PolitiFact Florida | St. Petersburg Times
Sorting out the truth in state politics

PolitiFact: Gov. Rick Scott says rail line would have cost state taxpayers $1 billion to build

Though Gov. Rick Scott killed the Tampa-to-Orlando high-speed rail line months ago, he continues to get asked about the decision when he crisscrosses the state.

He says it wasn't quite the deal everyone thought it was.

"The federal government, (they said) I'm going to give you $2.4 billion — that sounds nice, right?" Scott told Tampa's local CBS affiliate WTSP this month.

But, "You've got to put up a billion dollars to finish the project."

Scott made the point during a meet-and-greet with Tampa Bay Buccaneers coach Raheem Morris after Morris said he liked rail.

Readers picked up on the line and asked PolitiFact Florida if Scott got Florida's share of the high-speed construction correct.

A 2010 fact sheet from the Florida Department of Transportation said that the federal government would pay for the bulk of the rail project — about $2.4 billion. The state's portion, according to the state DOT, would be $280 million.

So why did the state say the rail line would cost the state $280 million to construct but Scott said $1 billion?

The answer is because Scott's source of information isn't state transportation officials. It's the libertarian Reason Foundation.

On Jan. 6, 2011, the Reason Foundation released an analysis of Florida's rail project, which concluded capital costs to build the line would be higher than anticipated and ridership would fall short or projections.

Scott relied on the Reason analysis in killing the high-speed rail project a month later.

While the federal government had committed $2.4 billion and the state $280 million, "This report assumes that any cost above $2.7 billion will be borne by Florida taxpayers."

The Reason analysis goes on to cite research by European academics who looked at 258 projects in various countries over 70 years and found that cost overruns occurred in 90 percent of the projects.

"If the Tampa-to-Orlando high-speed rail line experiences cost escalation typical of international high-speed rail projects, it will cost between $0.54 billion and $2.7 billion more than projected," the Reason report states. "Based on averages, most likely the overrun would be about $1.2 billion, all of which would be the responsibility of Florida taxpayers."

The analysis is right to point out that many other rail projects experienced cost overruns. But there are reasons its methodology and objectiveness are suspect. Consider:

• The author of the study, Wendell Cox, is a known rail skeptic, and Robert Poole, a Reason Foundation director whose name was on the report, served on Scott's transition team for transportation issues.

• Much of the expectation of cost overruns is based on a list of 258 projects studied by European academics. But those projects are not just rail projects. The study includes bridges, tunnels and highways. In fact, of the 258 projects, only 58 (or 22 percent) are actually rail projects.

• The $1.2 billion overrun estimate is created simply by assuming the Florida rail project will cost 45 percent more than anticipated. How is that assumption made? By calculating the average overrun in 258 transportation projects considered. There is no analysis to suggest Florida will experience an "average" cost overrun compared with the other projects.

• The study fails to account for the current low price of construction and materials given the problems in Florida's economy.

• And, most important, the study assumed Florida taxpayers would assume the cost of all construction overruns, when that likely wasn't true.

To satisfy state legislators, who were unwilling to spend additional state taxpayer dollars on the high-speed project, Florida transportation officials promised in early 2011 that any contract to build the rail line would include a guarantee that Florida wouldn't pay for construction overruns.

Kevin Thibault, the Florida Rail Enterprise's executive director, said in a Jan. 11 Senate committee meeting that private companies — not state taxpayers — would be responsible for overruns.

U.S. Transportation Secretary Ray LaHood also said that private companies, not the state, would be required to pay for cost overruns in a Feb. 16 statement.

Ultimately, bids were never sent out, so we can't say for certain that DOT officials would have included the overrun guarantee. And we don't know if private companies would have agreed to the deal. But we do know legislators made it clear they would need a guarantee to move forward with the project.

Our ruling

If high-speed rail had moved ahead in Florida, Scott said the state would have had to pay $1 billion to build it.

Scott bases his claims on hypothetical cost overruns from a suspect study written by a libertarian think tank. While the study correctly points out that other transportation projects have experienced cost overruns, there are several flaws with the study.

Most important, the study assumes that the state would pay for cost overruns.

But it ignores that both the state official in charge of the rail project and the U.S. Department of Transportation secretary said that the state wouldn't be liable for overruns.

In the end, the state's share to build the line would have been capped at about $280 million. We rate Scott's claim False.

The statement

High-speed rail would have cost Florida taxpayers $1 billion to build.

Gov. Rick Scott, Aug. 5, in TV interview

The ruling

Scott bases his claims on hypothetical cost overruns from a suspect study written by a libertarian think tank. While the study correctly points out that other transportation projects have experienced cost overruns, there are several flaws with the study. We rate Scott's claim False.

The statement

High-speed rail would have cost Florida taxpayers $1 billion to build.

Gov. Rick Scott, Aug. 5, in TV interview

The ruling

Scott bases his claims on hypothetical cost overruns from a suspect study written by a libertarian think tank. While the study correctly points out that other transportation projects have experienced cost overruns, there are several flaws with the study. We rate Scott's claim False.

PolitiFact: Gov. Rick Scott says rail line would have cost state taxpayers $1 billion to build 08/15/11 [Last modified: Wednesday, August 17, 2011 12:19am]

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