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Monday, August 23, 2010

Stopping high-speed rail would be costly for state

From an article by Andrew Weiland in BizTimes.com:

Although U.S. Department of Transportation Secretary Ray LaHood insists that high-speed rail is inevitable in the state, Wisconsin Department of Transportation officials indicate a new governor could stop the $810 million project planned between Milwaukee and Madison. However, it would be costly to do so.

The Republican candidates for governor in Wisconsin, Milwaukee County Executive Scott Walker and former Congressman Mark Neumann, have pledged to stop the high-speed rail project if elected.

“As governor, I will stop this train dead in its tracks,” Walker said.

“This is an Obama wasteful spending boondoggle that I will stop immediately in its tracks as governor,” Neumann said. . . .

Although the federal government is providing the construction funds for the Milwaukee-to-Madison high-speed rail project, the state Department of Transportation, and not the federal government, is in charge of the project, said John Oimoen, passenger rail program manager for the Wisconsin DOT.

A spokeswoman for the U.S. DOT declined to directly answer a question asking if a future governor could cancel the high-speed rail project in Wisconsin.

“We’re not going to speculate on hypothetical situations,” said U.S. DOT spokeswoman Olivia Alair.

If a new governor wants to stop the high-speed rail project, the federal funds would have to be sent back to the federal government. By the time a new governor is sworn in, in January, the state will have allocated more than $100 million in engineering and construction contracts, Oimoen said. Construction is expected to begin in October on “land bridges” over wetland areas west of Watertown, he said.

A new governor could direct the Department of Transportation to cancel engineering and construction contracts. However, the state would have to pay a “significant” amount of money to contractors for claims that they would make for their equipment, material and labor costs incurred on their cancelled projects, said Paul Trombino, division operations director for the state DOT.

“I’m not saying it can’t be done,” Trombino said. “We have the ability to get out, but there could be significant costs to get out of a contract.”

The state has a $2.5 billion budget deficit, which could make it difficult to find funds to reimburse the federal government for money already spent on the high-speed rail project by January when the new governor takes office, and to pay the claims filed by contractors for the cancelled contracts.

“In the short term, it creates a major budget problem if we just decide we’re going to stop everything and scramble to send the funds back to Washington that we have already spent,” said state Rep. Jon Richards (D-Milwaukee). “I think it will be very difficult to cancel the project, and I think it would be unwise to do so.”

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