A news conference Wednesday in support of high-speed rail in Wisconsin underscored the conflict between those who say the project will create jobs and those who wonder where the money will come from.
The Wisconsin Public Interest Research Group argued Wednesday that high-speed rail has been successful in other parts of the world, and Wisconsin needs a system to keep pace in a global economy.
But project opponents, including Gov.-elect Scott Walker, have said the project’s estimated annual operating cost of $7.5 million will suck money from taxpayers’ wallets. Walker has vowed to stop the Milwaukee-to-Madison project.
The state can bridge the money gap, said James Peoples, a University of Wisconsin-Milwaukee economics professor who supports the project. He said the state should consider a private partner to take on at least some of the maintenance and operation costs.
According to Smart Growth of America and the U.S. Public Interest Research Group, Peoples said, public transportation infrastructure projects create or maintain twice as many jobs as road repairs, which is where Walker wants to spend the money.
“Once you build the infrastructure for public transit, you’re still employing operators to run it,” Peoples said, using engineers, technicians and maintenance crews as examples.
There are rail lines across the nation with private operators, said Rick Norment, executive director of the National Council for Public-Private Partnerships. Virginia and Denver successfully leased out public train systems, he said, but high-speed rail is uncharted territory for private companies.
Private partnerships, Norment said, can cut operating costs for high-speed rail by 15 to 40 percent, based on studies by Norment’s council. That means, he said, Wisconsin still would have to dedicate a lot of money to the project, possibly defeating the purpose of a public-private partnership.
“There has to be a revenue stream that is sufficient for the private investor to recoup his capital investment. This is not philanthropy,” Norment said. “Public-private partnerships are business arrangements that have to benefit both sides.”
Bruce Speight, WisPIRG director, said high-speed rail can offer that benefit without any formal partnership. Instead, he said, it is the areas surrounding proposed train stations in Milwaukee, Brookfield, Watertown and Madison that could use private support.
Watertown Mayor Ron Krueger said his city would gain $20 million to $25 million in increased tax base through a tax incremental finance district surrounding a station.
“The additional revenue generated would by far pass what it costs to operate the train station annually,” Krueger said.
Still, Brookfield Mayor Steven Ponto said, there’s no way to get around the cost to taxpayers. He said Amtrak’s Hiawatha line from Chicago to Milwaukee shows why a public-private partnership would not work.
“The revenue from that line doesn’t cover the cost,” Ponto said, “so to think there would be a way to make Milwaukee to Madison profitable for the private sector seems hard to understand.”
Marc Magliari, Amtrak regional spokesman, said revenue on the Hiawatha line does not cover costs. Furthermore, he said, Illinois and Wisconsin cover 70 percent of the shortfall, with Amtrak covering the rest.
But as fuel costs rise and the public becomes more reliant on public transportation, Peoples said, increased ticket revenue will offer balance for the Milwaukee-to-Madison rail line. That, combined with a private partner, can help the line succeed, he said.
“They should allow the private sector to bid on publicly funded projects,” he said, “and that could recoup some of the costs.”