By Todd Richmond
MADISON — A railroad executive asked the Wisconsin Claims Board on Friday to pay $160,000 he said the state still owes his company for work on a high-speed rail line completed before Republican Gov. Scott Walker killed the project.
Timothy Karp, vice president of finance for Milwaukee-based Wisconsin & Southern Railroad Co., told the board the railroad began negotiations in June 2010 with Amtrak on how to share existing tracks that would serve as the high-speed route.
The line was supposed to connect Madison and Milwaukee. Wisconsin Democrats touted the project as a job creator, calling it a key step toward linking Chicago and the Twin Cities by rail and stimulating the economy during the throes of the recession. But Walker killed it shortly after winning election in November 2010 by rejecting federal stimulus money to pay for it.
State officials promised to reimburse Wisconsin & Southern for expenses tied to the negotiations, Karp said, but pressured the railroad to start talks before a formal contract was drafted because Democratic Gov. Jim Doyle’s administration wanted to move as quickly as possible ahead of the election. The company complied, trusting the state would follow through, he said.
“All along they reiterated they were committed to us and would take care of all the costs associated with the project,” Karp said. “(But) time is of the essence.”
Wisconsin & Southern and the state Department of Transportation finally reached a contract in October 2010 but the deal called for paying only the railroad’s expenses going forward. Karp said the railroad still expected the state to make good on its promises to pay their back expenses.
Walker ultimately won the 2010 election. He promptly rejected $810 million in federal stimulus money earmarked for the line, killing the project. Walker said then he didn’t want the state to get stuck with upkeep and he wasn’t interested in train construction jobs because the state needed more sustainable non-government positions.
Joe Pozen, an attorney who negotiated with Amtrak on behalf of Wisconsin & Southern, told the claims board that DOT staff drafted a memo in September 2011 saying the agency should pay the railroad’s back expenses. But DOT attorney Jim Thiel pointed out Secretary Mark Gottlieb never signed the memo and said he didn’t know exactly what agency personnel might have told Wisconsin & Southern officials.
“Much of this was verbal but the government doesn’t really run on verbal contracts,” Thiel said.
The claim got a lukewarm reception from board members, who questioned why Wisconsin & Southern would do any work without a contract in hand.
“You don’t do that unless you know you’re taking a risk,” said board chairman Steve Means, an assistant state attorney general.
Pozen stressed Wisconsin & Southern has been doing business with the state for two decades and has established a relationship. The railroad didn’t have any choice but to enter into negotiations, he added; sharing the track with Amtrak carried scheduling ramifications that would have affected business.
Board member Greg Murray, who serves as the state Department of Administration’s chief attorney, said half of Wisconsin & Southern’s claim was for the cost of outside consultants. He said the state typically doesn’t pay for contractors’ consultants.
He also pointed out the board can award a claimant only $10,000 and questioned whether the claim was a precursor to a lawsuit.
Karp told the board the railroad doesn’t intend to sue because the company considers the state a partner. He declined to comment when asked after the hearing if the railroad wants only $10,000.
The board did not make a decision Friday.