Most of the early eastern railroads in the United States were financed by European creditors with help from local and state governments. As examples, the Baltimore and Ohio was funded in part through bonds issued by the City of Baltimore. The Pennsylvania Railroad received financial support from the State of Pennsylvania.
The first so-called transcontinental roads were financed initially by the federal government through the Pacific Railway Acts, which authorized the issuance of government bonds and grants of lands to the railroads. The bonds and grants were critical for the funding of the railway lines. They acted like seed money to draw in funding from private investors. Once the projects appeared to be viable, European and American creditors joined the party. Without the government backed funds and land grants, capitalists probably would not have supported the construction of the transcontinental railroad, at least not as early as the 1860s.
The creditors (local, state, and federal governments, as well as private investors) expected to get back their principal and interest. Most of them did. However, there were some nasty scandals associated with the financing of the Central and Union Pacific railroads, and some of the investors got a haircut.
The highways, airways, and waterways in the United States, because they are common access facilities, have been funded for the most part by governments, i.e. federal, state, county, city, etc. They are not expected to make a profit. The users are expected to pay for them, thereby retiring the debt that was incurred to build and maintain them. For the most part they have done so. However, because of the convoluted pricing mechanisms in the United States, it is not always clear to the casual observer that the users have paid for them.
Commercial carriers pay a proportional share of the recovery cost embedded in the facilities that they use. Their payments are usually in the form of fuel taxes, fees, property taxes, excise taxes, sales taxes, etc. Whether they pay their fair share is an arguable point. Motorists pay their proportional share in the form of fuel taxes, excise taxes, fees, and property taxes.
America's airlines, trucking firms, intercity bus lines, barge operators, etc. either make money or they go out of business. Most of these firms are public corporations. In addition to the user taxes and fees mentioned in the preceding paragraph, they pay corporate income taxes to federal, state, and sometimes local governments. In 2010, as an example, J.B. Hunt paid approximately $120 million in federal and state income taxes. Income taxes flow into general funds, and some of them flow back to transport trust funds to help pay for the construction and maintenance of the transport infrastructure.
The problem for passenger rail is found in the numbers. It holds little promise of covering its costs, i.e. operating and capital costs. Accordingly, the only potential investors for passenger rail (high speed and otherwise) are governments, which is another way of saying we the people (taxpayers). This is the reason that the governors of Florida, Ohio, and Wisconsin, amongst others, have pushed back on the proposals. There are no other investors, and they don't think that the projects will recover their costs from the users. It has nothing to do with capitalism or socialism or any other ism. It has to do with economics. If the users will not or cannot pay for it, the taxpayers will be on the hook for the deficits.
Last Sunday I drove 170 miles to attend a symphony concert in Dallas. I would have liked to have been able to catch a train to get there and back. Unfortunately, not enough people in Texas share my desire. Accordingly, there is no viable market for intercity passenger rail in the Lone Star state, high speed or snail speed. Until there is a market for it, which will happen in time because of congestion, I don't support building out a passenger rail system that will be an additional drain on the taxpayers, most of whom would never use it.
The main question of HSR no HSR or no passenger rail service lies in the 170 mile you traveled to Dallas. Under current rail standards that would be a 5 to 7 hour journey. Higher speed train--say 90MPH---could bring it to about three hours but true HSR would get it to under three hours. What would it have taken to get you aboard the train? Your fellow Texans? How many of you? How man of them? Which wouild be the best service for the majority of you and them? Next: how often. Building from there we might someday be able to justify a service.
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Chicken or Egg?
Never too old to have a happy childhood!
Sam1 ......... Commercial carriers pay a proportional share of the recovery cost embedded in the facilities that they use. Their payments are usually in the form of fuel taxes, fees, property taxes, excise taxes, sales taxes, etc. Whether they pay their fair share is an arguable point. Motorists pay their proportional share in the form of fuel taxes, excise taxes, fees, and property taxes. .........
