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Florida’s Scott Joins States Rejecting U.S. Rail Funds

Florida Governor Rick Scott. Photographer: Joe Raedle/Getty Images
Florida Governor Rick Scott. Photographer: Joe Raedle/Getty Images

Feb. 16 (Bloomberg) -- Florida Governor Rick Scott joined three other Republican governors in rejecting Obama administration funds for rail projects, saying a planned high-speed line in his state could saddle taxpayers with $3 billion in added expenses.

The former health-care executive said at a news conference in Tallahassee that he informed U.S. Transportation Secretary Ray LaHood of his decision today. The state was awarded almost $2.4 billion in federal money for an 84-mile (135-kilometer) passenger line between Tampa and Orlando in central Florida.

Scott’s move cancels the first new project in the $53 billion high-speed rail plan that President Barack Obama included in his fiscal 2012 budget this week. California is the only other state proposing to build a new high-speed network. Other states are looking to increase passenger-train speeds on existing freight-rail lines.

“This project would be far too costly to taxpayers and I believe the risk far outweighs the benefits,” Scott said in a statement. “Historical data shows capital cost overruns are pervasive in nine out of 10 high-speed rail projects.”

Scott joins John Kasich of Ohio and Wisconsin’s Scott Walker in rejecting U.S. funds from $8 billion in high-speed rail grants created by Obama’s 2009 stimulus legislation. In New Jersey, Governor Chris Christie, also a Republican, last year refused $3 billion of U.S. government money for a commuter-rail tunnel under the Hudson River, saying the state couldn’t afford $5 billion in potential extra costs.

‘Extremely Disappointed’

LaHood said in a statement that he was “extremely disappointed” in Scott’s move. “We worked with the governor to make sure we eliminated all financial risk for the state, instead requiring private businesses competing for the project to assume cost overruns and operating expenses.”

He also cited “overwhelming demand for high speed rail in other states that are enthusiastic to receive Florida’s funding.”

Representative John Mica, the Florida Republican who chairs the House Transportation and Infrastructure Committee, said he was “deeply disappointed” that Scott canceled the project before inviting private companies to bid on building and operating the line. “That’s 100,000 jobs we won’t see in Central Florida,” he told reporters today.

‘Viable Project’

Mica called the line a “viable project” even though he has questioned how many passengers would use it other than to travel between downtown Orlando and Walt Disney World. He said he thought private investors would be willing to make up the $300 million difference between the amount of federal grants and estimated cost of the project.

“We never got a chance to see what would be offered. That’s the sad part. I’d still like to have that opportunity,” he said.

Rachel Wall, spokeswoman for the California High-Speed Rail Authority, noted that the state received more than half of the rail funds forfeited by Ohio and Wisconsin. She said California likely will vie for the Florida money as well.

“We’re ready to use it here,” Wall said. “We know the long-term benefits of developing high-speed rail here in California.”

Projections Questioned

Scott, 58, proposed a fiscal 2012 budget last week that cuts spending by $4.6 billion. He said in a letter to LaHood that he would rather spend the money intended for rail on highways and on dredging ports to accommodate larger cargo vessels. The $3.7 trillion 2012 budget Obama presented this week provides no money for deepening ports to prepare for when widening of the Panama Canal is completed in 2014.

Florida already pays $34.6 million a year to subsidize the Tri-Rail commuter line that links West Palm Beach with Miami because passenger revenue covers only $10.4 million of the $64 million annual operating cost, Scott said.

He said projections call for the Tampa-Orlando line to carry 3.07 million people annually, about the same number of riders on Amtrak’s Acela train linking Washington and Boston, a market he said is eight times larger.

Florida spent $26 million of the U.S. rail funds through January on design, site surveys and ridership studies for the Tampa-Orlando line, said Dick Kane, a spokesman for the state transportation department. He said Florida isn’t required to pay the money back.

Alstom Group Reacts

“We are disappointed with the Governor’s decision as we believe high speed rail has a unique potential to create jobs and spur economic development in Florida," Timothy Brown, a Washington-based spokesman for Florida High Speed Rail Development Partners, said in an e-mail. The group, which includes Alstom SA and Virgin Group, planned to bid on the Tampa-Orlando project.

Senators Charles Schumer and Kirsten Gillibrand, both New York Democrats, said the Obama administration should redirect Florida’s funds to their state’s New York-Albany-Buffalo project. ‘‘We can put these funds to use in a way that gets the best bang for the buck,” Schumer said in an e-mailed statement.

To contact the reporters on this story: Jerry Hart in Miami at jhart@bloomberg.net; Lisa Caruso in Washington at lcaruso7@bloomberg.net

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net

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