Passenger trains tie us to our nation’s history and they remind us of far-away destinations and adventures. But we should not allow our nostalgia to cloud our rational thoughts about good public policy. Especially when it involves taxpayer dollars.
The plan to restart passenger service from Mobile to New Orleans, with stops along the Mississippi Gulf Coast, is a great example of letting pleasant-sounding promises overpower railroad cars full of empirical evidence and common sense. Mississippi leaders have committed $15 million of taxpayer money to the initial infrastructure costs to restart the Gulf Coast line. The project has also received $33 million in federal grants.
Even though this line of passenger travel, which runs on railroad lines owned by CSX, was discontinued in 2005 due to declining interest, we’re being told this attempt will be different. Has the mindset of travelers along the coast changed that much?
Most of the political leaders are on board, claiming it will create jobs, grow the economy, and increase our quality of life. But are new people actually coming to the coast because of a train, or is it just visitors who previously traveled by car? And can we objectively evaluate how this impacts our quality of life?
To be fair, there was an economic impact study produced by the Trent Lott National Center for Excellence in Economic Development and Entrepreneurship at the University of Southern Mississippi that claimed a potential creation of somewhere between 1,600 and 16,000 jobs annually. That study also estimated the potential economic impact of over $1 billion. Having been deeply involved in feasibility studies and economic impact modeling in support of municipal funding in my earlier life, I wouldn’t bet the mortgage payment on the likelihood of actual results ever crossing paths with these estimates. Call me cynical.
There are some less-promising estimates than those from the Trent Lott Center. Amtrak’s own study admits that this new line would attract just 26 riders per train and require a $6 million annual subsidy to stay afloat.
The Amtrak passenger rail boondoggle isn’t just on the coast. To date, Amtrak has yet to produce a profit while operating a monopoly with almost zero competition from private market participants. For 48 consecutive years, going back to the passage of the National Railroad Passenger Corporation in 1970, Amtrak has lost money. It produces those losses even though it receives nearly $1 billion in federal and state subsidies every year.
Amtrak has tried to change course. They have begun to reduce their operating losses thanks to a focus on shorter routes in the highly congested areas of the Northeast that largely take people from their homes to work. Can you think of an area less like the Northeast than the Gulf Coast communities in Mississippi?
Another factor that complicates the establishment of the service is the need for CSX, which owns the 136 miles of track that Amtrak wants to use, to agree to the terms of a use agreement. CSX moves freight on the line for 250 customers, operating approximately 20 trains each day. There are potential conflicts of service delivery to work through and both sides have agreed to a third party analysis and report.
The state of Louisiana has already agreed to $10 million in initial funding. Through the Mississippi Department of Transportation, Mississippians will be funding $15 million to the project. Alabama has thus far declined to commit to funding its portion of $3 million. The Gulf Coast line is projected to cost a total of $65.9 million. Though we know long-term operational and maintenance costs are likely to be much greater.
Taxpayers in Mississippi should not have to fund pet projects that residents are not willing to pay for. If the passenger train demand is so strong in the region, we should invite private operators to put forward their plans. If profits can be generated from such a service, you can rest assured the private providers will do it much better than the public ones.
For example, Fortress Investment Group owns and operates a passenger train service in Florida under the Virgin Trains USA brand. It takes passengers from Palm Beach to Miami. They just announced adding Orlando service. Surely they can get folks from Mobile to New Orleans, too.
When Fortress completes the expansion to Orlando in 2022, they will be the only high speed rail service operated privately in the U.S. We should show Virgin Trains USA our hospitality and invite them to Mississippi.
Jon L. Pritchett is president and CEO of the Mississippi Center for Public Policy, the state’s non-partisan, free-market think tank.