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I would like to point out that commercial carriers do not generally pay much in the way of property taxes, since for some reason roads and highways generally do not pay property tax. If road users, and especially commercial users, were required to cover the property tax on the land value of ALL the highways and ALL the streets they use, as the railroads do, the trucking business would shrink dramatically. In the short to medium term the cost of goods would go through the roof since the North American economy is based on this and other hidden subsidies to the commercial road users.
Railroads need volume to make sense, and this is true both for freight and passenger. The fixed costs are the problem, both for the tracks and the equipment. Where there are lots of passenger trains, such as the NEC, or in Europe, the incremental cost of each additional train is not that great so there becomes a reasonable chance of at least covering the direct operating costs. Even less obvious items like that spare coach or locomotive to substitute in case of mechanical problems - it is an expensive backup for a tri-weekly train but easily justifiable as protection for several dozen daily trains.
Passenger rail can make sense, but the reality is that in most corridors the present situation makes them almost irrelevant. A single daily trip is often at a less than convenient time, and significantly slower than driving. Hence you were forced to drive 170 miles. The thinking behind the HSR (or HSrR) proposals is that by actually providing an attractive rail alternative the vicious cycle will be broken.
The better the service, the more folks will use it. That is shown in a few places where the states have promoted rail corridors, and in commuter operations. Unfortunately it has only rarely been recognized as a wise use of taxpayer's dollars. More often we see twice as much spent to add capacity to a short section of freeway in the futile hope that the traffic congestion can be eliminated.
John
henry6 The main question of HSR no HSR or no passenger rail service lies in the 170 mile you traveled to Dallas. Under current rail standards that would be a 5 to 7 hour journey. Higher speed train--say 90MPH---could bring it to about three hours but true HSR would get it to under three hours. What would it have taken to get you aboard the train? Your fellow Texans? How many of you? How man of them? Which wouild be the best service for the majority of you and them? Next: how often. Building from there we might someday be able to justify a service.
To get Texans out of their cars and onto an intercity train would require a major culture shift. The Lone Star State is a car culture state. California has nothing on it when it comes to a love affair with the horseless carriage.
Quick, economical, dependable, comfortable, and frequent trains, coupled with user friendly stations and adequate parking, would be required to get me and my fellow Texans to use the train more frequently. On occasion, I have taken the train from Georgetown to Dallas, but it is a pain. And if the southbound Texas Eagle is delayed seriously or annulled, I am stuck in Dallas for up to 24 hours.
Currently, there is no serious passenger train service in Texas, outside of the Trinity Railway Express (TRE), which runs between Dallas and Fort Worth. It is primarily a commuter operation. The overwhelming majority of Texans, at least the ones that I know, don't even know that Amtrak operates in Texas. Moreover, the ones that do know about it would not ride it in a heartbeat.
San Antonio, Austin, Waco, Dallas/Fort Worth, Oklahoma City offers the best potential corridor for better passenger train service. These cities are linked by I-35 and are often referred to as the I-35 corridor.
Quick means the train would have to cover the distances much quicker than driving. It does not mean, however, that the trains have to run 200+ mph. Fares would have to be cheaper for one person to take the train as opposed to driving. The trains would have to run on time and be reasonably comfortable. And frequent means there would be sufficient departures so that passengers could catch the train in the morning, complete their business at their destination, and are back home in the evening. This probably means a minimum of four to six trains a day.
Upgrading the rail right-of-way, including the construction of new station facilities in most of the cities, along the I-35 corridor would require billions of dollars. For example, the estimated cost to shift UP's freight trains to a line east of Austin and upgrade the line from Austin to San Antonio for commuter service is $2.4 billion. Just where the money would come from to improve passenger train service on the I-35 corridor is unknown.
I don't anticipate seeing any serious passenger train service along the I-35 corridor in my life time. But it may happen as congestion continues to grow and the cost of expanding the highways and airways becomes prohibitive.
