Kansas makes unwise bet on passenger rail

Last week Kansas Governor Mark Parkinson signed into law HB 2552, which enacts the Midwest Interstate Passenger Rail Compact. This act will promote improvements to passenger rail service and the development of plans for long-range high speed rail service in the Midwest, according to the governor’s press release.

“Passenger rail service in Kansas would create economic opportunities for the future, but the planning must begin now,” said Parkinson in a press release. “A strong public infrastructure system helps attract businesses and jobs to our state, and a high speed rail service is another piece in furthering our economic recovery. I am pleased to sign these two bills that will set the gears in motion for increased avenues of transportation in Kansas and the entire Midwest.”

The governor also signed SB 409, which authorizes the Kansas Secretary of Transportation to establish and implement a passenger rail service program in the state.

In Kansas, the Northern Flyer Alliance has promoted this legislation as a way to return passenger rail service to Kansas, specifically from Kansas City through Wichita to Oklahoma City and Fort Worth. It’s a bad idea. Any expansion of Amtrak, which is how this service would be implemented, is bad public policy.

Consider some of the recent history of Amtrak. In 2001, the Cato Institute Policy Analysis Help Passenger Rail by Privatizing Amtrak contained this in its summary:

Amtrak has failed to secure an increasing portion of America’s growing transportation market. It carries only about three-tenths of 1 percent of all intercity passengers. Its on-time performance on most routes is terrible, and it covers up this fact by measuring punctuality at a limited number of stops and building in lots of extra time before those stops.

Many of Amtrak’s trains run much more slowly today than did trains on the same routes earlier this century. Moreover, Amtrak uses creative accounting to disguise its financial problems. For example, Amtrak receives many subsidies from government agencies and has recently abandoned standard accounting practices to hide operating expenses as capital costs.

In the recent Cato Institute briefing paper High-Speed Rail Is Not “Interstate 2.0”, author Randal O’Toole provided this summary:

The administration has likened President Obama’s high-speed rail plan to President Eisenhower’s Interstate Highway System. Yet there are crucial differences between interstate highways and high-speed rail.

First, before Congress approved the Interstate Highway System, it had a good idea how much it would cost. In contrast, Congress approved $8 billion for high-speed rail without knowing the total cost, which is likely to be at least $90 billion.

Second, highway users paid for interstate highways, whereas high-speed rail will be almost entirely subsidized by general taxpayers who will rarely use it.

Third, interstate highways connect all 48 contiguous states and major metropolitan areas. The FRA’s high-speed rail plan consists of six unconnected networks that reach only 33 states and less than two-thirds of the nation’s 100 largest urban areas.

Fourth, the average American traveled 4,000 miles on interstates in 2007. High-speed rail proponents optimistically estimate that the average American would ride the FRA’s high-speed rail system less than 60 miles per year.

Finally, interstate highways improved social welfare by increasing highway safety. In contrast, far from saving energy and reducing pollution, high-speed rail would actually increase energy consumption and greenhouse gas emissions.

For all these reasons, the United States government should not fund high-speed rail. The $8 billion in high-speed rail stimulus funds should be invested in safety improvements, not in new trains and new routes that will add to future taxpayer obligations.

Amtrak also has problems with transparency and accountability, and has troubles complying with provisions of the federal Inspector General Act. A recent investigation concluded: “… contrary to the requirements of the IG Act, the OIG’s independence at Amtrak has been diminished and threatened by recent policies and practices at Amtrak affecting OIG investigations and giving the appearance that OIG is subordinate to the Law Department. The involvement by the Law Department in OIG investigations both impermissibly and unnecessarily restricts the OIG’s access to document and information …”

Amtrak is a federal agency that should be disbanded immediately, not expanded.

In testimony before the Kansas House Transportation Committee on March 3, advocates for the Northern Flyer project gave several reasons for supporting it. One reason is that other states are getting federal money for similar projects, and Kansas residents are “donating to what other states will receive.” The point was made that fares will offset some of the operating expenses, but that this rail services will not be profitable. Rail should not be expected to operate without subsidy, proponents said. Many other forms of transportation are subsidized, too, and the amount of money spent on rail subsidy is small.

