The possible expansion of Amtrak passenger rail service in Kansas was the topic of a meeting held last night in Wichita.
Expansion of rail service in Kansas is controversial, at least to some people, in that any form of rail service requires taxpayer involvement to pay for the service. First, taxpayer funding is required to pay for the start-up costs for the service. There are four alternatives being presented for rail service expansion in Kansas, and the start-up costs range from $156 million up to $479 million.
After this, taxpayer subsidies will be required every year to pay for the ongoing operational costs of providing passenger rail service. The four alternatives would require an annual operating subsidy ranging from $2.1 million up to $6.1 million. Taking the operating subsidy and dividing by the estimated number of passengers for each alternative, the per-passenger subsidy ranges from $35 up to $97 for every passenger who uses the service.
For three of the alternatives, the operating subsidy required is greater than the revenue the service is expected to generate. For the other alternative, the subsidy and revenue are equal.
It would be one thing if tickets sales and other revenue sources such as sale of food and beverage paid for most of the cost of providing passenger rail service, and taxpayers were being asked to provide a little boost to get the service started and keep it running until it can sustain itself. But that’s not the case. Taxpayers are being asked to fully fund the start-up costs. Then, they’re expected to pay the majority of ongoing expenses, apparently forever.
At the meeting, I calculated these per-passenger subsidy figures and presented them to officials from the Kansas Department of Transportation and Amtrak. They seemed to think that this was a novel way of looking at the cost of providing the service. I asked the Amtrak representative why can’t we just increase the price of a ticket by the amount of the per-passenger subsidy? The reply was that if the tickets are too expensive, people will not purchase them.
Much of the argument of rail supporters boils down to this: since other forms of transportation receive government subsidy, why shouldn’t rail transportation receive a subsidy too?
The proper response to this argument is first, let’s not expand government intervention in transportation by increasing or adding new forms of subsidy, even if it is to correct a perceived imbalance. Second, let’s get rid of the subsidy for all forms of transportation, so that each form may be evaluated on its total cost by consumers when they decide how to travel.
The Amtrak representative disputed subsidy figures that I referred to, saying that the study that I found them in has been discredited. These figures show that the federal subsidy for highway passenger travel is negative, meaning that highway drivers are paying their own costs plus more. The subsidy per passenger rail service is much higher than for either commercial or general aviation. The Amtrak representative promised to send me different figures, and I will report on those if I receive them. It may be that when state and local spending on highways is included, the subsidy landscape might look different.
These subsidy figures are based on the passenger-mile, not total dollars. Supporters of rail subsidies often use total dollars spent instead of spending per passenger-mile because rail receives much less subsidy than other forms of transportation. That’s because so few people travel on passenger rail.
This year legislation authorizing the Kansas Department of Transportation to establish and implement a passenger rail service program passed both houses nearly unanimously and was signed enthusiastically by the governor. That was an easy vote for legislators, however, as the legislation spends no money. The supplemental note for the bill states “… because the bill does not propose a revenue mechanism for financing any of the activities the bill would authorize, the Kansas Department of Transportation indicates it would not initiate any such activities nor incur any additional expenses.”
When legislators have to commit taxpayer funds for start-up costs and ongoing funds for passenger subsidies, I suspect the voting will be quite different.
Reporting on this meeting from KWCH is at Wichitans Give Input on Amtrak Passenger Train Proposals and from KAKE at State Gets Feedback On Passenger Rail Proposal. Related stories on this site are Amtrak, taxpayer burden, should not be expanded in Kansas and Kansas makes unwise bet on passenger rail.
