Menu
Tax Notes logo

Amtrak Board Testimony at W&M Hearing on Transportation Infrastructure

JUL. 25, 2000

Amtrak Board Testimony at W&M Hearing on Transportation Infrastructure

DATED JUL. 25, 2000
DOCUMENT ATTRIBUTES
  • Authors
    Thompson, Gov. Tommy G.
  • Institutional Authors
    State of Wisconsin
    Amtrak Reform Board
  • Subject Area/Tax Topics
  • Index Terms
    legislation, tax
    transportation
    infrastructure
    investment incentives
    savings, incentives
  • Industry Groups
    Transportation
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 2000-20047 (12 original pages)
  • Tax Analysts Electronic Citation
    2000 TNT 144-42

 

=============== FULL TEXT ===============

 

STATEMENT

 

OF THE

 

HONORABLE TOMMY THOMPSON

 

GOVERNOR OF WISCONSIN

 

CHAIRMAN OF THE AMTRAK REFORM BOARD

 

BEFORE THE

 

SUBCOMMITTEE ON OVERSIGHT

 

OF THE

 

HOUSE WAYS AND MEANS COMMITTEE

 

 

Tuesday, July 25, 2000

 

 

Mr. Chairman:

[1] As both Chairman of the Amtrak Reform Board and as a Governor of one of the 36 States currently pursuing high-speed rail, I am honored to appear before your Subcommittee to discuss innovative ways through which the federal government can help finance high-speed rail. I'll be focusing on the High Speed Rail Investment Act -- H.R. 3700 -- which I believe is a truly creative and historic piece of legislation. But I'd like to preface my remarks with a few words about the role of the federal government in promoting the general welfare.

[2] As you know, I'm a Republican -- and proud of it! I believe that the government's role in our nation's life should be limited. That was clearly what our Founders intended, and that's what we Republicans have fought for over the years.

[3] But believing in LIMITED government is very different from not believing in any government at all. Where the public interest is served by federal action, Republicans recognize that such action is warranted. As the father of our party, Abraham Lincoln, put it 146 years ago, "THE LEGITIMATE OBJECT OF GOVERNMENT IS TO DO FOR A COMMUNITY OF PEOPLE WHATEVER THEY NEED TO HAVE DONE, BUT CANNOT DO AT ALL, OR CANNOT SO WELL DO FOR THEMSELVES -- IN THEIR SEPARATE AND INDIVIDUAL CAPACITIES."

[4] There, Mr. Chairman, is the rationale for an innovative federal role in developing high-speed rail: to help Amtrak and the states do what needs to be done -- what we are, in fact, already attempting to do -- but what we cannot do nearly so well without the federal government's involvement and assistance.

[5] Like most Republicans, I look to the example of Abraham Lincoln for inspiration and guidance. In 1862, Congress passed a measure that President Lincoln had long championed -- the Homestead Bill. Giving enterprising Western farmers 160 acres of public land for a nominal sum, the Homestead Bill, in historian Paul Johnson's words, was "one of the most important laws in American history" -- a law that caused a tremendous burst of economic growth and led to the rapid settlement of the West.

[6] The Homestead Bill was a remarkable -- and highly original -- piece of legislation. As Johnson puts it, after the Homestead Bill, "it may be said [that] the United States no longer just allowed farming to 'happen' -- it had a policy for it." That policy can be summarized as expanding economic opportunity for all Americans by providing incentives that promoted greater choice.

[7] Unfortunately, in the area of transportation policy, Americans have lost sight of Lincoln's vision. As with farming in the pre-Lincoln era, we have just allowed transportation to "happen" -- and the results have been appalling: massive gridlock on our highways, growing congestion at our airports, and a dangerous and growing dependence on a handful of OPEC tyrants.

[8] Most alarmingly, we have permitted matters to reach the point where Americans are increasingly forced to use automobiles whether they want to or not. If I may say so, Mr. Chairman, this is a form of "transportation slavery" that violates everything America stands for.

