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Cost of rail, in relation to ridership, questioned by observers

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(The Center Square) – State leaders are touting record train ridership for North Carolina to justify planned expansions in coming years, but observers question whether taxpayers are getting their money’s worth.

The state Department of Transportation this week highlighted record ridership of 641,000 passengers on NC By Train’s passenger service between Raleigh and Charlotte in 2023, a figure that’s up 23% from the record set last year of 522,000.

“We’re pleased that NC By Train continues to grow and be an important transportation option for North Carolinians,” Transportation Secretary Joey Hopkins said in a prepared statement. “Based on the successes of the last two years, we are continuing to explore opportunities to further increase frequencies and expand service to communities across the state.”

Those plans are fueled by a recent $1.1 billion federal grant to design and build the first segment of a high-performance passenger rail line between Raleigh and Richmond, Va., as well as $3.5 million in federal grants to develop seven other corridors around the state.

Republican U.S. Sen. Thom Tillis, who helped negotiate the funding through a 2021 infrastructure law, described the investments as “transformational,” while Democratic Gov. Roy Cooper believes the S-Line “is a critical project that will provide fast, frequent and reliable service connecting North Carolina, Virginia and the Northeast.”

Mayors of several towns along potential expansion corridors have cited the potential to reduce congestion, while increasing access for residents to destinations such as the Charlotte airport and Bank of America Stadium.

“We envision a future with modern, efficient and sustainable passenger rail providing reliable and comfortable travel between North Carolina and the Northeast,” Hopkins said when the state announced the federal S-Line grant in December.

It all comes at a cost to taxpayers that’s not widely reported, both through baseline funding in the state budget and federal cost matches that will greatly increase the annual expense. The General Assembly appropriated $45.2 million for both the current budget year and next for rail. Cooper’s recommended budget stated “match funding of $78 million per year over five years is required to leverage $2.6 billion in federal investment” for the S-Line.

“Definitely there are some questions about the S-Line and if that’s a good use of tax dollars,” Marc Joffe, state policy analyst at the Cato Institute, told The Center Square.

In a recent analysis of the project, Joffe found the initial rail lines for the S-Line average about $70 million per mile. Extrapolated across the full 162-mile route between Raleigh to Richmond the entire project could cost as much as $11 billion, he said.

“Eleven billion was my estimate because I couldn’t get a number from NC DOT,” Joffe said, pointing to questions about transparency with taxpayers. “I think it’s important they’re more honest with the cost.”

While expanding intercity rail in a growing state “could make a lot of sense,” Joffe questioned whether the government was best positioned to do that at a reasonable cost. North Carolina is the nation’s ninth-most populous at 10.8 million.

“Theoretically, rail could be part of the solution, the issue is government agencies don’t do things very efficiently,” he said. “The question is can they build and operate these systems affordably.”

“I would be very dubious about that,” Joffe said.

Baruch Feigenbaum, managing director of transportation policy at the Reason Foundation, agreed taxpayer funding for rail is “not transparent” and “somewhat political,” noting it’s unlikely use will justify the spending, particularly on the S-Line.

“That $1.1 billion grant for the high-speed rail is obviously a tremendous amount of money for a line … between Raleigh and Richmond. That’s a very small number of people using it for the overall cost,” he said.

The same goes for the system in general, Feigenbaum said.

“North Carolina has got basically 11 million people, so I don’t think 641,000 passengers … is all that many, considering the number of trains they run between Raleigh and Charlotte,” he said, adding that commuters who use bus lines or drive greatly dwarf train ridership.

Investing in “the ones that don’t require subsidies is probably the better option,” Feigenbaum said.

“I just think in the context of what it costs, it’s not the best investment the state could be making,” he said. “If there was truly a big enough demand (for rail services), … the government wouldn’t have to subsidize it.”

Feigenbaum also raised concerns about the precedent set by the federal funding, with the S-Line grant representing the largest federal investment in transportation in the state’s history.

“The states in recent history have never had as much money for these passenger rail project then they’re getting now. That’s causing them to add services that are more questionable than they’ve added in the past,” he said. “I think it sort of creates a legacy of greater federal spending that’s really not economically justified.

“It might be record ridership, but it’s also record spending,” Feigenbaum said.

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