- Report Published -
|Funding Strategies for State Sponsored Intercity and High Speed Passenger Rail [SJR 63 (2010)]|
|Department of Rail and Public Transportation|
|SJR 63 (Regular Session, 2010)|
|Purpose and Need|
In 2009, the Commonwealth initiated its first state subsidized intercity passenger rail service. In addition, Virginia's Department of Rail and Public Transportation (DRPT) continues to grow and expand intercity passenger rail choices as an integral part of the overall transportation system in the Commonwealth. In the forefront, DRPT began service through a three-year demonstration project on the Route 29 and I-95 corridors, utilizing one-time limited resources with expansion of services to Norfolk in three years.
As a result of the passage of the Passenger Rail Investment and Improvement Act of 2008 (PRIIA), Virginia must begin subsidizing operations and capital equipment charges for four existing Amtrak Regional trains in the I-95 and I-64 corridors by 2013. Amtrak operates these trains today at no cost to the Commonwealth. In anticipation of these immediate and near term operating and capital needs for intercity passenger rail service, during its 2010 Session, the General Assembly passed Senate Joint Resolution 63 (SJ63) that directed DRPT to study funding of high-speed and intercity passenger rail operations in the Commonwealth. DRPT must identify the most efficient and beneficial method by which high-speed and intercity passenger rail operations should be funded. A stable, predictable source of passenger rail financing would encourage long-term planning and investment strategies to achieve incremental benefits. Reduced travel times, increased frequencies, and modern amenities would build ridership and reduce operating costs. A stable source of funding would also strengthen coordination with the freight community and federal and local government, and these partners would be able to structure their own investments with a greater degree of certainty. Without a source of state funds for the operation and associated capital charges and projects for high speed and regional intercity train services, the Commonwealth should anticipate a major loss of intercity passenger rail services.
The SJ63 report is structured in the following sections:
• Section 1: Introduction and Purpose – provides an overview of the rationale for the report, considerations about rail operations and funding limitations.
• Section 2: Passenger Rail in Virginia – profiles current passenger rail service to the Commonwealth and destinations beyond Virginia. It discusses the evolving relationship with Amtrak for the provision of passenger rail services and the current funding sources available for the improvement of intercity passenger rail service in Virginia.
• Section 3: Operating and Capital Project Funding – reviews the current state of Commonwealth and Federal funding programs.
• Section 4: Peer State Comparison and Public Input – provides an overview of states that provide capital and/or operational funding for intercity passenger rail service, based on a response to Virginia’s survey of states as well as a comparison of rental car tax rates by state. A discussion of public comments solicited by the Department before this study began is also reviewed in this section.
• Section 5: Proposed Program Structure and Potential Sources of Funding for Intercity Passenger Rail Services – proposes establishing an Intercity Passenger Rail Operating Virginia Department of Rail and Public Transportation and Capital Fund and provides a funding options from practices of peer states, input from public comments and discussions
• Appendix A: Details the state surveys and responses received, including an annual operations cost, a breakdown of costs per passenger mile and funding sources.
• Appendix B: Details the state vehicle rental tax comparison by state and major airport.
Summary and Options
An estimated $276 million from FY2010 through FY2021 is needed to continue operations of the two state-funded Amtrak regional trains with extension from Richmond’s Staples Mill Station to Norfolk by 2013 as well as continue operation of Amtrak’s four regional trains that become the responsibility of the state under PRIIA Section 209. Combined current and near term operating and capital needs for intercity passenger rail development is projected at $629 million from FY2010 to FY2021. The Commonwealth must continue to invest in our rail system to provide intercity passenger rail service in corridors of statewide significance. As a component of the statewide and national transportation network, intercity passenger rail serves a vital public purpose similar to that of the interstate highway system or the aviation network. It does not compete with these modes, but offers a complementary travel option. Passenger rail service provides the opportunity to assist in reducing congestion during peak travel times. Preservation and enhancement of passenger rail service is a public responsibility.
This report documents the fact that the Commonwealth has been, and continues to be, a willing and committed partner in the national intercity passenger rail network. A key factor in providing efficient passenger rail service will be the availability of adequate, predictable funding at both the state and federal levels. The federal government invests billions of dollars each year in other critical transportation systems in partnership with state governments. Similarly, the federal government must be a strong financial partner with states in the provision of future rail passenger service without draining funding from other modes. This report suggests allowing any established state funding source to be utilized as a match for leveraging federal funds. Most importantly, what is needed is a strong federal-funding partnership. The user fee/trust fund financing mechanisms for the other modes of passenger transportation provides a secure, long-term, dedicated source of funding. A similar financing system is needed for intercity passenger rail.
Intercity passenger rail service is a basic element of the Commonwealth’s multimodal transportation system, relieving highway and airport congestion in a safe, environmentally responsible way. Based on the research and information presented, DRPT has developed options from practices of peer states, input from public comments and discussions and listed them below for the General Assembly to consider in the development of a program and process to provide for high speed and intercity passenger rail capital project and operations funding:
• Establish a solid basis for passenger rail service partnerships between Virginia, its neighboring states, and the federal government by establishing a funding mechanism for federal grant match
• Set a goal to provide a stable system for funding intercity passenger rail operating and capital project costs
• Create a fund for the continuation and development of intercity and high speed passenger rail operations and capital
* Establish an Intercity Passenger Rail Operating and Capital Fund
• Establishment of the fund will provide the legal mechanism and conduit for any funds appropriated by the General Assembly for the purposes of providing for intercity passenger rail capital projects and costs of continued and expanded intercity passenger rail operations to be applied to projects and operations
• Establish a funding stream that provides for increased needs for funding intercity and high speed passenger rail operations and capital. With PRIIA Section 209 deliberations ongoing, the General Assembly could provide sufficient funding from available revenues through the Appropriations Act on a biennial basis through the newly created Intercity Passenger Rail Operating and Capital Fund.
* Appropriate available revenues to support existing service through the biennium
- Appropriation of funds could be achieved by:
• Annual allocations from the General Fund
• Annual allocations from the Transportation Trust Fund (TTF)
* Create a dedicated revenue source that is sustainable and will provide for the continuation and expansion of intercity and high speed passenger rail in the Commonwealth after review and consideration of the following mechanisms:
• Evaluate Rental Car Tax Revenues and consider increasing the current 10 percent tax by three percent to a total of 13 percent tax for use as a dedicated revenue source for the new Intercity Passenger Rail Operating and Capital Fund.
• Evaluate Rental Car Tax Revenues to localities and consider re-direction of three percent of the four percent dedicated to local governments to the new Intercity Passenger Rail Operating and Capital Fund.
• Evaluate the proportions of the TTF for a potential allocation of 4.3% of the TTF for potential use in funding the Intercity Passenger Rail Operating and Capital Fund. The General Assembly established the same funding level in its passage of House Bill (HB) 3202. Today, intercity passenger rail capital projects and funding for continued and new intercity passenger rail operations are the only mode not provided for in whole or in part through the TTF.
• Evaluate potential revenue from the privatization of the Alcoholic Beverage Control (ABC) stores for potential use in funding the Intercity Passenger Rail Operating and Capital Fund.
• Evaluate potential revenue from the addition of a sales tax to be charged in addition to the rental car tax on rental fees for potential use in funding the Intercity Passenger Rail Operating and Capital Fund.
• Evaluate other mechanisms adopted by other states such as:
* Assessing additional fees to personalized license plate fees
* Redirecting tax revenues from the sale of new and used motor vehicles
* Redirecting vehicle weight fee revenues