[9] It's time to reverse these dangerous trends -- and that's what H.R. 3700 proposes to do. It will emulate Lincoln's Homestead Bill by offering economic incentives to promote economic growth and restore freedom of choice. The purpose of this landmark legislation is to promote the modernization of our passenger rail infrastructure and the creation of new high-speed rail corridors. H.R. 3700 will increase America's productivity, protect our environment, enhance our safety, create more jobs, and promote "smart growth" through the economic development of our downtown urban centers. It will reduce congestion on our roads and in our skies.

[10] The simple truth is that our nation's passenger transportation system is in serious trouble. One of the clearest statements of the nature of the trouble appeared last December in a Los Angeles Times editorial. With your permission, Mr. Chairman, I'd like to read a brief excerpt from that editorial:

"CALIFORNIA FACES THE MILLENIUM WITH ITS TRANSPORTATION

 

STUCK IN THE FREEWAY-MAD, JET-AGE 1960S. THE STATE THAT

 

PIONEERED THE INSTANTANEOUS CONNECTIONS OF E-MAIL AND E-COMMERCE

 

STANDS ON THE VERGE OF A BROADBAND REVOLUTION THAT PROMISES TO

 

PIPE FEATURE MOVIES INTO HOMES IN SECONDS. BUT RESIDENTS STILL

 

PACK THEMSELVES INTO AUTOMOBILES THAT TRAVEL AT EISENHOWER-ERA

 

SPEEDS FOR MOST INTERCITY JOURNEYS. OR INTO SHUTTLE JETS THAT

 

SPEND MORE TIME WAITING FOR TAKEOFF AND CIRCLING THEIR

 

DESTINATIONS THAN EN ROUTE."

 

 

[11] What's true of California is true of the rest of the nation, as well. Indeed, a study issued by the Texas Transportation Institute last year points to the fastest and most pervasive growth in highway congestion that we've ever experienced. Meanwhile, our nation's aviation system is likewise becoming increasingly congested -- especially in our larger cities. In 1991, for example, 23 airports experienced annual flight delays in excess of 20,000 hours. Today there are 27 airports with at least that amount, and that number is expected to grow to 31 before the end of the decade.

[12] No wonder governors, public policymakers, business and labor leaders are all coming to appreciate the benefits that passenger rail can provide. Even before the recent rise in oil prices, the National Governors' Association unanimously voiced its strong collective support for Amtrak and high-speed rail corridor development. Amtrak also enjoys strong support from the National Conference of State Legislatures, the U.S. Conference of Mayors, the National League of Cities, and many other influential organizations. Most recently, a new grassroots organization -- States for Passenger Rail -- has been formed to support high-speed rail funding.

[13] What are the benefits that high-speed rail offers? A study conducted for the Coalition of Northeastern Governors listed five distinct gains:

o Improved mobility, due to the diversion of passengers from

 

highways to high-speed rail;

 

 

o Greater dependability, as rail operations are least affected

 

by inclement weather relative to road or air travel;

 

 

o Increased safety -- the study estimated a reduction of nearly

 

1,000 accidents in the Boston to New York Corridor alone;

 

 

o Lower travel costs, since the existence of a strong new

 

competitor in the travel marketplace will serve to keep all

 

travel prices down;

 

 

o And a reduced need for expensive and politically difficult

 

construction of new airports by freeing up gate and

 

arrival/departure slots for long-distance flights.

 

 

[14] The Governors' study also dealt with the environmental benefits of high-speed rail. For example, it estimated that the introduction of high-speed rail in the Boston to New York Corridor will save 20 million gallons of jet fuel alone each year, resulting in a reduction of 511 tons of carbon monoxide, 123 tons of hydrocarbons, and 270 tons of nitrogen oxide. Savings from fewer automobile trips were placed at 4.5 million gallons of gasoline annually.

[15] Additionally, investment in high-speed rail has an unusually powerful impact on the entire economy. An analysis prepared by the Center for Urban Transportation Research at the University of South Florida demonstrated that the economic benefits of an investment in high-speed rail are greater than an equivalent investment in the manufacturing, communications or service industries, in all categories but job creation, where high-speed rail is roughly equivalent. High-speed rail yielded, on average, $3.2 in output for each dollar invested, compared to manufacturing, communications and services, which generate $1.8, $1.9, and $2.1 of output per dollar of investment, respectively.

