TALLAHASSEE -- Never mind that the federal government was willing to pay nearly all the cost to build a high-speed rail line connecting Tampa to Orlando.
Never mind that private companies were willing to cover any additional construction costs and operating losses.
Florida Gov. Rick Scott on Wednesday rejected the federal government’s offer of $2.4 billion to build the line -- prompting cheers from his tea party base, and harsh criticism from leading Florida Republicans and Democrats -- squashing a project that has been decades in the making.
“The truth is that this project would be far too costly to taxpayers and I believe the risk far outweighs the benefits,” Scott said.
Reverberations from the stunning announcement were swift.
State legislators questioned whether the governor has the authority to unilaterally kill high-speed rail, and members of Florida’s congressional delegation discussed with U.S. Transportation Secretary Ray LaHood ways to circumvent Scott’s decision.
One possibility: Cut the state out of the equation and have cities along the rail line form a partnership to receive the federal dollars.
“We have DOT lawyers now researching to see how we can work around the governor’s decision,” said U.S. Sen. Bill Nelson, a Democrat.
“We have to look at all these options,” said U.S. Rep. John Mica, the Winter Park Republican who chairs the transportation committee. “I am a persistent son-of-a-gun.”
Lawmakers from New York and California quickly asked LaHood to reallocate the money to their states.
But Orlando Mayor Buddy Dyer said he received assurances from LaHood that he would not redirect the money until every option had been explored. That includes “engaging the private sector” to eliminate any “cost and risk to the state,” Dyer said.
Three main reasons
Scott said he opted to reject the federal taxpayer money for three main reasons.
First, he predicted construction cost overruns would put Florida taxpayers on the hook for $3 billion.
Secondly, he said, low ridership would have required state subsidies.
And finally, he said, if the project was shut down, the state would have to return the $2.4 billion to Washington.
A spokeswoman for the U.S. Department of Transportation, though, said the state wouldn’t necessarily have had to pay back the money and the issue could have been negotiated if Scott had ever raised it with federal officials.
As to his first two concerns, bid documents being prepared by state transportation officials would have required companies bidding on the project to cover the state’s obligation, as well as any construction cost overruns and operating losses due to low ridership. Companies had indicated they were willing to accept those terms.
Scott, though, said he didn’t necessarily trust that the private sector would bear all the risk.
“Here’s my experience in business,” he said. “If you enter into a project where it’s not a good transaction for the other side it always comes back to be a problem for you. My concern with this is, you look at the ridership studies, and I don’t think there’s anyway anyone’s going to get a return.”
Much of the justification Scott used for killing the project came directly from a report released in January by the Reason Foundation, a Libertarian think tank, which typically takes a skeptical view of rail. Robert Poole, who oversaw the report, served on Scott’s economic development transition team.
Scott also relied on information from the conservative Heritage Foundation, and was briefed on a ridership study commissioned by the Florida Department of Transportation that is still in progress, according to a spokeswoman for Scott.
State Sen. J.D. Alexander, a Republican from Lake Wales who chairs the Senate budget committee, warned that Scott may have overstepped his bounds by canceling the project.
“The Constitution doesn’t allow the governor to not spend appropriations funds,” he said. “We would certainly hope that in the future he would follow the appropriate policy with regard to his expenditures.”
The Florida Legislature in 2009 designated $300 million for the development of the 84-mile rail line between Orlando and Tampa. Eliminating that will require approval of the Legislative Budget Commission, Alexander said.
Still, Alexander said he agrees there is widespread doubt as to whether the project would have succeeded in drawing enough riders, and said the governor made the right choice.
So far, Florida has spent about $26 million on the high-speed rail project. That money went to such items as engineering work, surveys of the Interstate 4 median where the tracks were to run and the ridership study.
It’s not clear how many jobs were created with the money and when exactly the work will end.
“We need to talk to the federal government about how we’re going to wrap things up,” DOT spokesman Dick Kane said.
Backers of the project estimated the line ultimately would have created more than 20,000 jobs in Florida.
Meanwhile, Scott has also put the brakes on Florida’s $1.2 billion SunRail project, a commuter rail system planned for the Orlando area. He put a hold on $235 million in project contracts shortly after his Jan. 4 inauguration.
“SunRail is something I’m still reviewing,” Scott said.
From the early days of his campaign for governor, Scott has indicated he would only support high-speed rail if it created no burden for Florida taxpayers.
Based on remarks made at his news conference, it appears his concerns were as much about state coffers as federal spending policy.
He made his high-profile announcement just two days after President Barack Obama released his federal budget, which Scott criticized during his news conference, noting that it includes a $1.65 trillion deficit.
“Government has become addicted to spending beyond its means and we cannot continue this flawed policy,” he said. “Let us never forget, whether it is Washington or Tallahassee, government has no resources of its own. Government can only give to us what it has previously taken from us.”
That message resonated with state Rep. Mike Weinstein, a Jacksonville Republican, who is working to create a tea party or “liberty” caucus in the Legislature.
“There are probably better ways, and more impactful ways to spend a couple billion dollars than high-speed rail, especially at this particular financial situation that we’re in federally,” he said. “It might be wise to pay down the debt with billions.”
Cheers in California
“Thank you, Florida,” said Calif. Rep. John Garamendi, D-Walnut Grove. “California is moving forward with high-speed rail.”
The Obama administration already has provided California with about $3.6 billion for high-speed rail construction. The money will help build the state’s 123-mile initial segment, connecting Bakersfield with rural Madera County.
California’s total includes $616 million diverted in December when Republican governors in Wisconsin and Ohio turned down their own federal grants. Then, as now, Obama administration officials voiced disappointment that states would reject high-speed rail funds but also vowed to find other takers.
“There is overwhelming demand for high-speed rail in other states that are enthusiastic to receive Florida’s funding and the economic benefits it can deliver,” LaHood said.
California appears possible to secure at least some of the additional funding. One unhappy Florida lawmaker, Rep. Kathy Castor, D-Tampa, went so far as to urge Scott to reconsider “in order to save these jobs and not send the investment dollars to California and other states.”