Latest posts by Wendell Cox (see all)
- Land Regulation Making Us Poorer: Emerging Left-Right Consensus - January 10, 2016
- Declining Population Growth in China’s Largest Municipalities: 2010-2014 - December 31, 2015
- White House Economist Links Land Use Regulations: Housing Affordability and Inequality - December 3, 2015
Southern California residents can easily reach Las Vegas. They can pile the kids in the car for a weekend jaunt and be there in from 4 to 5.5 hours, so long as they avoid evening rush-hours. They park for free. The trip home takes no longer, except for a few weekend hours. The car is by far the least expensive way for a household to travel to Las Vegas. Driving also requires no contribution by taxpayers, because people provide their own cars, pay for their operation and have built the interstate highway system with federal user fees (gasoline taxes dedicated to road construction and maintenance).
Those who want to get there more quickly can fly. There are frequent flights from five airports in Orange County, the Los Angeles basin and the Inland Empire. As in the case of tourists who drive, tourists who fly pay their own way, paying for the purchase and operation of the airliners and for the airports from related taxes and fees. Taxpayers pay a miniscule amount for the air traffic control system, which serves not only commercial flights, but private aviation and the military.
For those in less of a hurry there are the increasingly competitive nonstop bus services, with fares starting as low as $5. The bus trip generally takes 5.5 hours or less from Los Angeles or Anaheim. Riders have access to high-speed wireless Internet services. Like driving and flying, customers pay their full fare, with no contribution from taxpayers. Additional options, both trains, are also being planned. The first, the “Las Vegas Railway Express,” would be an adults-only party train on weekends from Fullerton. The train would be operated under contract by Amtrak and run over Union Pacific tracks. Unlike other services operated by Amtrak, this one would be paid for by tourists, with no taxpayer assistance.
There are also plans for a high-speed train (Xpress West) that would take tourists two-thirds of the way from Southern California to Las Vegas. Yes, “two-thirds of the way.” The train would operate from Victorville, requiring people to drive more than 75 miles from Anaheim or Los Angeles to more than 100 miles from southern Orange County or the San Fernando Valley to get to the train. This would make the train unique. None other in the world requires driving such a long distance to complete such a short train trip. Demand for the train is supported by illusions of nightmarish delays on Interstate 15. Yet the maximum delay on the recent Labor Day weekend was only 60 minutes and 30-minute delays were encountered for only seven hours of that day.
The train would also be unique in requiring nearly all its financing from taxpayers. The project requires a loan from federal taxpayers of more than $5 billion, which is to be repaid out of passenger fares. The project is not sufficiently creditworthy to justify conventional, commercial finance.
There are manifold problems with the plans that have been made public. To start with, the ridership projections are stale, having been produced before the Great Financial Crisis. Even those projections appear consistent with international research showing that projects tend to wildly inflate ridership and revenue figures to obtain project approval.
The result, as our Reason Foundation report suggests (“The XpressWest High-Speed Rail Line from Victorville to Las Vegas: A Taxpayer Risk Analysis“), is a strong probability that the train will not earn enough money to repay taxpayers. In a bankruptcy, the taxpayers could lose all of their money, just as in the case of Solyndra, where a federal loan guarantee and a flawed business model produced a “bounced check” for taxpayers of a half billion dollars.
Why is any taxpayer involvement needed to finance tourists traveling to Las Vegas. It is the nation’s second most popular tourist destination and virtually everyone who travels there pays their own way, without taxpayer subsidy.
It is long past time for prioritizing federal commitments. The nation has no credible plan for keeping its commitments to retirees and government employee pension funds, other than borrowing more money – a strategy that is unsustainable in the longer run. The federal government has no business speculating on high-speed rail with taxpayer funds.
The proposed federal loan should be declined. There will still be plenty of planes, automobiles, buses and maybe a train. No one will be denied their travel to Las Vegas.
Wendell Cox heads Demographia, a public-policy consulting firm in the St. Louis area. He is a policy advisor to The Heartland Institute.
[First published in the Orange County Register.]