Sherrod Brown’s “California Dreaming” Debt Train

Guest post by Duke

In 2009, Sherrod Brown urged the Federal Railroad Administration to provide stimulus funding for a high speed rail service to connect Ohio’s largest urban areas. Brown’s motivation was “economic development and job creation.” In January 2010, Obama rewarded his fair haired boy from Ohio with $400m in stimulus funds to connect Cleveland, Columbus, Dayton and Cincinnati. In December 2010, Ohio’s new Governor John Kasich forfeited the stimulus funding saying that “there are too many unanswered questions about how many people would ride the train, how fast the train would go, and how much it would cost.” At the time, the incoming Governor, Kasich, was facing an $8 billion budget deficit courtesy of out-going Governor Ted Strickland. Yet Strickland wouldn’t go quietly. He said “I fear that history will show that this one uninformed decision will be looked upon with regret by future generations of Ohioans.” While the future generations of Ohioans have not weighed in on this yet, it seems like Strickland was uninformed and the early returns suggest that Ohio dodged a fiscal bullet.

In California, one of the prime beneficiaries of the forfeited Ohio cash, the LA Times referred to the high speed rail project as a “train wreck”, and added that “there is a powerful argument for scrapping Obama’s national rail plan,” and added “California is a test case whether high speed trains can succeed in the U.S., and so far, the state is failing.”

California's Legislative Analyst Office (LAO), a non-partisan fiscal and policy source of analysis for the California Legislature, has weighed in in saying that “the Legislature faces challenging choices about whether even to proceed with the project, noting that the projects optimistic 2009 business plan counts on federal, state and private funding that may not materialize.” The LAO report urges lawmakers to slash funding to the project while its future is reevaluated.

Questions remain as to whether High Speed Rail can stand on its own two feet. Amtrak might be a good comparison. In Fiscal Year 2010, Amtrak had a net loss of $1.3b on $2.0b in revenue. Amtrak’s Retained Earnings (retained deficits would be more descriptive) ended 2010 at more than $27 billion. If you can’t make a profit and avoid further bailouts from Washington with the scale of Amtrak, can any high speed rail survive? Note that Amtrak gets $1.5 billion in taxpayer subsidies every year. Maybe that is why Wisconsin and Florida have forfeited their stimulus funds as well. Sherrod Brown commented on the forfeited $400m saying that “It’s a great day for New Yorkers and Californians, but a truly disappointing one for Ohioans waiting for jobs, and high speed rail.” Did he ever think about the cost to Ohioans?

The California High Speed Rail Authority projects the Anaheim-San Francisco segment would cost $43 billion. The LAO estimates starts at $67 billion (a small difference for a Progressive Democrat like Brown). The High Speed Rail Authority assumes that California will receive $17-$19 billion from the Feds. The LAO notes that “given the federal government s current financial situation, it’s uncertain if any further funding will be available.” California, already a fiscal basket case would need to borrow $9 billion according to the High Speed Rail Authority. In addition, $14-$17 billion would be paid with funds from local agencies and private partners. The Authority has not been overly precise in their projections. From the 2009 estimate for the first section of the rail track to the 2011 estimate, the projected cost rose 57% despite a 17% reduction in miles.

It’s safe to say that Sherrod Brown doesn’t think about the cost to taxpayers (Ohio & National). He wants more union jobs that will fund his re-election campaign. We now know that the CBO has increased the cost of the Stimulus program. It’s now $830b, and the CBO says that the increase in employment as a result was 3.3 million on the high side. At over $250k per job, that’s, a bargain to Progressives Democrats like Brown.

If California is a good example of the economics of High Speed Rail, and taxpayer support required to get High Speed Rail rolling, Ohio dodged a “Progressive Bullet.” Thanks to John Kasich, we have avoided the fiscal black hole that California will be facing if they don’t come to their senses.

It is increasingly evident that Ohio taxpayers cannot afford another six years of Sherrod Brown. At a minimum, we should send him to Vermont. He would fit right in.