Cost over runs are a given on any major government project. A 5 percent over run would have wiped out those predicted profits and replaced them with costly losses.
If the over runs were on the scale of Bostons Big Dig, $3 billion quoted with a completion price north of $14 billion and still climbing as tunnel leaks are still being fixed, those trains would never earn a profit in 100 years of operation.
High-Speed Rail
Florida’s governor Rick Scott may have effectively killed high-speed rail for his state, but several other states are clamoring for the money.
Transportation Secretary Ray LaHood said at the Senate Appropriations Committee’s Transportation and Housing and Urban Development subcommittee meeting today that he plans to reallocate the $2.4 billion in high-speed rail money to other parts of the country.
Sen. Bill Nelson (D-Fla.) had been hoping that LaHood would allow four Florida cities — Orlando, Tampa, Miami and Lakeland -– to bid for the high-speed money without Scott’s involvement, but LaHood categorically said that the funds will be used somewhere else.
“There is a line outside of my door of governors, senators and congressmen,” he told The Hill. “There is no shortage of interest in the $2.4 billion we’re going to reallocate from Florida.”
While Scott rejected the high-speed rail funds stating potential cost overruns, a new report released by the Department of Transportation yesterday, found that the project would have exceeded both financial and ridership projections that were first made in 2009.
Data released from the Florida Department of Transportation showed that the operations would have made a surplus of $10.24 million in 2016, the first full year the trains would have run, and a $28.58 million surplus in 2026. Even ridership, which Scott had claimed would be low, was expected to hit 3.3 million riders during the train’s first year of operation in 2015-16.
The $1.3 million ridership study was done by the transportation consulting firms Steer Davies Gleave and Wilbur Smith Associates.
Nelson had hoped that the new data would have changed Scott’s mind, but Scott stuck to his guns saying he was “comfortable” with his decision.
“I had been briefed on their ridership study, and I looked at other ridership studies, and I’m still very comfortable with the decision I made that I don’t want the taxpayers of the state on the hook for the cost overruns of building it, the operating costs or giving the money back if it’s shut down,” Scott said at a press conference on Wednesday at the Florida capitol in Tallahassee.
With more numbers coming in, Scott’s rejection of federal money seems far more political, than anything based on economics or good business.
The rest of the country, of course, seems only too happy to get in on the pie.
