t benefit are not as likely to collectively take action to lobby against such from happening; this is called a collective action problem. Although some may not want a high speed rail, it is in no one person’s best interest to spend their time lobbying against it because they don’t have a high incentive to do so. However, the ones lobbying for such federal $ to be spent in their area do have the incentive to take collective action and lobby because they are the ones that have the most to benefit/gain from the federal money. Luckily for the taxpayers of FL, our current Governor isn’t letting himself be persuaded by such special interests, (in this case, those that do want the high speed rail), and he instead is siding with the citizens of the state of FL as a whole. He represents all of the citizens in this state which is why he acted on behalf of the taxpayers by not accepting federal $ for a project that would end up forking the rest of the bill over to the taxpayers of our state. Gov. Scott has mastered Economics 101: there is no such thing as a free lunch!
2011
