Cities should take the lead on inter-city rail service

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An article caught my eye recently about how business and civic leaders in four Midwestern cities were talking cooperation and super-regionalism. Fearful of being forgotten in a possible future of “mega-regions”, this group is stepping up to discuss how to work together to enhance the economies of all, rather than focus on competing. It’s a wise move.

One aspect noted in the article was that of transportation, including (gasp!) passenger rail. I’m admittedly a big fan of passenger rail, especially since it provides people with choices. Choices are good. Choices equal freedom. Choices in transportation are especially important, since not everyone wants to drive everywhere for everything. And, a little redundancy in a system is always a good thing – see the floods of the summer of 2011 and I-29 closure as one good reason.

The problem in getting more quality passenger rail service going, however, is the painfully slow process of working with Amtrak, the federal government, and especially state governments. While the feds might be slow and cumbersome, at least they are favorable to providing additional service. Many state governments however, especially those in conservative-leaning Midwestern states, are openly hostile to any funding for rail service. They might begrudgingly accept some additional grant monies from the Federal Railroad Administration, but certainly won’t be proactive in providing 21st century rail service. In fact, most can’t even conceive of planning for early-20th century caliber rail service.

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So the question on the table then becomes, why don’t the cities just do it themselves? While these four cities are talking cooperation, what if they took the leadership mantle and worked around the states and feds to provide at least low-speed rail service, if not high-speed rail eventually?

Here’s a few numbers to chew on:

• The intra-state line between Kansas City and St. Louis costs the state of Missouri an operating subsidy of about $8 million per year, for twice-daily service
• On occasion, that line receives some capital funding from the federal government for modest infrastructure improvements. In 2008 and 2010, it received $34 million for such upgrades
• In FY 2011, the line generated $4.7 million in revenue, for about 200,000 riders
• Distances between the 4 cities: KC to St Louis is 247 miles; KC to Omaha is 189 miles; KC to Des Moines is 193 miles; Des Moines to Omaha is 138 miles; St Louis to Des Moines is 370 miles. Total mileage for all those links: 1,137 miles
• If the same operating subsidy for the Missouri line is applied as a per-mile cost to the total links about, the necessary operating subsidy would be approximately $36.8 million per year.
• The populations of just the 4 major cities: KC, MO is 463,000; Omaha is 415,000; St. Louis is 318,000; Des Moines is 206,000. Total is approximately 1,402,000, or about 3 times that of KC, MO.
• Revenue generated by a ¼ cent sales tax in KC, MO: $17 million / year
• Proportionate revenue generated by a ¼ cent sales tax in all 4 cities combined= $51 million / year in revenue

Very simplistically, a ¼ cent sales tax levied in each of the 4 cities (not even their regions – just the big cities) could easily raise enough revenue for inter-city service at the level of the intra-state line in Missouri. I want to be clear here that I’m not recommending this as THE funding approach. It is one possible approach, of many. Other potential revenue sources include higher ticket prices, charging taxes and fees like the airports and airlines do, using value capture financing tied to up-zoning around train station areas (since rail service inevitably drives the desirability of higher-density development), property taxes and more.

To be fair, a few other negative caveats:

• The current Missouri service is only two trains per day. It’s hard to imagine a true business-level service between these cities working with less than four trains per day
• The numbers above do not take into account capital costs, although capital is one area that is frequently funded by the federal government. Missouri, for example, recently received FRA grant money for new rolling stock along with several other Midwestern states
• It’s possible that these lines could require more of an operating subsidy than the Missouri line

Now that the basics and some negatives are laid out, let’s also look at the significant potential upside. For one, a quality service, with several trains per day operating at speeds of 90 to 125 mph could generate far MORE revenue and need far LESS subsidy than what is done currently. In fact, a privately-run operation could in fact make money, as is the case with what FEC is undertaking in the state of Florida for service between Miami and Orlando. That service will have 16-19 trains running each way per day in 2015.  The level of demand is clearly less between these four Midwestern cities, but is 25% of that demand possible? A more detailed look would be required, but on the face it seems reasonable to assume so.

I personally wish for the day that passenger rail can be privately-run and profitable across the country, but our largesse in highway and airport spending makes that nearly impossible today. And, I wish our state governments were supportive of doing anything other than building and widening highways across the landscape. But that’s not today, and cities should not wait around for others to be supportive. Cities have the need, the public interest and the money. One thing that should be obvious from the history of trying to fund transit in Kansas City, for example, is that cities do themselves no favors by looking to build broad constituencies with people who have suburban and rural interests. But more on that another time.

For now, it’s time for cities to take the lead, and make quality inter-city rail happen on their own initiative. They have the most to gain by action, and the most to lose by inaction.