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IMPACT OF RAIL LINE

IMPACT OF RAIL LINE

From the Watertown Daily Times

Friday, November 26, 2010 9:50 PM CST
We visited with Mayor Ron Krueger in recent days and of course one of the topics was the passenger rail line extension from Milwaukee to Madison, the project that is hanging by a thread because Gov.-elect Scott Walker has vowed to kill the $810 million federally funded project.

One of the major concerns of Walker is that the state’s terrible budget deficit means it simply cannot afford the $7.5 million operating deficit the line is expected to have.

The $7.5 million deficit would actually come all the way down to $750,000 because federal funds outside the high-speed rail appropriations would cover 90 percent of the operating losses.

So, the operating deficit becomes minuscule when you’re talking about a state with over 5 million people. But, that doesn’t take into account any new revenues the trains and the upgraded tracks for both passenger and freight services would generate.

Steve Grabow, a University of Wisconsin-Extension professor from the Jefferson extension office, made a request to Professor Steven Deller of the UW-Extension office in Madison. Steve asked Deller to estimate the economic impact of one new company locating in Watertown because of the better rail access, or conversely one leaving Watertown because of a lack of improved rail lines.

Just to show the model, Deller estimated a plant with 70 to 75 employees. Now, remember, that’s far less than the 125 or more employees that Talgo was estimating it would have at its train manufacturing plant in Milwaukee. However, Talgo is now seriously considering moving that train manufacturing plant to Illinois where high-speed rail is welcomed with open arms.

Here are some of the numbers he came up with. A plant that size would probably have economic impact of $5 million from paid labor, total income of $7.2 million and total annual sales of about $18.7 million.

That would be the base economic impact. That money would then ripple through the economy and create even more incomes in various segments like agriculture, construction manufacturing service, trade, government, etc. The largest segment to benefit from the ripple effect, he estimated, would be manufacturing with $3.8 million in more labor wages and benefits.

Now, on the government benefits side of things. Deller estimated the state and local governments would gain about $125,130 in income taxes, $123,482 in sales taxes, $163,988 in property taxes, $99,918 in corporate profit taxes and dividend taxes, and $68,000 in other benefits for a total of about $581,087.

Think about that. Just one business of that size could have an economic impact in the state’s coffers of nearly $600,000.

With Watertown’s new industrial park located on the Madison rail line which is in deplorable condition, an upgrade would be welcomed by existing and prospective industries. The rail project would include federal funds to renovate the Watertown to Madison segment to modern standards. To us, that alone makes the whole project worthwhile and when the economic impact is taken into account, the expanded rail project would easily generate a lot of new revenues for the state that would more than offset the small operating losses.

It seems just about every day there’s new information floating out there on the high-speed rail project. Only time will tell if there will be a change of heart from Scott Walker.