TALLAHASSEE -- An intense last-ditch effort to save high-speed rail in Florida collapsed Thursday with Gov. Rick Scott rejecting the plan, and then angry lawmakers accused him of overstepping authority and threatened legal action.
“I remain convinced that the construction cost overruns, the operating cost risk, the risk that we would give the money back if it’s ever shut down, is too much for the taxpayers of the state,” Scott told the Times/Herald.
The proposal to divert responsibility to a group of cities, including Tampa and Orlando, was presented to Scott’s office Wednesday. He saw nothing to change his mind -- a stance critics attacked as politically motivated and profoundly stubborn.
U.S. Sen. Bill Nelson deemed it “one heck of a mistake.” U.S. Rep. Kathy Castor, D-Tampa, said she was “devastated” by the loss of potential jobs.
In Tallahassee, Sen. Thad Altman, R-Melbourne, said he hoped U.S. Transportation Secretary Ray LaHood would grant Florida more time before reallocating the $2.4 billion to other states so lawmakers can explore challenging the governor on constitutional grounds. The deadline had been today and LaHood’s office showed no sign of backing away from that.
“I believe that he exceeded his executive authority and in a very strong sense we have a constitutional crisis on our hands,” Altman said.
Senate Republican leader Andy Gardiner acknowledged there are concerns about the “parameters” of the governor’s use of his executive power. He did not reject the possibility that a fellow caucus member would have a legitimate basis for suing the Republican governor.
Altman noted that the Legislature voted to accept the federal money and build high-speed rail in a special session.
“We have a law on the books,” he said, and quoted the portion of the Florida Constitution that reads: “The Governor shall take care that the laws of Florida are faithfully executed.”
“The governor has completely ignored that,” Altman said.
Even before Thursday, there was virtually no chance Scott would budge from last week, when he rejected the federal stimulus funding for the 84-mile Orlando-Tampa line.
Scott, who relied on studies from conservative organizations including the Reason Foundation, said taxpayers could be on the hook for billions and doubted ridership would be high enough.
Still, bullet train backers began working feverishly to craft an alternative, to get around Scott’s insistence that the state not be financially liable in any regard. They continued to hold onto a shred of hope that Scott would come around, saying it would create thousands of jobs.
A local take over plan
The plan, calling for local governments to take over the project, was submitted to Scott on Wednesday after meetings between the governor’s office, federal transportation officials and representatives from local governments including Tampa, Orlando, Lakeland and Miami.
This new partnership would be considered a “non-recourse entity,” which is the key piece of the proposal. It means that if the project goes bust, in no way would the state or local governments be held liable for construction or operating cost overruns. The new entity would oversee the design, building and operation of the rail system, which would effectively be privatized, with the private company bearing all risks for construction and operating cost overruns.
The state would effectively be rendered into little more than a pass-through agency for the federal grants, accepting the money and turning it over to the “non-recourse entity.” The state would still provide the land on which rail lines are placed and provide some consulting to ensure a smooth transition.
The U.S. DOT would be in charge of determining that the winning company has the financial wherewithal to assume the risks. The company would be required to provide a guaranty on both the construction and operating side and surety bonds or some other form of insurance against cost overruns. It would be required to submit a fixed bid for construction costs, meaning if it misses its target it’s on the hook to make up the difference. The company would be responsible for operating costs for a period covering 30 years.
All “costs, fees and expenses and general liability of cost overruns and operating shortfalls shall be passed on to and guaranteed by the winning bidder selected from a concourse of bidders from the private sector,” the proposal stated.
‘There’s nothing new’
In the end, it failed to garner Scott’s support.
Asked Thursday if he had contacted federal transportation officials, Scott said no and reiterated his opposition.
“I’ve said that all along, so there’s nothing new,” Scott said. The governor also seemed unmoved by talk of a lawsuit, again stating his reasons for rejecting the project.
He added a feature to his Facebook page allowing supporters to add a badge to their own profile saying, “I stand with Governor Scott against high-speed rail.” In a few hours, more than 500 people had clicked on button indicating they “like this.”
Information was also stripped off a state high-speed rail website. Officials behind the effort to save the deal were outraged. “A wise man’s quote favored by President Kennedy was that ‘an error does not become a mistake until you refuse to correct it,’ “ Sen. Nelson said.
“Well, today, Rick Scott made one heck of a mistake. Forget the fact that we answered all the governor’s concerns, there still were 24,000 other good reasons why this project should have been approved.”
Tampa Mayor Pam Iorio said: “His reasoning does not take into account the work that has been done in the past week, which lays out a clear path for private investment and risk responsibility. The facts are clear: We have addressed his concerns on risk -- the risk will fall to the private sector.”
Iorio and others, including prominent Republicans like former Gov. Jeb Bush, have questioned why Scott did not let the project go out to bid, to at least see what private companies could offer in assurances of assuming financial liability.
“In effect, the message being sent to eight worldwide business consortiums across the globe and the United States is ‘don’t bother,’ “ Iorio said. “As a mayor who cares about economic development and the encouragement of investment by the private sector, I can not understand or justify his stance.”