Why am I not surprised at your answer: you, and other Texans, and other Americans, all want the same thing: service...not running a train or two, but service that benefits both the consumer/rider and the service, too. We here in America don't get it. All we understand is the cost of things, not the value and how something done completely right is really right!
henry6 Why am I not surprised at your answer: you, and other Texans, and other Americans, all want the same thing: service...not running a train or two, but service that benefits both the consumer/rider and the service, too. We here in America don't get it. All we understand is the cost of things, not the value and how something done completely right is really right!
What I as well as most of my fellow Texans want is free choice options paid for by the users. We believe that the willingness to pay for the service is the best indicator of its value. It is a bent for individual choices as opposed to government or corporate choices.
Right. If there is a real service provided, then there is real choice to determine what most want and will use. I discount paid by user because in transportation all choices are taxpayer funded.
What people need to realize is that People woke up in this last Elelction cycle to how much in Debt this nation is and how much that Highspeed rail was going to cost us Now and in the Future. People are going well it is only going to cost us this much now but how much more in the Future and that much never is correct. medicare was only supposed to cost 3 Billion in the Future it is now the 3rd largest outlay after the Military and Social Secrutiy in the Budget.
We have Highways that are Crumbling because we can not maintian them now we have we have Highway Bridges that are obsolete yet are going to be pushed for another 20 years before they get replaced. We have have Public Workers and Teachers that bring home over 100K a year when they retire Tax free and no one sees a Problem with that. States and the US Goverment are Crushed by the Debt they have to Support all the Pensions they have and still the workers are screaming Higher wages. We no longer have the base of Companies that make things anymore that produced the things we need. why we have regulated them out of Business in this nation .
Yet everyone is upset that Governors newly elected did exactly what they said they where going to from Stopping a Boondoggle in HSR to limiting the power of the Public Sector Unions. Yet they are being killed in the MSM and here. Why because they are daring to go after the Holy Grail for Union Labor Public Sector Spending and their Pensions.
henry6 Right. If there is a real service provided, then there is real choice to determine what most want and will use. I discount paid by user because in transportation all choices are taxpayer funded.
It is true that if service is provided, there is a choice, but it is possible to provide a service that gives everyone the choice of using it, but nevertheless, results in either too few using it or too many non-users paying for it.
The proper way to go about it is to build what people want, rather than build it and let the people decide whether they want it or not.
It is a fallacy to assume that all public transportation options are equally justifiable just because existing options are “taxpayer funded”.
The true measure of worth of public transportation is how much of its cost is paid by the users. It makes no difference whether the users pay through the fare box or pay through their taxes.
But all transportation is somehow government supported. Name one mode of transportation that does not rely somehow or another on the government. Even walking often depends of municipal streets and sidewalks and roadway!
henry6 But all transportation is somehow government supported. Name one mode of transportation that does not rely somehow or another on the government. Even walking often depends of municipal streets and sidewalks and roadway!
Just because money is taken from the taxpayer and used to fund a service does not mean that the service is "government supported." In fact, the phrase "government supported" needs to be defined, because it has no clear meaning on its own.
True! Every mode of transport in the United States has received some form of public support. It usually has been an up front investment. And the users have paid for the public investment, usually in the form of ticket prices and user fees, although the payback is not always apparent. Most people who walk on sidewalks pay property taxes, which pay for the implementation and maintenance of the sidewalks.
The 64 dollar question regarding passenger trains is whether the users will or can pay for them. This is the real issue regarding HSR. Will the users pay the government (taxpayers) back if it invests in HSR. The record is not promising.
Whatever the government(s) has done or not done with respect to common transport systems is irrelevant to the question of what it should do now. What is the optimum solution to the mobility problem is the key question. Is it passenter rail? Is it rapid bus technology? Or is it expanded highways and airways?
