Tag Archives: high-speed rail

High-speed rail plans meet opposition in southeast Minnesota

Opposition is growing in rural southeastern Minnesota to proposals for a high-speed rail line connecting Minneapolis and Rochester.

Rochester civic leaders see high-speed rail as a way to draw thousands of new workers to the Mayo Clinic and other big employers in their region.

But people living along the U.S. Highway 52 corridor see problems and costs with the Zip Rail project, Minnesota Public Radio News reported. Trains on the proposed line would speed along at more than 150 mph, cutting the roughly 90-minute ride from Rochester to the Twin Cities in half.

“Our farms are important and our industry is important. And nobody once notified me and sent me a letter and said, ‘Hey, we’re looking at this plan,’” said Heather Arndt, who lives on a 35-acre farm near Goodhue.

Arndt last year joined with other neighbors to form a grass-roots group called Citizens Concerned about Rail Line, which opposes any form of high-speed rail along the corridor. The group’s members are worried about potential loss of farm and taxable land, loss of traffic that supports local business and the lack of any stops between Rochester and the Twin cities.

Rural southeastern Minnesota should not have to bear a cost for Rochester’s multi-billion dollar Destination Medical Center development plan, and the 30,000 to 40,000 workers the development plan is expected to draw over the next 20 years, Arndt contends.

“If their choice is to take a great job opportunity in Rochester but they prefer to live in the Cities, that is their personal choice,” Arndt said. “It should not be the responsibility, the problem or (to) the economic disadvantage of people who live between the two places to have to pay for that.”

Traffic on Highway 52 has grown steadily. According to a 2010 corridor study by the Minnesota Department of Transportation, volume on the highway could nearly double to about 87,000 vehicles a day by 2025, up from 47,000 in 2000.

Earlier this year, officials with the state Transportation Department released eight corridor options as well as Zip Rail’s potential social, economic and environmental impacts. Now, the agency is wrapping up an environmental review of the rail line due out at the beginning of next year. MnDOT paid for the $2.3 million study mostly with state funds.

Private investors are pushing a second rail option. The North American High Speed Rail Group proposes an 84-mile elevated line to be built over Highway 52. The line would run along the median, which would be the least disruptive to the region’s farming, said Wendy Meadley, the group’s chief strategy officer.

The privately held firm based in Bloomington says it has backing from undisclosed U.S. and Chinese investors and expects to raise $4.2 billion for the project. Once it receives a permit from MnDOT early next year, the group will have 120 days to complete its pre-development study.

Analysis: Taxpayer cost for Walker’s breach of contract with trainmaker rises to $50M

Wisconsin taxpayers are on the hook for a modernizing rail transportation project Scott Walker nixed when he took office as governor, breaking a contract that ex-Gov. Jim Doyle’s administration entered into with the Spanish trainmaker Talgo. 

Under terms of a settlement made recently in a lawsuit that Talgo filed against the state, Wisconsin will pay $9.7 million to Talgo in addition to the $42 million it’s already paid the company. The total bill taxpayers must pay for trains the state never received or used is $50 million.

Talgo had originally sued the state for nearly $66 million.

Doyle and the state’s then-Democratic Legislature agreed in 2009 to purchase two new train sets from Talgo. They were to be used for Amtrak’s popular Hiawatha line between Milwaukee and Chicago, as well as for a high-speed rail project between Milwaukee and Madison.

In addition to agreeing to purchase the trains, the state had entered into a 20-year maintenance agreement to service the trains, a deal to provide a maintenance facility and an option to purchase two additional train sets.

The deal fell victim to politics, as the new governor sought to burnish his credentials as an “anti-big government” conservative. The rail project was tied to $810 million in federal stimulus money to help pay for it, but Walker rejected the federal funding, depicting it as part of a scheme to foster state dependency on Washington.

