CONSERVATIVE ECONOMICS STRIKES AGAIN
FIRST, I NEED TO GIVE CREDIT TO THE SOURCE of my material, Dave Cieslewicz, former mayor of Madison, WI, in an article he wrote on 7/24/14 at http://m.isthmus.com/article.php?article=43235, in case you want to read the whole thing. The point of this blog is to highlight some of the facts presented by Mr. Cieslewicz and make some comments on them.
- In 2009, then Gov. Jim Doyle joined forces with Milwaukee Mayor Tom Barrett to convince train manufacturer Talgo to locate in Milwaukee. The city of Milwaukee invested $10 million for site improvements at the old Tower Automotive plant in a neighborhood that needed the jobs and the reinvestment.
- Wisconsin ordered two trains for the state-sponsored Milwaukee to Chicago Hiawatha service. In addition, Talgo had an order for two trains for use in Oregon and Washington that would also be built in Milwaukee.
- Gov. Doyle then secured $810 million in federal stimulus money to build higher-speed rail from Chicago to Milwaukee to Madison with the promise of eventually connecting the line to the Twin Cities.
- Those train sets would have been built in Milwaukee too.
- Talgo was already well along in the construction of two sets of trains to serve that line.
- The state has already paid Talgo $40 million for those trains
- The state paid another $12 million to other vendors, for a total cost so far of $52 million.
- Talgo, rightly, filed a claim against the state for an additional $66 million in unpaid invoices and other losses due to the state defaulting on the contract. Even though the state is clearly at fault they nevertheless recently denied the claim and an unnecessary and expensive formal lawsuit is most certainly in its future.
- In May 2014, the completed trains were unceremoniously moved from the now abandoned Milwaukee Talgo plant to Indiana, for possible use there.
- Illinois is paying for an extension of Amtrak service to Rockford, and plans are in place to extend that to Dubuque. From there it's not hard to imagine completing the line to the Twin Cities (see above) and bypassing Wisconsin altogether.
- Walker claimed that he opposed the 100% federally funded train because of the annual operating costs to the state, which amounted to around $7 million/yr.
- Now the state is on the line for as much as $118 million, which is 17 years of operations (longer if you take into consideration the time value money) for which Wisconsin will have received nothing at all except lost opportunity!.
- Bringing new business and tax revenues into Wisconsin
- Revitalizing a crumbling part of one of Wisconsin's major cities
- Jobs both in the Milwaukee plant and all along the routes the train would have traveled
- Growth in those rural places where stops were planned, at least based on the experience of other similar projects, including Madison itself
- Advertisement about Wisconsin joining the 21st Century with a high-speed rail which would probably bring in new business to outlying areas that would combine the low cost of rural construction and operation combined with access to population centers for employees (Wisconsin now ranks 37 out of 50 in job creation.