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Justus Armstrong: Expanded rail service not cost effective

The Oregon Department of Transportation recently published its Tier 1 Draft Environmental Impact Statement for the Oregon Passenger Rail Project, which plans to expand and improve passenger rail service between Eugene and Portland and increase Amtrak Cascades rail service from two to six round trips per day.

Out of two potential build alternatives — Alternative 1, which would improve the existing Amtrak route, and Alternative 2, which would create a new route along

Guest Writer

Justus Armstrong is a research associate at the Cascade Policy Institute, Oregon’s free-market public policy research organization.

Interstate 5 between Springfield and Oregon City — ODOT has identified Alternative 1 as the preferred option.

Many are optimistic about improved passenger rail options, but Alternative 1 would require $870 million to $1.025 billion in capital costs. Is the project worth such a high price?

One of the stated goals is to implement an already cost-effective project. But based on ODOT’s own testimony, it appears Amtrak is actually becoming less cost effective.

In a 2017 legislative report on passenger rail performance, ODOT reported, “The gap between revenue and costs continues to increase,” thus, “It is likely the costs to operate the service will increase in the coming years.”

The EIS estimates annual operation and maintenance costs under Alternative 1 would run around $48 million — a sharp increase from the $17.75 million ODOT pays Amtrak annually to support the existing rail service. And the EIS also admits this is a conservative estimate based on the assumption Amtrak payments will triple as the number of round trips triples.

Currently, ODOT subsidizes each one-way Amtrak ride for about $118. And with the cost of Amtrak operations already rising, expanding the service risks puts an even greater burden on Oregon taxpayers.

If the improved passenger rail service were to achieve the 89 percent increase in ridership hoped for by 2035, ODOT’s subsidy would be distributed more broadly — among an expected 646,000 annual rail passengers.

Theoretically, this could help make ODOT’s investment worthwhile. More Amtrak passengers would mean more ticket revenue, lessening the gap between revenue and operating costs.

However, ODOT’s ridership projections are largely based on the hope that population increases in the Willamette Valley would spur “unprecedented ridership increases.”

To put this in perspective, only 105,000 of the Willamette Valley’s 2.8 million residents were riding Amtrak in 2015 — less than 4 percent. Living up to the ridership goals in the EIS would thus require a significant shift in transportation choice towards intercity passenger rail not yet seen in Oregon.

The draft EIS does not include projections for expected revenues and fare recovery, so exact measures of potential cost-effectiveness have not yet been nailed down. Unless fare recovery is significantly improved, though, Oregon will continue to lead the nation in passenger rail subsidies and triple already wasteful operating expenditures.

The up to $1 billion in construction and design costs would have to be paid from state and federal funds. ODOT’s passenger rail plans are likely motivated by prospects of broader eligibility for federal funding. But any advancements in rail service are bound to be a costly investment for Oregonians nonetheless.

Public transportation expansions are often offered as solutions to highway congestion. However, the EIS for the passenger rail project admits neither build alternative would alleviate Oregon’s congestion issues, stating the potential reduction in the number of vehicles on I-5 between Eugene and Portland “would not be significant enough to affect or improve congestion.”

In fact, the EIS states the project could even exacerbate congestion by increasing vehicle activity on surface streets near Amtrak stations. So while expanding passenger rail service might benefit a small portion of the Willamette Valley population, it would do little to address Oregon’s broader transportation challenges.

Instead of expanding Amtrak service, ODOT could plan on gradually increasing the frequency of Thruway bus service over the next 20 years.

The No Action alternative already includes plans to increase intercity bus service between Eugene and Portland to seven round trips daily, so why not focus on further increasing bus frequency rather than replacing it with a more costly rail alternative? That way, transportation service can be more flexibly adjusted to transportation demands without the heavy capital investment and subsidies that expanding passenger rail would require.

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