Still, Talgo continued building the train sets that the state had agreed to purchase. In January 2012, Talgo notified the state they were ready for delivery, but the Wisconsin Department of Transportation refused to accept them. In November 2012, Talgo canceled its purchase contract with the state.

According to the settlement, Talgo will try to sell the two train sets it built for Wisconsin to another buyer. If successful, the train manufacturer will give 30 percent of the sale price to Wisconsin. 

But Nora Friend, the company’s vice president of public affairs and business development, told Milwaukee Business Journal that it would be difficult to find a buyer. Part of the problem is that the trains were not built to meet federal specifications, because they were paid for by the state, according to MBJ.

“We are hopeful we will find a state that is actually open to doing business and actually honors their contracts,” Friend told the publication.

Politics over people

Walker’s critics say the rejection of federal money and the subsequent loss of jobs and high-speed rail was the first in a series of destructive economic decisions the governor made.

Walker’s public argument at the time was that the project would eventually cost the state millions in maintenance fees.

But advocates for the project claimed it was potentially a vital economic development engine that would create jobs and spur new business growth along the rail line, as it has in other regions that have modernized rail.

In light of the Talgo deal, critics charged Walker with hypocrisy when he sought to borrow more than $1.3 billion for new highway projects in the 2015–17 biennial budget. At the time, Walker argued that the road construction would help create jobs. That’s something Walker has said the government should not be in the business of doing.

Walker also has been criticized for saying yes to the considerable federal funds that the state receives for road construction while turning down funds for other forms of transportation. He enjoys major financial support from roadbuilders and donors whose wealth is tied to the fossil fuel industry, leading to accusations that his transportation decisions are being made on their behalf rather than that of the state’s residents. 

Some of the highway projects Walker supports were found to be unnecessary, according to an independent audit of traffic flow patterns commissioned by 1000 Friends of Wisconsin.

A court decision earlier this year denied federal funds for a project to widen Highway 23 due to faulty traffic-flow projections from WisDOT. In response, the Republican-led Legislature included an item in the budget requiring WisDOT to reevaluate and justify its methods of traffic projections.

Walker vetoed that item, which watchdog groups said could have saved Wisconsin taxpayers billions of dollars.

Major missteps cost the state jobs

Scott Walker ran for governor in 2010 on the promise to create 250,000 jobs using the core Republican economic strategies of cutting taxes, easing environmental and consumer regulations and reducing government spending.

As a result of those actions, however, the state’s economic performance in comparison with the rest of the nation’s has been dismal by most measures.

“Almost to the month since Walker took office, Wisconsin has fallen behind the nation in job growth,” said Jack Norman, former research director at the Institute for Wisconsin’s Future, a progressive but nonpartisan group whose mission is to educate the public about state policy issues.

Walker and his supporters are touting the state’s shrinking unemployment numbers as evidence that he’s succeeded in boosting Wisconsin’s employment market. But experts say that figure is misleading, because large numbers of people have simply stopped looking for work. People who were pushed off the unemployment rolls when Republicans reduced the length of time they qualify for benefits helped to drive the unemployment figure down, said Jennifer Epps-Addison, executive director of Wisconsin Jobs Now. 

Epps-Addison also pointed out that the unemployment figures fail to reflect the thousands of Wisconsinites who went from decent-paying jobs to service-sector jobs that pay so poorly that some cannot survive without taxpayer-supported public assistance. Ironically, while Republicans in Wisconsin and elsewhere condemn social welfare programs for “fostering dependency,” they award large tax breaks to corporations that don’t pay workers enough to keep them off food stamps and other public assistance programs. 

Progressives refer to that as “corporate welfare.”

Admittedly, the governor of a state and the mayor of a city actually have much less control over the economy than their promises and boasts suggest.

“The research would show that overall state and local policies might have an effect on the margins of the economy, but they’re not a real driver,” says Gary Green, professor at UW–Madison, whose research and teaching focuses primarily on community and economic development. “About 10 percent of business growth might be attributed to state or local policies. But we’re driven more by what’s happening in the global economy, especially in Wisconsin, where we’re so much more driven by manufacturing than other states.”

