NCPA - National Center for Policy Analysis

High Speed Rail Is Risk for Local Taxpayers

February 22, 2011

In an announcing his decision to reject federal funding for the Tampa to Orlando high-speed rail line, Florida Governor Rick Scott cited the substantial risks to Florida taxpayers from cost overruns, the ongoing obligation under the federal grant to subsidize operations and the fact that under certain circumstances Florida might even have to repay the $2.4 billion in federal grants.  Any local government accepting the federal money would expose itself to the financial risks from which Florida taxpayers have been exempted by Governor Scott's action, says Wendell Cox.

Capital Cost Overruns.

  • The eventual construction cost overruns for the Tampa to Orlando high-speed rail line could easily run to $3 billion, more than doubling the price of the project.
  • Any local federal grant recipient (city, county or transit district) would be responsible for these cost overruns.

Ongoing Operating Subsidies.

  • The ridership projections for the Tampa to Orlando high-speed rail line are exceedingly optimistic.
  • This could well lead to a situation in which substantial subsidies are necessary to operate the trains, which would be the responsibility of any city, county or transit district that becomes a grant recipient.

Federal Pay-Back.

  • If, for any reason, the eventual high-speed rail service levels are not sufficiently high because of lower than projected ridership or if service is canceled, any city, county or transit district could be required to return the $2.4 billion in federal grants.
  • Florida is already paying millions annually for a similar "transgression."
  • In 2009, service reductions on the Tri-Rail Commuter Rail System in the Miami area led the Obama administration's Department of Transportation to demand repayment of one quarter billion dollars in grants.
  • Tri-Rail was saved from this obligation only by a multimillion dollar Tallahassee bailout.

Source: Wendell Cox, "Tampa to Orlando High Speed Rail: The Risk to Local Taxpayers," New Geography, February 18, 2011.

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