But when compared to other forms of transportation, rail is subsidized at a much higher rate. According to the Bureau of Transportation Statistics, in 2002, highway use was subsidized at the rate of negative $1.00 per thousand passenger miles. “Negative numbers show user charge payments to the federal government in excess of cost responsibility,” explains the report, meaning that highway drivers are subsidizing other forms of transportation.

Commercial aviation was subsidized at the rate of $6.18 per thousand passenger miles, with general aviation racking up subsidy at the rate of $91.42 (2001 figures.)

Railroad received $210.31 per thousand passenger miles. It’s a very expensive way to travel.

19 Comments

  • kimpot54 -

    This is such a horrible idea!!! The costs will be staggering, and unless you outlaw cars–which may be the next step–Kansans will not use this form of transportation. Just one more collectivist idea to destroy our economy and way of life.

  • Wichitator -

    What is high speed passenger rail service? I have heard the rail travel advocates discuss how fast this service will be. The tradeoff is, the more stops you make, the longer it takes for the entire trip.

    I’ve heard reports that this train will make a large number of stops in places ranging from Arkansas City to many smaller communities north of there in KS. If this becomes a “milk train,” stopping every 20 miles or so, how will this attract riders with an average speed that is likely to be well below the “bullet train” speeds mentioned on express trips between major cities? If it goes an average of 40 or 50 mph, then why not buy everyone a bus ticket? Would an “express” train that only stops in cities >250,000 people be able to average a higher speed than the typical car driving on an interstate highway? I’ve heard that Amtrak regularly runs trains at speeds that are slower than interstate figures. That would certainly limit passenger interest.

    A bus ticket would be cheaper for taxpayers and probably a lot easier on the environment.

  • The facts don’t square with this opinion.

    First this is NOT high speed rail. Period. If Bob doesn’t know the difference between the proposed high speed rail lines and this proposed route on Amtrak’s existing service he should stop posting and do a lot more reading. First of all, the White House’s proposal can be read here: http://www.whitehouse.gov/blog/09/04/16/a-vision-for-high-speed-rail/ It even has maps of the proposed lines. You will see that the route proposed by the Northern Flyer Alliance is not on this map because it is not part of the high speed rail proposal. That 90 billion dollar figure (and the entire quote from the Cato Institute’s paper) is for a very different program altogether.

    This proposal is to extend passenger service on existing freight rail lines, connecting Wichita to Oklahoma City. It’s NOT going to cost 90 billion to do that.

    Did Bob do his research and tell you that this plan is supported by the Chambers of Commerce in Newton, Mulvaine, Winfield, Edmond OK, Norman OK, and Chase County? Nope. Why would the COC back a supposedly reckless proposal given the fact that they support conservative policy issues right down the line? The COC the the largest lobby group in the United States and they are not going to support something that results in needless wasteful spending.

    MAYBE, just MAYBE, Bob doesn’t know what he’s talking about and didn’t do his basic research, or he’s trying to pull a fast one. If one is going to offer opinions, they should have a basic grasp of the facts. Bob, you should apologize. But, you never do, and you never correct your columns when people point out flaws.

  • Chuck, one of the bills refers to high speed rail. The other, the one promoted by the Northern Flyer Alliance, doesn’t. So some evidence I presented refers to high-speed rail, and some doesn’t.

    I would have to disagree with your contention that local chambers of commerce are fiscally conservative and opposed to wasteful spending. I refer you to my post The decline of local chambers of commerce, in which I quote extensively from a Stephen Moore editorial, in which he writes how local “chambers of commerce deploy their financial resources and lobbying clout to expand the taxing, spending and regulatory authorities of government.” This rail subsidy is one such example.

    As a matter of fact, the Kansas Chamber of Commerce, which is a fiscally conservative group, is at odds with a number of its local chamber members, as the local chambers are pushing for tax increases in Kansas. The state chamber opposes them.

    So despite your inflammatory demands, Chuck, I think I’ll decline to offer an apology.

  • Anonymous -

    It is important to note that the entire highway system loses money, and so does the FAA’s Air Traffic Control System (the airports are another matter—the biggest ones make money off the parking, concessions, etc., but smaller-town airports usually are net losers).

