WASHINGTON — The public sector should provide 55% or 65% of high-speed rail costs through gasoline and other taxes, Richard Harnish, executive director of the Chicago-based Midwest High Speed Rail Association, said at a conference here Friday.
Harnish did not provide an exact dollar amount but said that percentage of investment would be necessary for successful public-private development of a high-speed rail network. He said the 55% or 65% estimate is based on a study conducted by French rail operator SNCF, which analyzed what would be required to develop rail with 220-mile-per-hour trains in the U.S. Midwest.
Another speaker at the conference, which was hosted by the U.S. High Speed Rail Association, agreed on tax-based funding for high-speed rail.
“At least for the next 10 to 15 years, we’re going to have to rely on government subsidy,” said David Spencer, a corporate, securities, and finance attorney for Steptoe & Johnson LLP. The public sector will probably have to subsidize right-of-way acquisition and construction costs, either directly or through methods such as revenue guarantees, he said.
“A unified trust fund to me seems like the answer,” Spencer said. “The bad things we want to tax are oil consumption, greenhouse gases — all the bad things that come with automobiles.”
Many other rail market participants have called for funding a high-speed rail system with a large proportion of federal dollars, reminiscent of the Interstate highway system. They also have advocated for a dedicated funding source, similar to how the federal highway trust fund relies on gasoline and diesel tax revenues to make payments to states.
The federal government contributes 80% of the funds for federal highways. Most of that money comes from gasoline and diesel fuel taxes and other motor vehicle user fees.
But Harnish, after saying gasoline taxes should help pay for the public portion of high-speed rail funding, noted recent crises that were caused by reliance on fuel taxes to pay for transportation infrastructure.
The federal highway trust fund nearly went broke last year and again this year, as vehicle miles driven decreased and the number of gas-saving hybrid vehicles increased. Congress had to use general funds to rescue the trust fund, transferring a total of more than $15 billion into it.
“We can’t look at ... five or 10 years ago” for solutions to fund transportation, he said.
Lawmakers in charge of federal spending have made no decisions on a long-term funding level for high-speed rail or how to pay for a national network.
A multi-year transportation bill introduced by House Transportation Committee chairman James L. Oberstar, D-Minn., would create a national high-speed rail program with up to 80% federal funding and at least 20% non-federal funding. Oberstar has estimated $50 billion of rail funding will be needed to pay for the program.
Oberstar’s bill is pending in the committee and is the only multi-year transportation bill to be introduced so far, even though the current law — the Safe, Accountable, Flexible Transportation Equity Act, or SAFETEA-LU — expired Sept. 30 and has been temporarily continued by Congress through the end of the month through stopgap appropriations.