[16] Finally, I should point out that although I have been talking about the benefits of investment in PASSENGER rail, the upgrading of our underutilized passenger railroad network will SIMULTANEOUSLY bring with it a radical improvement in the capacity of freight railroads to transport their cargo. That's because in most areas of the United States today, passenger and freight trains share the same track. But because high-speed passenger rail infrastructure is used most extensively during the day and evening, an additional benefit of investment in high-speed rail is an improved infrastructure usable for carrying freight at night, or sometimes concurrently with passenger operations. In other words, when you invest in high-speed rail, not only do you help passengers by relieving gridlock and "winglock" -- you're also helping business by unclogging the arteries of our nation's commerce.

[17] Mr. Chairman, so far I have talked about the economic, environmental, safety and mobility benefits of high-speed rail mainly in absolute terms. But to fully understand the critical importance of high-speed rail to our nation's future, it is necessary to examine the benefits of investing in high-speed rail in relative terms, as well -- that is, as compared to making investments in new highways and airports. And once you do that, one fact is glaringly obvious: the costs of building new highways and airports are going way up; the costs of adding to our rail capacity are coming way down. You don't need to be a rocket-scientist to figure out that as the marginal cost of highway and airport construction rises, while the marginal cost of increasing our passenger rail capacity falls, rail becomes cost-effective relative to other transportation modes. To put it plainly, you get more "bang for your buck" by investing your transportation dollar in passenger rail, than by investing that same dollar in new highway or airport construction.

[18] There are many ways I could illustrate this point, but let me provide just one telling comparison. A supply of highway salt that would cover this country's needs for 12 winter months costs $1.2 billion, which is about what it costs to build the entire high-speed rail infrastructure from New York to Boston. Think about it: 115 miles of continuous welded rail, 6.5 miles of additional track to accommodate commuter traffic, 487,000 tons of ballast, 455,000 concrete ties, 115 bridge locations, a new signal system, 25 electric power stations, 14,000 foundations, 12,000 poles, 1,500 miles of wire for the overhead catenary system, 21 miles of new fencing, and a new Route 128 Station, all for about the price of three winters' worth of highway salt. And when the rail infrastructure is complete, you've got a high-speed rail service that will spark extraordinary economic growth throughout the Northeast. It seems to me that's worth a heck of a lot more than a big puddle of salt water.

[19] As I said, Mr. Chairman, you don't need to be a rocket-scientist to figure all this out. Even politicians like myself get it. That's why 36 states are working with Amtrak on passenger rail projects. California, for example, plans to invest $700 million out of a $5 billion infrastructure bill expected to be earmarked for intercity passenger rail investment next year. Also, as part of the $5 billion Midwest Regional Rail Initiative, Illinois plans to spend $140 million; Michigan spent $25 million; and my own state, Wisconsin, plans to spend $60 million. The state of Washington has invested $125 million, New York will invest $100 million and both North Carolina and Pennsylvania are investing $75 million in high-speed rail projects. Virginia recently approved $75 million in new spending for the Richmond-Washington high-speed rail corridor, and Georgia recently approved $200 million out of $2 billion planned for investment in high-speed rail and commuter rail in that state.

[20] What's so significant about these investments is not simply that they are happening, but that they are taking place without a federal guarantee of funding. That indicates a real commitment to high-speed rail on the part of the states. But states will be limited in how much they can do because of the regional nature of passenger rail systems. Like with the genesis of the interstate highway system, the federal government must lead the way with vision and financial assistance.

[21] For our part, Amtrak is working closely with the states to help meet the growing demand for high-speed rail. We would like to do a lot more, and if H.R. 3700 is adopted and long-term capital funding becomes available for high-speed rail -- the way it now is for highways, airports and mass transit -- believe me, Mr. Chairman, we WILL do a lot more. In the 21st century, we envision a national passenger railroad system consisting of regional high-speed rail networks linked by market-responsive long-distance service. This national system will empower Americans to choose the fastest, safest, most efficient, and most convenient way to reach their destinations. It will give travelers more options -- including the option not to travel by car if they choose not to. Fundamental to the success of our vision will be the fostering of mutually-beneficial partnerships with states, with the freight railroads, with other commercial enterprises, and yes -- with the federal government.

