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Joint finance committee approves $822 million for light rail


Earlier today, the Legislature's Joint Finance Committee approved accepting $810 million in federal stimulus money to construct a high-speed rail line between Milwaukee and Madison. The vote was 12-4, completely split on party lines (12 Democrats vs. 4 Republicans).


With this vote, the Department of Transportation can solicit proposals for feasibility studies related to environmental impact, the location of depots, and other infrastructure necessary to support the rail line. If everything progresses at a reasonable pace, actual construction could start in late 2010. Construction is projected to take three years.

The project is not without controversy. Annual operating costs are projected to be $7.5 million. These costs would need to be covered by taxes or riders in the form of fees. Nationally, the vast majority of light rail systems, even in larger urban areas such as Chicago, New York and Washington, D.C. require ongoing taxpayer subsidy of their operating costs in order to keep fare prices at a point sufficient to attract riders. Republicans, including County Executive Scott Walker who is running for Governor, have opposed the project on the grounds that it will not attract sufficient ridership to generate fares large enough to offset the annual operating costs. Walker and other Republicans have claimed that essentially, tax revenue via new taxes or a diversion of other tax revenues will be necessary to fund the operating costs. Their claim is that Wisconsin's budget clearly cannot support the line without a new source of taxes and Wisconsin's economy can't support another new tax, particularly one that subsidizes a little used rail line.


Proponents of the line argue that such an investment would be Eco-friendly (reducing emissions), create jobs and create new development opportunities along the rail corridor. They also point to the fact that the Stimulus funding is essentially a 'use it or lose it' proposition and that without the rail construction, Wisconsin's economy would not benefit from the $810 million of federal investment. Current Governor Doyle and Democratic gubernatorial candidate and current Milwaukee Mayor Tom Barrett are leading proponents of the rail line construction.


Barring action from the Governor to stop construction or delay progress via requiring additional studies, the path for the high speed rail line is fundamentally established. Gov. Doyle's successor could kill the process upon taking office in early 2011 however, such a move would require Wisconsin to refund the stimulus money and essentially 'eat' the costs that have already been incurred (with more likely to come in 2010).


Stepping back from the; pro'arguments regarding federal stimulus use and potential economic development gains (jobs, infrastructure improvements along the corridor, etc.), my analysis raises the same concerns that Republicans and others have raised; namely, is the line ultimately going to be used and financially viable beyond its initial 'operating' honeymoon. Looking at similar systems and projects in other regions nationally tells me that construction costs are likely to exceed the budget of $822 million (none of the similar projects in recent years have come close to initial budget expectations). Attracting and maintain ridership is constantly an issue, even in regions that are more heavily populated than the Milwaukee - Madison corridor. Ultimately, ridership is a factor of maintaining low enough fares to attract commuters (regular riders) and as such is the case, each of the other comparable systems has needed to rely on tax subsidies to stay viable. I firmly believe that Wisconsin's experience will be no different, especially since the level of commuter traffic between Milwaukee and Madison is substantially lower than the traffic in other regions; each requiring tax subsidies to stay afloat.

 

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