By the same token, whatever other countries have done or not done regarding passenger rail, including HSR, is irrelevant to what the U.S. should do. Again, the key question is whether passenger rail, including HSR, the optimum solution for the U.S. It may be the best solution for France, Japan, China, etc. That does not make it the optimum solution for the U.S., which is a different country with a different culture.
cx500 Sam1: ......... Commercial carriers pay a proportional share of the recovery cost embedded in the facilities that they use. Their payments are usually in the form of fuel taxes, fees, property taxes, excise taxes, sales taxes, etc. Whether they pay their fair share is an arguable point. Motorists pay their proportional share in the form of fuel taxes, excise taxes, fees, and property taxes. ......... I would like to point out that commercial carriers do not generally pay much in the way of property taxes, since for some reason roads and highways generally do not pay property tax. If road users, and especially commercial users, were required to cover the property tax on the land value of ALL the highways and ALL the streets they use, as the railroads do, the trucking business would shrink dramatically. In the short to medium term the cost of goods would go through the roof since the North American economy is based on this and other hidden subsidies to the commercial road users.
Sam1: ......... Commercial carriers pay a proportional share of the recovery cost embedded in the facilities that they use. Their payments are usually in the form of fuel taxes, fees, property taxes, excise taxes, sales taxes, etc. Whether they pay their fair share is an arguable point. Motorists pay their proportional share in the form of fuel taxes, excise taxes, fees, and property taxes. .........
Trucking companies pay ad Valorem taxes on their off-road facilities, e.g. terminals, warehouses, inventories, etc. All other commercial and private carriers, including railroads, pay similar taxes, except Amtrak, which pays no taxes whatsoever. Determining the total ad Valorem taxes paid by the country's commercial carriers would be a daunting task.
Investor owned railroads pay ad Valorem taxes on their right-of-way as well as their other assets. Airways, highways, and waterways users don't pay ad Valorem taxes on the common facilities (airways, highways, waterways) that they use because these facilities are owned by governments. Taxing themselves would make no sense.
All commercial entities can deduct their local and state tax expenses, including fuel taxes, on their federal and state income tax returns. Moreover, they can depreciate their property and equipment, which results in a lower tax bill than would be the case if they did not have any depreciable assets.
In addition to the aforementioned depreciable assets, e.g. equipment, buildings, etc. associated with all commercial transport modes, railroads can depreciate the capital costs of their right-of-ways. The own them. The depreciation is significant, and results in a large reduction in federal and state income taxes. I would be surprise if the depreciation impact on railroad net income does not offset the ad Valorem taxes paid by the railroads on their right-of-ways.
From time to time transport experts have suggested that the government or a quasi government body should buy the rails and open them up to any qualifying common carrier. The railroads have pushed back hard, which tells me that they have a pretty good deal with the current arrangement.
The payment of taxes for pavement is only the beginning of the upkeep after upfront costs. We have police and emergency services, maintenance, improvements, and I'm sure a list that goes on and on. The same for air and water services. But we are stuck in the realm of return on initial investment of railroads...freight and passenger--because railroads have traditionally been private, big business ventures with private rights of way, stations, terminals, etc. with the full cost of investment and its retrurn thought to be just on the private investors. We've got to shake that thinking and look at how all transportation has received and benefits from government programs. To believe that railroads were and are outside this is having our heads in the sand. Even today's big business private railroads are looking to governments for tax privileges and abatements, help in expansion corridors, and grade crossing eliminations for instance. So lets stop asking rail for a direct return on taxpayer investment.when we don't ask the same of bus, truck, air and waterway transportation companies.
How does that reasoning silence critics who argue that passenger trains are not cost effective?
Yes, every mode of transportation has some connection to the government, but does this mean that one can not longer do any comparison shopping of the relative costs of different modes of transportation? That how we pay for something is mediated by the government means we cannot ask if we are getting value for our money?
Then someone will wheel out the ol' "people who know the cost of everything and the value of nothing" response. Trains have such intrinsic goodness that we should pay whatever amount of money it takes to have them? That something has a value means that questions cannot be asked about cost?
If GM "killed the electric car", what am I doing standing next to an EV-1, a half a block from the WSOR tracks?
