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Sunday, February 6, 2011

HIGH-SPEED RAIL: MAKE-WORK PROJECTS?

In business, in order to keep people busy, "make-work" projects are devised to keep workers busy until they are needed for serious endeavors. Such projects were commonplace in Franklin Roosevelt's "New Deal" of the 1930's to try and get the country back to work. We are also witnessing it as part of the Obama administration's stimulus program. Here in Florida, the most visible example is the proposed high speed rail project (aka, "Bullet Train") to go between downtown Tampa and the Orlando airport. Over time, it is envisioned it would also connect Orlando with Miami, but for now, Tampa-to-Orlando is the first step.
This is something Florida voters have been debating well before Obama took office, going back to 2000 when voters first approved the development of such a train. By 2004, voters had second thoughts and repealed the train after realizing the hefty price tag associated with such a project. Then in 2009 with President Obama now in office, the Federal Government offered billions of dollars to states for stimulus projects, particularly high speed rail. Florida enjoyed a head-start over others as they had already been surveying land and planning routes. So much so, Florida was the only state who had a "shovel ready" project ready to be executed. However, Florida's legislators and governor are now weighing the pros and cons of such a project before agreeing to accept the stimulus money.
Railroads played a significant role in Florida's development, both in terms of freight and passengers. They began to appear in the 1830's. By 1888 the Orange Belt Railway arrived in St. Petersburg, and by 1910 the Tampa and Gulf Coast Railroad arrived in Tarpon Springs, all of which played a significant role in opening up the Tampa Bay metropolitan area where I live. We also had a trolley system in Tampa and I believe in St. Petersburg as well, both of which disappeared as the automobile emerged as the dominant mode of transportation. This scenario is similar to what other cities in the United States experienced. Except for major metropolitan areas, local passenger rail service was replaced by automobiles and buses.
Now the state is entertaining the idea of introducing a rapid transit system based on the rail with other states closely watching our progress. To me, this discussion is a non-issue as rail travel is questionable at best from an economic perspective and likely represents an obsolete technology for passenger transportation. I like trains as much as the next person, it is a nostalgic reminder of a bygone era. The reality though is if passenger rail transportation was so good, why did we abandon it? Simple, people wanted their independence and found the automobile a cost effective solution for their transportation needs, thus began our love affair with the automobile. There are, of course, storm clouds on the horizon as the cost of petroleum keeps rising and we have developed an undesirable dependence on foreign oil. The question though is whether rail transportation is the right technology to gamble on for the future. Other than bringing money and jobs to build the train today, I contend politicians have yet to build a compelling argument in favor of it from a long term perspective.
There are three aspects to consider: logistics, time savings, and costs. In terms of logistics, people in the Tampa Bay area question the wisdom of having high speed rail originate from downtown Tampa as opposed to its airport which is considered more accessible to the public and has ample parking. The estimated time savings between Orlando and Tampa is a mere 30 minutes, which is not substantial (plus you have greater independence by automobile). Development costs are significant and will undoubtedly result in jobs to build it, but what about afterwards to operate and maintain the rail system? It is my understanding the major rail systems in New York, Chicago, Philadelphia, and Washington, DC all rely on subsidies. In other words, the taxpayer foots the bill. In business, most companies avoid undertaking projects without a substantial return-on-investment (many require at least a 200% ROI). This is hardly the case in the proposed Tampa-to-Orlando connection.
Bottom-line, the high speed rail system proposed for Florida is an expensive proposition with negligible long term benefits and a questionable return-on-investment. So the question becomes, why should we entertain such a proposition? Some would answer, "To put people to work today." True, but it would inevitably create a burden for the taxpayer tomorrow. High speed rail is a risky proposition no matter how you slice it which will affect us for years to come. Surely government officials will study it carefully before making a final decision. Ultimately, they must determine if high speed rail is the right transportation technology for our future and not just a link to our nostalgic past. As a Florida taxpayer, I want them to make the right decision, and not one that does nothing more than "make work." Let's do our bit to help the economy and allow the federal government to keep the stimulus money.
Keep the Faith!
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Tim Bryce is a writer and the Managing Director of M. Bryce & Associates (MBA) of Palm Harbor, Florida and has over 30 years of experience in the management consulting field. He can be reached at timb001@phmainstreet.com
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