    In other words, the question for passenger rail critics is: Why do you expect rail to be a business when its competitors are simply treated as government transportation programs? Why should passenger trains be held to a higher (commercial) standard of financial performance when highways and civil aviation are not? If there is a business case for roads, why did the Federal Highway Trust Fund just go broke and have to be bailed out with a $20-billion congressional subsidy from the General Fund? Why does every state subsidize its road program with sales, property and income taxes? If the politicians are so insistent that transportation programs be “profitable,” why are they too chicken to raise the federal motor fuel tax, which has not been increased in the last 20 years? And why are state legislators subsidizing their roads with taxes raised from non-users? State gas taxes aren’t rising either—not enough to keep up with inflation much less offset all road building and maintenance costs.

    Most of the studies I have seen indicate that roads recover a maximum of 2/3 of their costs from user fees, such as motor-fuel taxes, license-plate and drivers-license fees, traffic fines, etc. The balance is subsidized, just as passenger trains are.

    But some roads are subsidized at rates much higher than 33%. One example is State Route 99 in Texas, as a recent case indicates.

    Several years ago Texas Gov. Rick Perry became alarmed at the size of the subsidies the state was paying into its road program, so he asked TxDOT to develop a program to turn most of the state’s highways into toll roads that would recover their costs from user fees. This program was very controversial. Motorists really hate paying the full cost of their driving, and politicians hate to upset them by insisting they pay the full cost. So to make his case as strong as possible, Gov. Parry asked TxDOT to develop an analytical mechanism to identify just what each piece of road was likely to cost—for construction and maintenance—over its lifetime. The service life of a typical highway is now considered to be 40 years. After that maintenance can no longer keep pace with deterioration and the road must be dug up down to the dirt, the broken concrete and asphalt hauled away and the whole thing rebuilt.

    So TxDOT developed something called the Texas Asset Value Study and began analyzing some of the state’s most important highways to see what they really cost to build and keep up and how much of that cost would be covered by the gas tax on cars and trucks. What they found out was that a typical busy highway, such as a 15-mile stretch, motor-fuel taxes were contributing only about 16% of the costs. The rest was all being subsidized. If every motorist using SR 99 were to be assessed the full cost of his or her driving on that road, the gasoline tax would have to be raised to $2.60 a gallon.

    The results of the study were so controversial that Gov. Perry’s toll-road program was discontinued and the story about the study was quickly taken down from the TxDOT Web site. I first heard about it in a blog from Wisconsin (which is attached) that appeared in early 2008. The blog at that time contained a live link to the TxDOT story about the Asset Value Study. When I first ran across the Wisconsin story a year later I was unable to activate the link, so I e-mailed and then called TxDOT to see if they would send me a copy of the original story. Nobody at TxDOT would return my e-mails or voice mails. Finally, in desperation, I put out an All Points Bulletin asking everyone in my network whether anybody had saved the original story. It turned out that George Chilson, president of the National Association of Rail Passengers, had saved it when it first appeared. He e-mailed it to me, and I have been using it ever since to take the wind out of the sails of anti-train critics and highway advocates who claim that “roads pay for themselves through gas taxes.” No way. My friend Stu Nicholson at the Ohio Rail Development Commission says the federal government and all of the states have been practicing “vehicular welfare” and that cars are the biggest welfare queens in the U.S., sucking up huge volumes of subsidies that nobody wants to hear about.

    Which is why TxDOT took the truth off their Web site.

  • KipSchroeder -

    I needed to read only one sentence to know that this is a bad idea…and this from the mouths of the proponents:

    “this rail services will not be profitable.”

    It is even more frightening when you look at just how unprofitable this line is expected to be. Take a look at this Wichita Business Journal article where Amtrak researched the feasibility of four routes through Kansas:

    http://wichita.bizjournals.com/wichita/stories/2010/03/22/daily17.html?ed=2010-03-25&ana=e_du_pub

    Option 1 = $500,000 in losses annually
    Option 2 = Revenue neutral
    Option 3 = $1,900,000 in losses annually
    Option 4 = $4,300,000 in losses annually

    Anyone care to guess which option will be selected?

    Oh, by the way. The bill didn’t provide any of the $479 million needed to fund the creation of the rail service. Just imagine the proposals the legislature would be voting on if we weren’t in a recession.

  • Mark Redeker -

    Another great idea from the government who has an endless supply of money, who is the only authority that can legally collect that money at the end of a gun barrel. Why should they care if their ideas are profitable or not.

