Plans for a privately financed, high-speed rail line between Houston and Dallas are being challenged by members of the Texas State Legislature, landowners along the proposed route, and some transportation researchers.
Modeled on Japan’s Shinkansen high-speed rail system, the Texas bullet train is variously projected to cost between $12 billion and $20 billion and to be in operation in 2025. It would reach a top speed of 200 mph and have its own dedicated track, meaning it wouldn’t have to share track with freight lines, and it would cover the 240 miles separating the two cities in less than 90 minutes.
The company behind the project is Texas Central Partners (TCP), which would be responsible for the development, construction, financing, and operation of the bullet train. The company has tentatively scheduled construction to begin in late 2019.
The Texas House of Representatives is considering bills that would prohibit the state Department of Transportation from cooperating in utilizing highway easements for the project, ban the use of state taxpayers’ funds, and deny the railroad the use of eminent domain to acquire right-of-ways. A special subcommittee of the House Transportation Committee, including both supporters and opponents of the project, was appointed on April 5 to consider legislation related to the project.
Though TCP says the rail line will be largely privately financed, TCS has said it would seek loans from the U.S. Department of Transportation, wrote Baruch Feigenbaum, assistant director of transportation policy at the Reason Foundation and a policy advisor to The Heartland Institute, which publishes Budget & Tax News, in a March 15 report.
“There are significant concerns regarding the project’s feasibility that must not be overlooked, since taxpayer funds are at risk (through RRIF [Railroad and Rehabilitation Improvement Financing] loans),” wrote Feigenbaum.
Transportation experts are “skeptical that a high-speed rail line connecting the two low-density, car-friendly metro areas of Dallas and Houston could be profitable without substantial public subsidies for capital and operations,” wrote Feigenbaum.
Cost overruns and inflated ridership estimates for high speed rail are common, says Matthew Glans, a senior policy analyst at The Heartland Institute.
“Almost all HSR projects in the United States have been expensive and underutilized,” said Glans.
Ridership estimates from TCS are probably inflated, because they exceed the number of people using Acela, which links cities in the Northeast, including Washington, D.C. and New York City, says Glans.
“Texas Central estimates a ridership of five million people annually by 2025, but those numbers are unreasonable,” said Glans. “Even the Acela, located in a dense rail corridor, only carried 3.5 million passengers in 2014.”
Revenues from tickets on Acela do not cover its operating costs, says Glans.
“Even the one seemingly successful HSR service, the Acela high-speed line serving the Northeast Corridor, is heavily subsidized, like all Amtrak rail services,” said Glans.
At this point, taxpayers aren’t more liable to be on the hook if the project fails than with any other business, says Tom Giovanetti, president of the Texas-based Institute for Policy Innovation.
“Reason’s argument, essentially, is that if the project doesn’t work out, the company will be in trouble and taxpayers will have to bail it out,” said Giovanetti. “Burger King will be in trouble if their business plan doesn’t work out, too, but I don’t see any public policy organizations writing articles critical of Burger King.”
Federal loans or loan guarantees do not make the Texas project different from others in the industry, says Giovanetti.
“All private railroads, including freight railroads like Burlington Northern, use the federal loan financing program,” said Giovanetti, “I don’t see anyone criticizing Burlington Northern for using the program.”
Government shouldn’t stand in the way of innovation, says Giovanetti.
“In a free-market economy, we let companies try things,” said Giovanetti.
Existing transportation infrastructure should be policymakers’ top priority in this area, says Glans.
“Instead of subsidizing the construction of new and unnecessary HSR lines, states should focus on maintaining and improving their current highways and air travel infrastructure, which are well-established, still in demand, and in dire need of repair and upgrades,” said Glans.
Bonner R. Cohen, Ph.D. (bcohen@nationalcenter.org) is a senior fellow at the National Center for Public Policy Research.