Still, “What governors can do is a little bit of tipping at a crucial time,” Norman said. The big decisions that Walker has made on the economy have tipped it in the wrong direction, he added.

Following is an assessment of some of the critical missteps that Walker made and what Democratic gubernatorial candidate Mary Burke said she would do differently.

Public-spending cuts

In what his detractors branded as a scare tactic, Walker falsely proclaimed during his 2010 campaign that Wisconsin was bankrupt. The state faced a projected budget shortfall but was nowhere near being out of funds — or funding.

Walker called his first budget a “budget repair bill.”

In fact, Walker enters into his re-election campaign after submitting a biennial budget last year with a projected shortfall of $505 million, according to the nonpartisan Legislative Fiscal Bureau.

The real goal of Walker and his tea party backers was — and is — to starve the government, which they contend saddles business activity with red tape. Walker’s inflammatory rhetoric was used to justify massive government spending cuts, which he claimed were needed to balance the state’s budget.

At the same time, Walker instituted tax cuts that disproportionately benefited the wealthy corporate interests that contributed massively to his campaign. He promised the cuts would stimulate jobs.

Walker’s spending cuts, which Democrats criticized as draconian, succeeded in yielding a budget surplus of nearly $1 billion last year. That’s more than he expected, and his supporters are trumpeting it at as Walker’s greatest achievement.

But the cost of that surplus was jobs, according to economic experts. In taking money out of the paychecks of the state’s 300,000 public workers, Walker took a massive amount of money out of Wisconsin’s consumer economy.

“Walker tripped us when we were trying to get back up,” Norman said. “It’s not like a factory shutdown that has an impact in just one community. You’ve got public school (workers) everywhere in Wisconsin, so the cuts saturated the state.”

“Some of the states that did not make some of these severe cuts seem to be doing better than Wisconsin right now,” Green said. 

High-speed rail and energy

One of the first things Walker did as governor was to renege on a deal already in the works to build a high-speed rail line connecting Milwaukee and Madison. He returned $810 million in economic stimulus money that the federal government had earmarked for the project.

The Spanish train manufacturer Talgo, which had built a manufacturing facility in the Milwaukee area to support the project, pulled out of the state and sued it for about $66 million, claiming breach of contract. 

Burke and others said the train would have brought good jobs to the state, along with increased economic activity along its route.

“In the short run, it would have created a lot of jobs and investment,” Green said. “If you look at these projects around the country, they do support a lot of development. The (Walker) administration thought it would take too much support from the state to maintain it.”

Walker is believed to have rejected the money to shore up his anti-government cred with the tea party in anticipation of a 2016 presidential run. While his action gained national headlines and the gratitude of his supporters in the fossil fuel industry, there’s no question that it hurt the state economically.

“We need a governor who will fight to bring Wisconsin taxpayer dollars back to Wisconsin,” Burke said, “particularly when they would spur economic development and job creation.”

In addition to blocking high-speed rail, Walker also prevented alternative-energy projects, especially wind energy projects, from moving forward. The alternative-energy movement not only has the potential to lower the state’s own energy costs but also is considered one of the most promising areas for creating the so-called “jobs of the future.”

Walker has never stated his reason for opposing wind and solar energy, but a number of his largest donations have come from the fossil fuel industry.

Medicare expansion

Norman said Wisconsin has traditionally ranked poorly compared with other states in getting back the federal taxes that citizens of the state pay. But when Walker turned down $100 million in Medicaid expansion money from the federal government, he became an instant hero to the tea party at the cost of health care for tens of thousands of poor Wisconsinites.

That action once again turned down jobs for the state.

Jobs in health care pay relatively well, much better than service-sector jobs. Critics say that refusing the Medicaid money cost thousands of potential jobs as well as increased economic activity that would have created other jobs. 

