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Rick Shapiro
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Are Government Subsidies to Railroads Serving The Public Interest?

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The nation freight railroads such as CSX and Norfolk Southern (NS) are posting healthy profits, but should state and federal governments be paying Norfolk Southern and CSX railroads for infrastructure improvements or for benefits that the railroads will reap privately? 

Gregory Richards, of the Virginian Pilot, based in Norfolk, Virginia near Norfolk Southern’s headquarters, recently published a thoughtful analysis on the public benefit vs. private corporate benefits of government dollars going to pay for railroad improvements

Essentially the railroads argue that getting trucks off the highways (of Virginia, West Virginia, Ohio, and others states) have a significant public benefit, much less reduction of pollution also.

In Florida, the state newspapers are now reporting on what many Florida citizens and bloggers are calling a “secret deal” and a “public subsidy” of CSX also. 

David DeCamp  a staff writer with the St. Petersburg Times, recently reported on the tentative state deal as follows:

The fight is over a complex plan struck under former Gov. Jeb Bush to run commuter trains on CSX’s railroad through Orlando. In exchange, the state would subsidize the building of the biggest railyard in the Southeast in Winter Haven. It would help improve CSX’s freight line through west-central Florida.

But largely unnoticed before the deal was struck was what would happen to Polk County. Clearing rail space in Orlando meant more trains slicing through Lakeland and trucks chugging around Winter Haven.

“They are going to divide our city,” says Lakeland Mayor Buddy Fletcher, whose citizens are in an uproar. “They are going to destroy our downtown.”

Lakeland’s Republican Sen. Paula Dockery, among others, wants more study and a new train route around her hometown. Some Tampa Bay lawmakers worry the extra freight traffic could curtail Tampa’s own bid to one day have commuter rail.

Aside from the Lakeland uproar, it seems that CSX is turning over/selling areas of its Florida tracks to Florida state government, but the state is picking up a significant part of the cost to pay for maintenance of the same tracks in the future.  One lawyer in Florida sued with the main argument being that the public subsidy to CSX violates the law.  Other news reports have questioned whether the CSX deal violates the Florida constitution.  Also, some argue that since CSX is running its freight trains over the same tracks, that the freight trains (heavy weights) actually cause a much bigger toll on track maintenance than the running of passenger/commuter trains the state of Florida plans to run.

A careful analysis of the public benefits of both freight and passenger railroad/train travel reveals that the true “public” benefit of government “subsidies” is a very difficult economic analysis which includes:  1) pollution; 2) reduced trucking traffic, 3) reduced car/auto traffic at least on commuter rail projects.

My viewpoint:  There are numerous examples of government’s contributing to railroad projects that have a significant private corporate interest co-mingled with a public benefit also.  Each situation requires a careful look–the government should never over-contribute, however government funding may serve to reduce air pollution and foster the goal of reducing car and truck highway traffic.  No comments on the localized Florida issues-those are well beyond my viewpoint here.