Highways Pay for Themselves, Trains Don’t

Charlie Arlinghaus

September 19, 2012

As originally published in the New Hampshire Union Leader

In a few weeks, Maine will finish a $44 million project to extend a money-losing commuter train and lose even more money. Fortunately, retiring Sen. Olympia Snowe got them money in the federal budget to fund their profligacy. Some politicians in New Hampshire want to follow suit and spend money we don’t have in the state budget to restore a commuter train that last operated for parts of 1980 until the federal dole ran out.

Transportation policy both at the state and national level are at a financial crossroads. We have to make difficult decisions about what we can and can’t afford. Huge debts and operating subsidies are the way of the federal government but we can and should avoid them. Trains are a great deal if someone else is paying for them. But if we have to pay for them ourselves, they are inefficient and unaffordable.

There is a distinction between highways and railways. Highways, in large part, pay for themselves through user fees. Commuter trains don’t come anywhere close to paying for themselves and are usually subsidized with highway user fees.

The most successful rail project in recent history is the Downeaster train on the Seacoast. It is also roughly a model for the commuter rail advocates want to build in the central NH corridor to Concord. Yet, the Downeaster exists only through massive capital and operating subsidies.

For the Downeaster, none of the capital costs are supported by user fees. They are entirely subsidized. Nor is the debt service calculated as part of the operating costs. For the central New Hampshire commuter rail project, the capital costs are estimated to be roughly $300 million. According to rail authority chairman Peter Burling, a partial project just going to Nashua would be about $90 million instead. Supporters want the federal government and the state to borrow the money for those costs.

Next even after a 100% subsidy of capital costs, the train won’t support itself. The tremendously successful Downeaster project recovers only about half its operating costs and relies on a government subsidy for about $7 million per year. If the capital corridor were that successful, the state would need to find $5-$10 million per year in its budget.

Keep in mind that ever dollar we spend is a dollar that isn’t available for something else whether behavioral health, hospitals which were cut in the last budget, or the university system looking for more money.

Well, since we subsidize roads, shouldn’t we subsidize trains too? The problem is we don’t subsidize roads. Roads pay for themselves in user fees – tolls, gas taxes, registrations, etc. This is not true in every state but it is true in NH.

For highways, capital costs and operating costs are both supporter by user fees. Federally and in every state, some money is diverted from user fees and some added back in. But in the aggregate, user fees support spending. For total federal and state spending, over the last ten years we’ve raised $1.08 trillion in user fees and spent $1.03 trillion. Because New Hampshire isn’t one of the states that borrows money from the general fund like New York, California, or Illinois our numbers are even better.

In most states, local road costs are less reliable. But in New Hampshire, even local roads are largely supported by user fees. In 2010, towns spend about $230 million in the category “highways and streets” while state block grants and car registration fees totaled around $230 million. Neither the measure of revenue nor spending is as precise as the state data nor are they controlled by a trust fund but you can see the number is close.

Trains are wonderful and romantic but unaffordable. We can’t borrow the money for operating costs and then just write off the debt service. From 2007 through 2011, state debt climbed precipitously from $654 million to $939 million – a 44% increase after having climbed just 8% and 4% in the two previous 4 years cycles. Simply put, we don’t have extra borrowing capacity. This isn’t Europe.

Beyond the huge startup costs, we can’t afford to keep a train running. If we had additional highway user fees would you prefer to diver $5 to $10 million to a little used train or help towns pay for more bridge repair?

2 replies
  1. Rep. Joe Krasucki says:

    There is no such thing as free lunch.. After numerous studies yet another study is proposed to extend passenger rail service up through Nashua to Concord. Passenger rail is romantic, nostalgic and fun; BUT it cannot pay for itself. It requires Govt. subsidies and support.. Federal funds for this proposed study come from each of us through taxes or Govt. debt, which is a “hidden ” tax. The question is just what tax do the rail supporters wish to use to pay for rail service and on whom will it be imposed ?? Or what current Govt. services would they end to get the funds from to support this passenger rail service?? No free lunch..

  2. stan says:

    It is my understanding that the Boston commutter busses and local citu buses are subsidized. Wouldnt it be more cost effective to suport trains. The local buses are always empty. The Boston buses are full. I think it would be a good investment.

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