    To: anonymous, why should there be increases of any tax to account for inflation? As taxes are a percentage of the price being charged they automatically go up as prices inflate. The government will always claim they require more and more of our money because they don’t have to go out and earn it themselves. Please give me a break about how the government requires more revenue. They will spend every penny we allow them to take from us, we need to stop the taking because everything they do they do poorly and inefficiently. Because they have no one to answer too and no bottom line to watch. At this point in time the average American who earns $50,000 a year or more works more than 1/2 of the year just to pay the combined federal and state taxes placed upon them. Any higher tax rate than we already pay equates to the average citizen being relegated too serfdom, just to support government over spending!

  • Matt Dowty -

    To: anonymous, why should there be increases of any tax to account for inflation? As taxes are a percentage of the price being charged they automatically go up as prices inflate.

    Mark,

    Except in the few states which include a sales tax on fuel, gasoline and diesel taxes are levied as a defined number of cents or percentage thereof on a defined quantity of fuel.

    It does not naturally adjust for inflation or deflation.

    Matt

  • When the American passenger rail system was abandoned by the nations railroads the federal government agreed to develop a national passenger railroad system.

    Amtrak has operated on a less than shoestring appropriation and suffered criticism for this limitation that has been irrational and unrelenting for 40 years. Often it is the press that periodically pertuates the criticism with a bias that plays to the prejudices of the fringe elements.

    Most of there are key facts “conveniently” left out of the discussion.

    Here’s just one: from a public fund comparison the total 40 year subsidy of Amtrak would amount to only two years of public funding for the Federal Aviation Administration. Not that we don’t need this critical federal agency but where is the “libertarian” commentary or outrage over the taxpayer support of a dole for the private commerical air carrier which are the chief beneficiary. The public certainly isn’t and there has been more than one airline that has been bailed out, with additional taxpayer expense.

    Weeks includes facts that are conveniently skewed for the story.

    I’m curious why this wouldn’t be a good column for Weeks to write up. But his bias is probably aligned with the fringe element.

    The Kansas legislature has actually made a wise decision, as has the Governor in signing these bills. Kansas is geographically positioned in the center of a passenger rail network with a major gap in service in our state. The economic return seen everywhere in the country when towns are reconnected will come to Kansas as well.

    One fact that Weeks is either ignorant of (perhaps deliberately ignoring) or just didn’t want to mention is that the Governor and the legislature received city council resolutions of request for service from over 60 communities. That is a significant mandate and the primary reason why this legislation passed with votes of 37 – 3, and 115-5 in favor.

    Weeks must be clueless, if not then prejudiced, with marginal journalist talent.

  • I’ll overlook Mark’s needless insults and address his remarks, some of which have merit.

    I wouldn’t expect Mark to be aware of this as it is a local issue, but for several years I asked the Wichita City Council and Sedgwick County Commission to stop paying an airline a subsidy to operate service in Wichita. I was a lonely voice on that issue.

    As to subsidizing other forms of transportation: It should all be ended.

    I ask you to take notice in my article where I cited testimony from Northern Flyer advocates: “Many other forms of transportation are subsidized, too, and the amount of money spent on rail subsidy is small.”

    In my article, I cited figures on a passenger-mile basis, because rail carries just a tiny fraction of passenger traffic. Saying that the absolute amount spent on rail subsidy is small when compared to other forms of transport, without placing that in the context of usage: is that being informative?

    I’m aware of the vast community support for this program. Cities love getting federal dollars for boondoggle projects like this. They are under the delusion that this money is free.

    I’m also aware of the vote in both houses of the Kansas legislature. It loves federal money, too, and is equally deluded.

  • Mr. Weeks

    The highway system therefore must end? Isn’t that the biggest capital subsidy and operating transportation subsidy?

    Amtrak moved 28 million in 2009, 29 million in 2008. Ridership continues to increase.

    You reference the “tiny fraction of passenger traffic.” It is smaller. The system is smaller; there are fewer seats available.

    You may suggest that these trains run with many seats vacant. What is never mentioned is that passenger trains are have constant boardings and arrivals. Over the course of a run there is often a greater percentage of people aboard, than there were seats for. That’s because it isn’t comparable to point to point airline travel.

    Amtrak operated on a budget of 1.2 billion in 2008. If this were returned to the public trough it wouldn’t make a thousandth of an ounce difference in the national economic crisis.

