President Obama has been quite supportive of building high-speed rail. In January he announced an $8 billion down payment. But that was just a start. Building high-speed rail is a major investment, and the big question is: how will we pay for it, especially in a time of increasing federal deficits?
PPI Fellow Mark Reutter has some ideas, and he writes about them in a new policy memo that PPI is releasing today. The memo is called: “A smart way to finance high-speed rail: Restructuring the Highway Trust Fund into a results-driven transportation fund.”
Reutter argues that the money should come out of a cleaned-up Highway Trust Fund, which is currently larded with strategically aimless and costly programs:
Congress could easily allot $5 billion a year for HSR construction – without an increase in the gas tax – by cutting out earmarks and formula-based grants that now soak up billions of dollars, according to the General Accountability Office (GAO). Such fund reallocations could not only jumpstart HSR projects but serve as seed money to public-private partnerships to get the work done.
Although the Highway Trust Fund was once an elegant solution to funding the construction of the Interstate Highway System with gasoline taxes, it has over the years become more and more just a source of political pork.
Reutter thinks it’s time we use the almost $300 billion authorization (over six years) for building up genuine high-speed-rail routes. To that end, he makes seven specific policy recommendations for the next Highway Trust Fund re-authorization replacing the current authorization due to expire at the end of 2010.
- Change the name of the Highway Trust Fund to the Surface Transportation Trust Fund to better reflect its new mission for the 21st century.
- Allocate at least $5 billion in Trust Fund money in 2011 to HSR construction, with special emphasis on getting a demonstration high-speed line between Tampa and Orlando completed by 2015. (The Florida line received $1.25 billion in federal stimulus grants, but is still short of its $2.6 billion budget.)
- Increase HSR expenditures in years 2012-15 (if a five-year spending bill is enacted) to reflect the increased demand for grants as more states develop passenger rail plans.
- End the bureaucratic separation of highway and rail programs by establishing a team of planners to develop a HSR network in coordination with future highway building and restoration.
- Direct the U.S. Department of Transportation and state authorities to examine routes where HSR could use Interstate and other publicly owned highway corridors for rights of way. This approach, already being used in the Tampa-Orlando corridor, would greatly lower land acquisition costs for new rail lines.
- Base federal transportation decisions on clear analytic measures of performance rather than earmarks – and competition between states instead of preset formulas – to produce the greatest return on taxpayer dollars.
- Ensure that HSR, which uses about 20 percent less energy per passenger mile than automobiles, gets its fair share of any future revenues generated by carbon pricing.
Reutter also explores ways that policymakers can leverage private capital to augment public spending.
One approach is assembling land around potential HSR terminals for sale to private companies either operating or putting up part of the capital costs of HSR building.
Another is to encourage overseas operators with proven track records to invest in U.S. projects, at least initially, to allow U.S. companies to “learn the ropes” of building these highly sophisticated systems.
Ultimately, though, it’s going to take real political leadership. As Reutter concludes:
The Obama administration has repeatedly talked about its commitment to “green” technology and how fast trains could provide job growth and business opportunities to regions hard-hit by the loss of manufacturing. The administration needs to seize the initiative and make the case for HSR funding during the fall election cycle and in the next transportation reauthorization bill.
Reutter will be discussing high-speed rail Wednesday at a panel on “Keeping America on Track: The Future of High-Speed Rail,” which is part of the 2nd Annual North America Strategic Infrastructure Leadership Forum, co-sponsored by PPI.