It is quite apparent that nothing will silence the critics of rail passenger service, Paul.. And while asking those very questions, long range returns and cost effectiveness along with environment advantages are ignored any way in favor of one's own automobile and its attending "freedoms". Its not that trains have such "intrinsic goodness" that we shoiuld pay whatever but since trains do have that "intrinsic value" that they should be considerd equally with highways, airlanes and airports, and waterways and not dismissed out of hand. Are we afraid of spending the money or of helping a private enterprise make money or of feeling we do not have control of the outcome?
henry6 ... but since trains do have that "intrinsic value" that they should be considerd equally with highways, airlanes and airports, and waterways and not dismissed out of hand.
... but since trains do have that "intrinsic value" that they should be considerd equally with highways, airlanes and airports, and waterways and not dismissed out of hand.
Trains are always being considered equally with highways, airplanes, and airports. Trains are not dismissed out of hand when compared to other forms of transportation. When the train option is dismissed or rejected, it is an economic based decision. Trains are dismissed because of inadequate return on investment, whether the evaluation is based on private or public sector financing.
And despite the economic fault with the investment, HSR is still being foisted upon the public by the current government for reasons beoynd economic return. We are being told that we must pay a higher price for HSR in order to combat climate change and stop suburban sprawl.
So, I think that it is hardly the case that HSR is being dismissed out of hand.
Part of the problem, as I see it, is one of perception. At this time many of the true costs of highway and air transportation are hidden in a maze of different funding sources. This has been and will continue to be true. If anyone thinks uncovering those costs is easy, then have a look. The other factor is out-of-pocket expenses versus "true" expenses. Take driving. Most people have at least one vehicle because that is the way out society has evolved since at least post WWII, for better or worse. The result is that to most people the only expenses they think about when driving versus air or the train (if a service actually existed) are gasoline, tolls, & parking versus train or airfare. To most people, driving is simply cheaper than flying or taking the train, always an option and more convenient, and faster than train, slower than air.
Since little rail service is currently available, when people hear how much a proposed route will cost, they see huge numbers and say, "What do we need to spend all that money for? Don't need it."
Trying to raise arguments about "true costs" and environmental concerns just don't work, as Paul has pointed out so well.
C&NW, CA&E, MILW, CGW and IC fan
Schlimm's perception of how we percieve rail service based on what is has to be taken seriously, yes. But Bucyrus, the term of return on investment has to be takend into consideration, too. We too often are looking at such short term returns we don't see or even look at the longer range. Do we see that perhaps rail might yield a better 10 or 20 year return than an automobile road or just that road bonds will be paid off in a shorter amount of time? We are pressured by the oil/highway and airline lobbies to overlook the longer term of return. In other countries, they evidently have looked for longer term returns. So why shouldn't we?
henry6 Schlimm's perception of how we percieve rail service based on what is has to be taken seriously, yes. But Bucyrus, the term of return on investment has to be takend into consideration, too. We too often are looking at such short term returns we don't see or even look at the longer range. Do we see that perhaps rail might yield a better 10 or 20 year return than an automobile road or just that road bonds will be paid off in a shorter amount of time? We are pressured by the oil/highway and airline lobbies to overlook the longer term of return. In other countries, they evidently have looked for longer term returns. So why shouldn't we?
But you can go broke building too far in advance of that future need. I have faith that, if there is any money left after all the entitlements, real passenger service -- "high speed" or not -- will FOLLOW the need, as it has in the NEC, in the Seattle-Portland market and in a handful of other places.
In the meantime:
You hear a lot about crumbling and overcrowded interstates, and the unfriendly skies, but the cold hard fact is that 9 out of 10 intercity travelers still prefer their cars, and the business traveler who is the main support of the rest of the business is forced by his company to take the plane.
