Thursday, July 5, 2012

Wisconsin High Speed Rail Fiasco Costs US Taxpayers $14.6 Million

Wisconsin taxpayers are getting a bailout from the rest of the nation as the federal government just paid the state $14.6 million as reimbursement for costs sunk into the high speed rail contracting process the current Governor, Scott Walker campaigned against and terminated once he was elected. That payment from Washington D.C. won’t make up for all the lost Wisconsin taxpayer dollars going down the drain because of the Walker administration policy reversal, however.

Under Governor Jim Doyle, Wisconsin won a federal grant of $810 million to build a stretch of 110 m.p.h. high speed rail line between Milwaukee and Madison, and trains to run on the line, as a part of a proposed high speed upgrade of the Chicago to Minneapolis Empire Builder Amtrak route. When Governor Walker pulled out of that deal, the feds clawed back all but $2 million of the $801 million grant, but Wisconsin had already spent $9 million of the money, and was on the hook for another $5 million in cancellation fees and breach of contract claims by consultants and other private interests involved in the project. While the federal payment of $14.6 million covers those sunk costs, there are going to be other significant cancellation expenses Wisconsin taxpayers will have to pay for all by themselves.

The state has contracted with Spanish train builder Talgo to pay $71.8 million for high speed rail cars to run on the high speed Milwaukee to Madison line, and Talgo is already building and testing the cars in a factory it set up in Milwaukee expressly for that purpose. Wisconsin Transportation Secretary Mark Gottlieb says he has no use for those trains now, and he has canceled a $5.8 million per year maintenance contract with Talgo to keep the useless trains running. He is also backing out of a deal for state construction of a $63 million maintenance facility Talgo was to use in fulfilling the upkeep obligations. Talgo is threatening a lawsuit over these cancellations, and meanwhile continuing to test the now useless trains for delivery.

The $810 million federal grant Governor Walker turned down would have paid all these costs, but now Wisconsin is exposed to these liabilities all by itself. Walker’s “money saving” decision to squash high speed rail development in his state may cost a lot more than he says it was going to save.

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