Texas is one of the latest states to pursue a high-speed rail (HSR) line, a form of transportation that has yet to prove it can be viable in the United States. HSR supporters claim it is a better form of transportation than automobile or air travel because it is more energy-efficient. However, evidence shows that in most cases, HSR is not feasible or cost-effective. Because the U.S. population is widely dispersed over a large landmass, with major cities located hundreds of miles away from each other, rail travel is inefficient. Unlike in small countries that have highly dense population centers, automobile or air travel almost always makes more financial sense than traveling by train in the United States.
Texas Central, a private for-profit company that is seeking to build an HSR line between Dallas and Houston, introduced its plan in 2010. The HSR route would stretch 240 miles, with the goal of operating 65 or more trains every day. The trains would travel at 210 miles per hour during each 90-minute trip. Texas Central’s initial cost estimate is $10 billion, and it is projected it would consume more than 3,000 acres of land. Where this funding will come from is not entirely clear. Texas Central claims the majority of funds will be raised privately, but many critics believe some federal tax dollars will be used by the project.
Like nearly all HSR plans, this cost estimate is likely far below the actual price. In a worldwide study of 27 HSR projects, the average final cost of high-speed rail ended up being 45 percent higher than initial estimates, according to the European Court of Auditors. In 2017, Baruch Feigenbaum of Reason.com examined the potential costs of Texas’ plan and found it could cost taxpayers $21.5 billion and would include a $537 million annual operating deficit over its first 40 years of operations.
While many supporters argue Texas’ geography is well-suited for HSR construction, making it unlikely there will be significant cost overruns and delays, this may not be an accurate analysis. California’s HSR project on a 119-mile segment currently under construction through the Central Valley has experienced several delays and is facing $1.7 billion in cost overruns, which have increased the expected total cost of the project by 27 percent compared to proponents’ original estimate. These additional costs should be particularly troubling for supporters of HSR in Texas because the Central Valley is expected to be, from an engineering perspective, one of the least challenging portions of the new rail line’s route.
Although Texas Central has long claimed it would require little to no public funds for the proposed HSR, executives have also discussed applying for Railroad Rehabilitation and Investment Financing (RRIF) loans, a federally funded taxpayer subsidy. This means that should the project fail, taxpayers would ultimately be liable for the entire value of the loans. The Texas Legislature had similar concerns and even passed a bill to block the project from using any state taxpayer funds.
Almost all HSR projects in the United States have been expensive and underutilized. Even the one seemingly successful HSR service, the Acela high-speed line serving the Northeast Corridor, is heavily subsidized, like all Amtrak rail services. Texas Central estimates a ridership of five million people annually by 2025, but these numbers are unreasonable. Even the Acela, located in a dense rail corridor, only carried 3.5 million passengers in 2014.
The other main issue with the Texas HSR project is how Texas Central will acquire the land for the rail line. Texas Central is attempting to acquire eminent domain rights that will allow it to force the hand of property owners to sell their land, even if landowners have no interest in doing so. To date, Texas Central has been unable to accomplish this, and some critics argue the company has already entered the private property of current landowners to conduct land surveys without their permission. According to law firm Dawson & Sodd, Texas Central has filed 38 lawsuits against landowners who have refused to allow entrance to their property for land surveying.
Texas Central seems hell-bent on using eminent domain to force property owners to sell their land so they can build a taxpayer-funded boondoggle. It seems like the only one making out in this one-sided deal is Texas Central, and the losers are Texas landowners and taxpayers.
High-speed rail is an expensive endeavor with questionable benefits for taxpayers. As Randal O’Toole of the Cato Institute explains, “high-speed rail proposals are high-cost, high-risk megaprojects that promise little or no congestion relief, energy savings, or other environmental benefits. Taxpayers and politicians should be wary of any transportation projects that cannot be paid for out of user fees.” 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 upgrade.
The following documents examine high-speed rail in greater detail.
Texas High Speed Rail: Caution Ahead
https://reason.org/wp-content/uploads/files/texas_high_speed_rail.pdf
In this Reason Foundation Policy Brief, Baruch Feigenbaum examines a proposed Texas high-speed rail project and its potential costs.
A European High-Speed Rail Network: Not a Reality but an Ineffective Patchwork
https://www.eca.europa.eu/Lists/ECADocuments/SR18_19/SR_HIGH_SPEED_RAIL_EN.pdf
This Special Report examines high-speed rail projects in Europe and the technical, administrative, and cost barriers such projects typically face.
The California High-Speed Rail Proposal: An Updated Due Diligence Report
https://reason.org/files/california_high_speed_rail_report.pdf
In this Policy Study, the Reason Foundation examines high-speed rail ridership and revenue, rider demographics, construction costs, operating costs, financing costs, airport and highway alternatives, train speeds, train designs, safety regulations and standards, greenhouse gas reductions, potential community opposition, and historical experience in the United States. This report updates a 2008 “Due Diligence Report” and addresses and evaluates the numerous changes to California’s plan to build a high-speed rail system between San Francisco and Los Angeles via the San Joaquin Valley.
The Full Cost of High-Speed Rail: An Engineering Approach
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1089088
This paper examines the costs of the California high-speed rail system that will connect Los Angeles and San Francisco in California. The paper concludes, “high-speed rail is significantly more costly than expanding existing air service, and marginally more expensive than auto travel. This suggests that high-speed rail is better positioned to serve shorter distance markets where it competes with auto travel than longer distance markets where it substitutes for air.”
High-Speed Rail: The Wrong Road for America
https://www.cato.org/publications/policy-analysis/highspeed-rail-wrong-road-america
In this Cato Policy Analysis, Randal O’Toole argues against implementation of high-speed rail: “In short, high-speed rail proposals are high-cost, high-risk megaprojects that promise little or no congestion relief, energy savings, or other environmental benefits. Taxpayers and politicians should be wary of any transportation projects that cannot be paid for out of user fees.”
High-Speed Rail, Budget Buster
http://www.nationalreview.com/articles/258417/high-speed-rail-budget-buster-wendell-cox
Wendell Cox writes in National Review about the massive cost overruns experienced by other countries that have implemented high-speed rail. “Virtually everywhere high-speed rail has been constructed, financial liability has fallen to the taxpayers. In Taiwan and the United Kingdom, taxpayers assumed billions of dollars in private debts for much more modest high-speed-rail systems than Japan’s,” Cox wrote.
The Tampa to Orlando High-Speed Rail Project: Florida Taxpayer Risk Assessment
http://reason.org/files/florida_high_speed_rail_analysis.pdf
In this Reason Foundation Policy Brief, Wendell Cox examines the Tampa to Orlando High-Speed Rail Project. Cox concludes the financial risk to Florida taxpayers could ultimately be huge and involve both capital cost overruns and operating subsidies.
Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this and other topics, visit the Budget & Tax News website, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.
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Matthew Glans joined the staff of The Heartland Institute in November 2007 as legislative specialist for insurance and finance.