    Amtrak benefits everyone through its tremendous life and limb savings. There are on average 5-7 deaths a year aboard Amtrak trains. 45o die annually on Kansas roads. The average cost per accident as published on KDOT’s website is about $185-200 thousand per incident. Other studies estimate that each fatality costs $4-5 million. If only a few tragic fatalities are averted, this cost avoiadance would pay for the rest of the public subsidy.

  • I don’t know why you make the leap from me saying “all forms of subsidy for transportation should end” to “the highway system therefore must end.” I’d be curious as to why one follows the other.

    By the tiny fraction of passenger traffic, I am referring to the number of miles traveled by passengers on trains as compared to all other forms of transport.

    No doubt trains are a safe form of travel. There’s still no need to force people who will never use a service to pay for it.

  • Good points, Mark.

    I think we have established that this program has nothing to do with the high speed rail proposal, or the objections raised to it. it is also worth noting a study done by a number of MBA students at KU found there would be approximatley $3.00 in benefit to the state for every $1.00 spent. You can read an article about the study here: http://www.usatoday.com/travel/destinations/2010-01-11-amtrak-northern-flyer-wichita_N.htm

    It’s too bad Bob didn’t include a discussion of the study in his original article. It makes the original analysis on this subject incomplete and one sided.

  • john bishop -

    Bob and all,

    Living in Denver I watched United Airlines absorb millions of dollars of federal loan guarantees and mismanagement that put General Motors to shame. To say that highways are not receiving big government handouts is to say the airlines are fully competitive without gov’t “too big to fail” programs.

    To say that all we need is a bus ticket is also showing some serious lack of knowledge about what kind of bus service is available today (non-existent in towns smaller than Wichita).

    And the “Air Capital” is in airplane building only–the airlines are reducing services to Wichita faster than you can take the Turnpike to the Mulvane exit.

    As a retiring senior and nearly 1million actual airline miles flown I am sick of airlines brutal treatment of their customers and their exhorbitant fees and add-ons. I would think that the city of Wichita would welcome another mode of transportation in and out of its city limits instead of crying about subsidies (which exist in all forms of transportation). Especially when Wichita air customers will eventually be flying prop jets and 12 seat jets to larger airports to begin their real air journeys.

    “High speed rail” is anyone’s definition. We recently travelled from Wichita by car west to Lajunta Colorado. We left at 10am and pulled into Lajunta at 6pm (mountain time)and spent the night. Amtrak’s Southwest Chief left Newton at 3:25am the next day. I saw it arrive 15 minutes EARLY into LaJunta at 8am(mountain time). Actual trip time–Amtrak 5-1/2, car 7 hours driving at about 70mph, including a lunch stop. Amtrak goes at about 80 mph with 3 Kansas stops and 1 before Lajunta. Here’s the point–YOU AREN’T DRIVING-THE COST OF GAS IS SPIRALLING AND THIS TRAIN DOESN’T EVEN MEET OUR HIGHSPEED RAIL DEFINITION!!

    How much longer are Kansas folks and others in the midwest going to hitch their wagons to receding airline and bus services or the high costs of the Kansas Turnpike Authority?

    I am a Kansas native and we will move back to where we can get reliable public transportation—Wichita should be wild about rail passenger service and the small cost to put a train in and out of there! Or you can go to the Wichita midcontinent airport and see: 1) Is that airline still there 2) where can I go 3) What outrageous price will I pay and how long will this trip be?

    Like much of the rest of the country we all need to get outside the airplane/ highway box and look at something else. The criticism that rail is such a loser needs realistic comparisons and our airlines and highway system are not it. Every train in and out of Denver on the California Zephyr to Omaha and Chicago is packed. These trains are highly used. The same would be true if there were service from Ft. Worth to KC-Chicago.
    European, Asian and Japanese rail systems are all highly subsidized as part of the government transportation policy. As a society in the US we have become drunk on cheap oil and the bottle is costing us more than we can now afford to pay.

    We need another alternative–the investment and the return are a no-brainer once get past our legacy “subsidy” Amtrak loser argument. John Bishop, Denver Colorado.

  • Why do all the proponents of rail think the only way to get it done is by government? I don’t think Bob would be opposed to a privately funded rail system. I don’t think there would be any opposition. In fact, if the debate is just whether or not we need a rail system, then there really is no debate.

