APT Position Statement – Funding High Speed Passenger Transportation

March 2, 2012
To secure a stable future for high speed passenger rail, it will be necessary to develop a predictable funding source for this travel. APT is in favor of creating a High Speed Passenger Transportation (HSPT) fund by means of Congressional legislation.

The following is a statement from the Association for Public Transportation (APT) on funding for high speed passenger transportation:

To secure a stable future for high speed passenger rail, it will be necessary to develop a predictable funding source for this travel. APT is in favor of creating a High Speed Passenger Transportation (HSPT) fund by means of Congressional legislation. America is falling behind its global competitors in providing high speed transportation alternatives to its citizens. This bill would address needs in both air travel as well as high speed rail (HSR). Air travel and HSR are linked together because these modes are both competitive and complementary, just as automobile travel and public transit are both competitive and complementary.

The gist of this bill, which could be offered as either an amendment to the next Surface Transportation Bill, or as standalone legislation, would be to put a user fee of 6 percent on airline tickets, charter flights, air freight revenues, Amtrak tickets, and future HSR tickets to fund a High Speed Passenger Transportation (HSPT) fund. Proceeds, based on 2010 data, would be $8 billion annually. Twenty percent ($1.6 billion) would be used to deploy NextGen Air Traffic Control, 20 percent ($1.6 billion) to increase average speeds of intercity rail (e.g. Amtrak et al), where possible, to 70 mph so it can better feed HSR backbones, and 60 percent ($4.8 billion) for the design and construction of HSR. These user fee proceeds should increase over time as the economy recovers and transportation revenues strengthen.

Benefits and Projected Results:

  • Next Generation Air Traffic Control (NextGen ATC): The existing air traffic control system is 50 years old, obsolete, and unable to handle current traffic in high volume markets such as greater New York City. Congestion in this market ripples in both directions, delaying flights from the west (Mid-west, California) and the east (Europe). The cost for this new system has ballooned from $10 billion to $40 billion and future funding for this project is not assured.
  • Higher Speed Rail (Amtrak and other Intercity Rail with an average speed of 60 to 70 mph or greater). Higher Speed Rail (HrSR) is important as a feeder to HSR. At an average speed of 60 to 70 mph, HrSR which still requires subsidization, would require less of a subsidy since it is far more competitive with both automobiles and buses. Many of these HrSR lines, also called emerging HSR, can become true HSR service in the future, as demand, conditions, and financing warrant.
  • High Speed Rail (HSR): HSR construction is key component of this bill. Lack of funding is holding back HSR deployment. This fund will rectify that problem. Assuming an initial $4.8 billion annual revenue stream for HSR, allocate $3 billion for bond interest payments (the $3 billion will float $100 billion bond offering at 3 percent coupon rate), and remaining $1.8 billion for the government to take actions to minimize the risk of private developers. These actions include buying rights of way, purchasing land around HSR stations for transit oriented development (TOD), making progress payments to private sector contractors who are constructing system. Future HSR fare revenues will be used to pay off debt and fund more HSR lines.

It is important to realize that neither the federal government nor private industry have the wherewithal to construct HSR alone. The total cost of development along the 11 key corridors designated by the FRA (Federal Railroad Administration) will be in the vicinity of $500 billion to three quarters of a trillion dollars, or $25 to $30 billion a year for 25 plus years. With this fund, the government and private sector can work together in Private-Public-Partnerships (P3’s). With the additional revenue streams from the commercial and residential TOD construction, along with the anticipated rail fares, HSR will make money, covering not only operating and maintenance costs, but also capital costs. The added benefit is that the HSPT Fund is a user fee and will not require allocations from general federal tax revenues.

The benefits accruing from the HSPT Fund are numerous. America benefits because there is now another way to transport the additional 100 million inhabitants that will be here by 2050. Airlines benefit because they will have a new ATC system that will make their operations more efficient. And since many Americans will chose to travel by rail between key city pairs 200 to 600 miles apart, airlines will be able to concentrate on more profitable, longer haul flights. Americans benefit because they will have a viable, cost-effective, time-competitive alternative to airline travel. No more long lines at airports or intrusive TSA searches. Even travelers who cannot use HSR benefit because there will be less congestion at airports, and better on time performance when they have to fly.

Proposed HSPT Act V4.0