Education cuts

When Walker declared that Wisconsin was “open for business,” he seemed to expect companies to relocate to the state to take advantage of lower corporate taxes, a poorly paid, non-union workforce and a weakened regulatory environment.  But large companies of the sort he sought seldom relocate at all, and those that do are looking for a skilled, educated workforce and the kind of quality-of-life perks that attract the best workers, according to experts.

“Higher graduation rates and having a higher percentage of your workforce with degrees lends to creating a strong economy,” Burke said.

But, instead, Walker took a hatchet to public education in the state. His first budget stripped $2.6 billion from education at a time when the state could have taken advantage of high unemployment to re-educate workers, according to Norman and others. His cuts on a per-student basis were the nation’s highest.

An especially disastrous decision Walker made was cutting funding to technical colleges by 30 percent. Wisconsin already lagged behind the nation in terms of having workers versed in the latest production technology, Norman said. Walker’s cuts made the state even less attractive to manufacturers and knowledge-based industries, according to him and others.

“It’s absolutely stupid to defund something that’s helping manufacturing,” Norman said. “You should use your tax dollars to supporting training people with a specific job in mind. This is targeted job assistance.”

Norman said that across-the-board tax cuts can’t possibly stimulate job creation in the same way that targeted job assistance can.

Interestingly, Minnesota raised taxes by $2 billion beginning in 2011, the same year that Walker cut them by $1 billion. Minnesota used the additional money to invest in education and job creation.

Despite Wisconsin’s cuts and Minnesota’s increases, not one Minnesota business relocated across the border. In fact, from March 2012 to March 2013, private-sector jobs increased in Wisconsin by 1.1 percent, ranking the state 34th in job creation, according to the U.S. Bureau of Labor Statistics. Minnesota ranked 16th, with 2.1 percent job growth during that period.

The WEDC

When Walker took office, he eliminated the Wisconsin Department of Commerce, which Burke headed under Gov. Jim Doyle at a time when the state had 80,000 more jobs than it does today. The office was charged with helping business startups, an area in which Burke is considered a world-class expert: She set up sales and distribution operations for Trek Bicycle Corp., a company founded by her father, in five European countries and oversaw operations in seven nations.

Walker replaced the commerce department with the Wisconsin Economic Development Corporation, a public-private partnership that’s  been one of the highest-profile disasters of Walker’s administration, plagued by turnover, outrageous cronyism and the loss of millions of taxpayer dollars, some of which simply disappeared. 

“Under Walker, Wisconsin ranks 48th in new businesses created,” Burke said. “At a time when entrepreneurs and small businesses need access to capital, WEDC failed to get $35 million designated for business loans out the door. That’s unacceptable.”

Burke said even if the agency had been staffed by professionals, it didn’t have adequate funding to handle the magnitude of the economic crisis in the state. She would have allocated $200 million, she said. She also would have targeted that money to go to businesses with the greatest potential for creating jobs.

“The specific industries and businesses I would target vary by region,” Burke said. “Our state is best viewed through its various regional strengths — for example, biotech and health information in south central Wisconsin, clean water research and development in Milwaukee and forestry products and tourism in the north.”

Overall, Burke would promote investment in high-tech and alternative energy, particularly solar energy.

“As recently as 2010 we were keeping pace when it came to developing and utilizing solar power, but the last three years have seen a precipitous decline here in Wisconsin, while the rest of the country continues to move forward,” Burke said.

Sales tax increase

Walker recently floated the idea of eliminating the state’s income tax and increasing the sales tax to make up for the revenue loss. The effect would be to make Wisconsin sales taxes the highest in the nation — more than 13 percent. 

Burke said this approach “would kill jobs and raise taxes on 80 percent of Wisconsinites.”

“Taking money out of the pocket of the families whose purchasing power drives our economy to give another tax break to those at the top doesn’t make sense — it would devastate businesses near the state’s borders and potentially cause businesses to leave the state,” Burke said. 