[22] Mr. Chairman, the truth of the matter is that a modern national railroad doesn't come cheap. Germany, for example, spent more than $7.5 billion to develop the 215-mile Hanover-Frankfurt corridor, and is planning to spend about $70 billion on its railroad system over the next decade. France spent over $12 billion on its TGV (Train a'Grande Vitesse) system and plans to spend even more. The European Community is planning to link key cities by a 12,000-mile high-speed rail network to cost, when completed, $100 billion. If we want a national railroad system that we can be proud of and that is economically competitive, we have to muster the will and national commitment to pay for it.

[23] That is precisely what H.R. 3700 does. It authorizes Amtrak to issue $1 billion in bonds annually for ten years, the proceeds of which would primarily support the development of high-speed rail corridors. Twenty percent of these funds would be set aside in escrow to guarantee repayment of the bonds. States would then be required to match the Amtrak investment in a particular project at 20 percent thus making the $1 billion whole. Amtrak would not be allowed to invest bond receipts without state partnerships -- thereby ensuring that these funds will take into account both the more easily measured financial benefits as well as the more difficult to measure public benefits so critical to states. The federal government would provide tax credits to bondholders in lieu of interest payments. The cost to the federal government would be minimal -- the Joint Committee on Taxation places it at $762 million over 5 years, and $3.2 billion over 10 years -- but as I have already explained, the benefits to the country would be phenomenal and the private market guarantees these bonds, so there is no risk to the Federal Government.

[24] Mr. Chairman, as you and your colleagues well know, Congress gave Amtrak a mandate to achieve operational self-sufficiency by 2003. I think the record-breaking ridership and revenue numbers we've achieved demonstrate the considerable progress we've already made in turning this company around. There is no doubt in my mind, however, that having a stable source of capital funding would help Amtrak do the long-term planning necessary to reach, maintain and surpass our goal of operational self-sufficiency.

[25] Mr. Chairman, for the past half-century or so I think it's fair to say that passenger railroads have been virtually relegated to the dustbin of history. The passage of the 1956 Interstate Highway Act brought America's love affair with great passenger trains like the "Empire Builder" and the "Twentieth Century Limited" to an abrupt end. Once it became possible to "see the USA in your Chevrolet" Americans did precisely that, and railroad ridership plummeted. It has gotten to the point where, last year -- in one year -- the federal government spent more than $33 billion on highways, more than $11 billion on aviation, more than $6 billion on mass transit, while we at Amtrak have had to fight for $500 million in federal funds like dogs for table scraps.

[26] But the tide is beginning to turn. Americans are growing increasingly tired of spending billions to build more highways and airports -- and STILL getting stuck in gridlock and winglock. They're beginning to realize that our national railroad system is a precious treasure that we've unwisely neglected for decades. They've started to understand that better utilization of our railroads could free our highways and airports to better fulfill THEIR potential roles. They've also begun to recognize what the cost of NOT investing in high-speed rail comes to: More gridlock on our interstates, more air pollution in our cities, and a highway construction bill that dwarfs the cost of upgrading the rails.

[27] Americans have also become aware of something else: Amtrak is here to stay. Our high-speed rail projects make us competitive with other modes of intercity transportation. We are widely-recognized as a powerful engine for economic growth in cities and states across the nation -- a way to get cars off of our gridlocked highways and to open up badly-needed slots at our congested airports. In short, we have a crucial role to play in the transportation industry of the 21st century -- and we respectfully ask the distinguished Members of this Subcommittee to help us play that role by giving us the innovative funding mechanism we urgently and desperately need to do the job: H.R. 3700.

[28] Thank you, Mr. Chairman, and thank you for your leadership on this issue.

DOCUMENT ATTRIBUTES
  • Authors
    Thompson, Gov. Tommy G.
  • Institutional Authors
    State of Wisconsin
    Amtrak Reform Board
  • Subject Area/Tax Topics
  • Index Terms
    legislation, tax
    transportation
    infrastructure
    investment incentives
    savings, incentives
  • Industry Groups
    Transportation
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 2000-20047 (12 original pages)
  • Tax Analysts Electronic Citation
    2000 TNT 144-42
Copy RID