Florida Governor Rick Scott rejects High Speed Rail money

6:18 PM, Feb 16, 2011   |    comments
Gov. Rick Scott
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TALLAHASSEE, Florida - Gov. Rick Scott on Wednesday rejected $2.3 billion in federal money to build high-speed rail between Tampa and Orlando. Earlier this month, the Tea Party, during Scott's budget proposal in Eustis, urged him not to approve spending on the rail.

Scott said the spending was not merited. He criticized President Barack Obama's spending plans while also saying he didn't believe the rail project would meet ridership estimates of just more than 3 million a year.

Earlier story:  Florida Governor Rick Scott says he will cut $5 billion from state budget

"Higher taxes and more government spending is a recipe for disaster," Scott said. "Government has become addicted to spending beyond its means and we cannot continue this flawed policy."

Scott said likely construction-cost overruns that could cost the state up to $3 billion, operating costs that could cost the state up to $575 million over a decade and the possibility that a failed high-speed rail line could require the state to return $2.4 billion to the federal government.

"The truth is that this project would be far too costly to taxpayers and I believe the risk far outweighs the benefits," Scott said.

Scott said he spoke to U.S. Transportation Secretary Ray LaHood Wednesday morning. The governor characterized LaHood's reaction as "disappointed."

LaHood last week said the project was a good one.

"Florida has been working on high-speed rail for 10 years," LaHood said. "They did it because it's the right place for the train to run to relieve congestion, deliver people from major cities and eventually go to Miami."

Scott said the money would be more effectively spent on improvements to ports, highways and existing rail systems. He said expansion of the Panama Canal and new trade agreements with South and Central America gives Florida an opportunity to become a transportation hub.

"By capturing a larger share of containerized imports entering our seaports, expanding export markets for Florida businesses and emerging as a global hub for trade and investment we can create up to an additional 143,000 jobs according to a recent chamber of commerce study," Scott said.

Some lawmakers were critical of Scott's decision.

State Sen. Paula Dockery, a Lakeland Republican and champion of high-speed rail, said international consortiums set to bid on the construction project agreed to do so at a fixed price.

"It was my hope and expectation that the governor would have allowed these teams to submit proposals before pulling the plug on this true public/private partnership that had little risk to the state and tremendous return to Floridians," Dockery said in a statement.

U.S. Sen. Bill Nelson, a Democrat, also criticized the end of the project. His office said Nelson spoke to Scott Wednesday morning and protested Scott's decision.

"If Florida would've had a governor who rejected President Eisenhower's idea, we wouldn't have an interstate system," Nelson said on Twitter.

Below are Governor Scott's Remarks as Prepared:

- As you know, I was elected to get Floridians back to work and to change the way government does business in our state.

- I am committed to making good on those promises. 

- Recently, I sent a budget proposal to the legislature that reduces the size and scope of government; reduces the costs of that government and passes those cost savings on to taxpayers so that we can create new jobs and turn Florida's economy around.

- I believe when you reduce government's reach and hold that government accountable, you create an environment where the economy can flourish.

- When you reduce taxes and put that money back in the hands of hardworking Floridians and Florida businesses, that money will be spent on creating private sector jobs

- As you know, my background is in business, not politics.  But you don't have to be an economics expert to understand that if you spend more money than you take in, your business will fail.

- Unfortunately, politicians haven't always seemed to grasp that same principle.

- In fact, the Obama administration just announced a $3.73 trillion budget that includes the largest budget deficit in our nation's history ($1.65 trillion).

- The president's budget includes $1.6 trillion in higher taxes.

- Those higher taxes will impact Floridians and our competitiveness worldwide.  We cannot expect individuals to build businesses in America if our taxes are higher than other countries.

- Higher taxes and more government spending is a recipe for disaster.  Government has become addicted to spending beyond its means and we cannot continue this flawed policy.

- Let us never forget, whether it is Washington or Tallahassee, government has no resources of its own.  Government can only give to us what it has previously taken from us.

- That is why today I am announcing my decision to reject the Obama administration's plan to partially-fund the costly Tampa to Orlando high-speed rail project.

- Moments ago I spoke with u.s. transportation Secretary Ray LaHood to inform him of my decision.   I appreciate the secretary's efforts to work with us and I look forward to working with him in the future.

My decision to reject the project comes down to three main economic realities:

- First - capital cost overruns from the project could put Florida taxpayers on the hook for an additional $3 billion.

-  Second - ridership and revenue projections are historically overly-optimistic and would likely result in ongoing subsidies that state taxpayers would have to incur. (from $300 million - $575 million over 10 years) - Note: The state subsidizes Tri-Rail $34.6 million a year while passenger revenues covers only $10.4 million of the $64 million annual operating budget.

- Finally - if the project becomes too costly for taxpayers and is shut down, the state would have to return the $2.4 billion in federal funds to D.C.

- The truth is that this project would be far too costly to taxpayers and I believe the risk far outweighs the benefits.

- Historical data shows capital cost overruns are pervasive in 9 out of 10 high speed rail projects and that 2/3 of those projects inflated ridership projections by an average of 65 percent of actual patronage.

- It is projected that 3.07 million people will use the train annually.  Keep in mind that Amtrak's Acela train in Washington, D.C., Boston, Philadelphia, New York and Baltimore only had 3.2 million riders in 2010.  And that market's population is 8 times the size of the Tampa/Orlando market.

- President Obama's high-speed rail program is not the answer to Florida's economic recovery.

- We must make investments in areas where we will get a return for the shareholders - Florida's taxpayers.

- Rather than investing in a high-risk rail project, we should be focusing on improving our ports, rail and highway infrastructure to be in a position to attract the increased shipping that will result when the panama canal is expanded when the free trade agreements with Colombia and panama are ratified and with the expansion of the economies of central and south America.

- By capturing a larger share of containerized imports entering our seaports, expanding export markets for Florida businesses and emerging as a global hub for trade and investment we can create up to an additional 143,000 jobs according to a recent chamber of commerce study.

- It is absolutely critical that we make smart investments with taxpayer dollars, whether state or federal, and I believe our state will be better served by spending these funds on projects that will benefit Florida and not turn into a spending boondoggle.

- The answer is to reduce government spending, cut government's leash on our state's job creators and then hold that government accountable for the investments it makes.

- That is what I was elected to do and that is how I plan to govern. Let's get to work!

According to floridahighspeedrail.org construction of the rail was projected to create 23,000 direct construction jobs and more than 48,000 through both direct and spin-off employment during the four-year construction period.

The peak employment period would have been between the fall of 2012 and 2014 when close to 10,000 workers are expected to be directly employed in building the system. FDOT further estimates the system will employ approximately 600 people once operation starts and another 500 indirectly on an on-going basis.

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