Norman said Wisconsin tax code has been historically regressive, but the sales tax idea is the most regressive he’s ever heard. “Burke should go berserk on Walker for floating that proposal,” he said. 

Are you better off?

During a 1980 presidential debate with incumbent President Jimmy Carter, Ronald Reagan famously instructed voters to, “Ask yourself, ‘Are you better off today than you were four years ago?’”

Voters felt the answer was no, and Carter lost his re-election bid.

Democratic gubernatorial candidate Mary Burke might consider asking Wisconsin voters the same question in her race to depose Republican Gov. Scott Walker in November. Despite the strained spin that Walker and his supporters are frantically applying to his record, only the wealthiest of voters have received a boost under his administration. The main question standing in the way of a Burke victory is whether she can inspire enough of those who’ve suffered under Walker’s policies to vote in a non-presidential election year, because the wealthy and those who identify with them are likely to turn out for Walker in record numbers.

Burke is a wealthy businesswoman, and downtrodden Wisconsinites might look at the two candidates and wonder, “What’s the difference?” That perception is not going to compel them to head to the polls in November. Political analysts concur that Burke and her campaign must overcome  that image in order to win.

Scott Walker’s massive economic failure

Scott Walker was elected governor on the promise that he’d create 250,000 jobs in Wisconsin by 2015. 

But Walker’s impact on job growth in Wisconsin has been disastrous. Under his tenure, Wisconsin has lagged consistently behind the rest of the region. The state has lost 31,027 jobs since Walker and GOP majorities came into office – the second worse job creation record in the nation (behind New Jersey).

As we reach Walker’s mid-term, let’s review how he brought us to this point. Walker began his gubernatorial tenure by turning down $800 million in federal stimulus money to bring high-speed rail to Wisconsin. That action cost jobs and infrastructure improvements that would have contributed to long-term growth.

In turning down the money, Walker appeased his tea party base, which opposes all government spending. His excuse to everyone else was that eventually the state would have to pick up a portion of the rail’s operating costs. He failed to consider, however, the jobs and economic activity it would have generated, including contributions to the tax base.

In response to Walker’s action, the Spanish train-manufacturing company Talgo abandoned a facility in the Milwaukee area that was projected to add up to 600 jobs. Talgo is now suing the state for breach of contract and the company refuses to turn over new trains that have already cost the state $42 million.

Walker’s economic management has only gone downhill from there. Huge cuts to public sector employment have significantly reduced state and local governments’ budget shortfalls as intended, but they’ve also had a crippling ripple effect throughout the state’s economy, lowering the tax base and causing tremendous suffering.

In a move that was praised by the Milwaukee Journal Sentinel and corporate-right groups, Walker dismantled the Department of Commerce and created the Wisconsin Economic Development Council, a public-private sector partnership that was supposed to give loans to promising businesses in Wisconsin to help them grow. Walker staffed the council with unqualified cronies with no background in the field.

WEDC’s mismanagement and complete lack of public oversight has so far resulted in $9 million in defaulted loans and the unexplained disappearance of $56 million. That money came from gas taxes, the federal mortgage settlement that was paid to the state and other public funding sources. WEDC has also been charged with bid-rigging schemes to give no-strings handouts to Walker’s political supporters and cronies. He’s fine with spending public money as long as it’s given to his friends without any accountability. 

Corporate right donations have successfully propagandized the public to believe Walker’s policies have been an economic success, even as Wisconsin recorded a net job loss from January to November 2012. Republicans, who now once again have total control over state government, are currently focusing their efforts on devising strategies to make it more difficult for traditional Democratic voters to cast ballots and for women to have access to reproductive medical care.

With gerrymandered legislative districts that ensure Republicans control of the state for the next decade, progressives are going to have to work on educating the public in order to minimize further deterioration of the state’s economy.