Until you change the cold hard facts, it's going to be hard to find taxpayer money, let alone private money, for passenger rail. As it took President Obama only two years and one election to learn.
henry6 henry6: You hear a lot about crumbling and overcrowded interstates, and the unfriendly skies, but the cold hard fact is that 9 out of 10 intercity travelers still prefer their cars, and the business traveler who is the main support of the rest of the business is forced by his company to take the plane. Until you change the cold hard facts, it's going to be hard to find taxpayer money, let alone private money, for passenger rail. As it took President Obama only two years and one election to learn.
henry6: You hear a lot about crumbling and overcrowded interstates, and the unfriendly skies, but the cold hard fact is that 9 out of 10 intercity travelers still prefer their cars, and the business traveler who is the main support of the rest of the business is forced by his company to take the plane.
Actually, I would say the cold hard facts are that we do not have a true HSR system in the U.S. Therefore Americans do not have a choice when it comes to modern transportation systems. This includes businesses and business travel The money is there. Let's face it when GW Bush desired to invade Iraq(for who knows what reason) the money was there, and republicans insisted on the invasion, without regard to cost.
The real cold hard facts are that if you don't do anything you'll suffer greatly! We have an apathy in this country right now that is to spend money on public needs of the future...except for wars...should not be done. So when we wake up some day in 2020 or 2050 or whenever and find we have fallen to become handmaidens to the rest of the world without a country! We cannot and should not do nothing because a few are so short sighted or greedy.
If we become "handmaidens to the rest of the world" it will be because we continue on our course of financing our deficits through the Chinese; letting other people make all our stuff instead of providing good jobs for Americans; and letting down our defenses. It won't be because we don't have fast passenger trains.
henry6 The real cold hard facts are that if you don't do anything you'll suffer greatly! We have an apathy in this country right now that is to spend money on public needs of the future...except for wars...should not be done. So when we wake up some day in 2020 or 2050 or whenever and find we have fallen to become handmaidens to the rest of the world without a country! We cannot and should not do nothing because a few are so short sighted or greedy.
The greed of the current insatiable government spending is going to kill us way before 2020.
Agreed government spending is wildly out of sight. But to correct and control we can't just go blindly saying 'no' to everything or 'no' to only the small amounts one can understand. The way the Tealoaders are picking on nickle and dime stuff shows they really don't understand all of the financial shenanigans that really go on in the bigger numbers. And they are being led (financed) by those who do understand but who are doing a distraction game on the numbers. And yes, China could be the one that makes us handmaidens. We have to get our investment community to be satisfied making 50% of $200 instead of 80% of $100, to invest more in America, American business, and American labor than to see how many zillion dollars they can amass ahead of the next guy. It questions patriotism; both its definition and those who proclaim it theirs alone.
I remember after 9/11 when the airlines received a $15 bn dollar bailout with scarecly any complaints. Where were all the complaints over government spending during the Reagan and GW Bush administrations? If people think that we can simply tax cut our way to prosperity they are sorely mistaken.
The government invests in large risky projects. Whether that happens to be NASA, the internet, HSR or an unneeded war etc. These projects will not please everybody. I am tired of hearing no,no no we must not try that. America has always been a nation willing to risks. Currently America seems to be risk averse and paralysed by fear. This is a great recipe for a mediocre nation, but not this one.
We have been a state of "good enough is good enough" for the last 20 to 30 years therefore allowing those who are able to wield power (i.e. investment bankers and other moneyed people) to run roughshod over us and the American economy and politcal parties. It started with Regaen kicking the traffic controllers out of the working arena and his form of financial reforms whereby investors believe it is better to take large percentages for return on investment by getting rid of lesser return products and services thus being able to close factories and towns and destroy enonomies. When 80% of $100 in 12 months is a more desireable return on investmen than even 50% of $200 it allows the investment community to blame everyone but them for the downturn. If they close all the factories, eliminate all the jobs, who is going to earn enough money to buy their products and return the money into the economy for growth? That's what has happened in business and has now carried over to government. Tealoaders are right: there is no money to pay for anything. But the investment banking community and the oil companies continue to take all the available money. So how are we to build new roads and other transportation infrastructure?
Groundhog Day.
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
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