    If you think that it just isn’t possible for private people to invest in trains so the government has to do it, I think you need to remember that the money would be coming from the private sector. So although the individual would never reap any financial benefit, they will most definitely be paying for it.
    I think that nuance has to be understood by those who want the government to pay…it isn’t the government who is paying. And if you can’t make money at it in the private sector, you are going to lose in the public sector as well. And if you lose in the public sector, then isn’t it a net loss regardless of if you feel the pain?

    And although I will be labeled a fool by most, I believe the same is true of the other forms of transportation as well. When you get down to where the rubber meets the road, or runway, the costs, on a federal level, far exceed the benefits.

    You can trot out all the studies you can find, but the adage remains true, “If you torture the data long enough, it will tell you what ever you want to hear.” In other words, most studies conclude with what the studiers wanted to see in the first place. That goes for those on the left and the right.

    Just so you know; I would love to be able to go to downtown Wichita, walk from my car and board a train without the hastles of being there hours early, bag screening, seat assignments and all the other junk that goes with air travel. I would love it so much that I have wondered about investing in a passenger rail system. I think there is still a feeling of nastolgia and mystique about traveling the rails. I think passenger rail could be wildly successful. The problem comes when you realize that there is no possible way for a private company to capitalize on the opportunity if the government has a monopoly. The system has so many barricades, it looks like I35 going through Oklahoma.

    And it has to be clear, even to those who support this spending, that there is no way for the government to run a train with the ammenities that people will want to make it successful.

    Would it be terrible for a city or state to reject federal funding and to put forth a call for anyone with the vision and capital to have a go at this venture? Or am I just naive to think that we have the same spirit in us today that we had when the rails were first built?

  • I think as oil prices rise-Gasoline becomes more expensive with owebama fuel taxes more people will use the Amtrak system if it is available for them. To get on a train at say Winfield and tavel to Wichita or Kansas City then return the next day will benefit many people. We should atleast try it and see if people will use it and cut down on the cars on the road.

    I do see your point Bob, I hate the money being paid to an airline to fly in and out of Wichita. I’ve never, nor will ever, fly. You can shut down midcontinent for all I care!

    Seems alot more fuel is waisted per mile in airplanes as compared to rail service though. Rail is the most efficient way to move people and freight than the highway system.

  • The Straight Truth -

    To Matt Dowty and Mark Redeker~

    You two couldn’t be more wrong about how gas taxes are generated. The federal gas tax is not “indexed” to the retail price of the product and does not fluctuate with it. It’s a flat 18.3 cents on each gallon and has not been raised since 1994. Details are available on the Web site of the American Association of State Highway and Transportation Officials (AASHTO) at http://www.transportation-finance.org/funding_financing/funding/federal_funding/motor_fuel_taxes.aspx.

    State gas taxes are assessed the same way—flat rate based on gallonage. AASHTO has a table on its Web site at http://www.fhwa.dot.gov/ohim/hwytaxes/2008/mf101.pdf. This table shows what the gas tax is in each state and how it is determined. Look at the center column: “Tax computed on basis of.” All of the states compute the tax on the basis of some measure of quantity of fuel either imported or sold. Not one state pegs the tax to the price of the fuel.

    There is great public resistance to indexing the motor fuel tax because people know it will inevitably rise. Funny, they are willing to pay more and more of their money to the people who sell them fuel but not to the people who build the highways.

    Now you have the facts.

  • The Straight Truth -

    To Ed~
    You’re right. Rail travel is significantly more efficient than either car or plane.

  • Mark Redeker -

    Thank you for the correction on my misperception on how the gas tax is implemented. That does not change the fact that regardless of how much money the government takes in, it always wants more and more. Also as consumption goes up as is always has with increasing populations and usage the revenue the government receives also increases even by the gallon.
    In the end, the fact is the government has no accountability it spends what it wants and then taxes what it wants to make up the difference The government fails to do it’s required jobs correctly or efficiently yet it always wants to do non-required jobs and screw them up as well. The free market which we have not had for over a hundred years does things efficiently or fails and demands accountability. The free market: supply, demand, risk taking, success and failure should be the way our markets are ran, with government oversight for safety and fair practices alone, and everything would run much smoother if the corrupt government kept it’s nose out of private bussiness!

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