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OPINION
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THE SARASOTA OBSERVER THURSDAY, FEBRUARY 17, 2011
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Oo-rah: Scott means what he says
He’s not a politician. Hallelujah! It’s no surprise to us, but Florida Gov. Rick Scott demonstrated emphatically Feb. 16 that he is who he said he is — a businessman — and he’s going to do what he said he would do — run Florida government like a business. Floridians should hail Scott for his bold decision to reject $2.4 billion of borrowed federal money to build a high-speed rail line from Tampa to Orlando. And Floridians should hail Scott for not succumbing to all of the political and special-interest leeches anxious to be the financial beneficiaries of such a project. As he demonstrated in his comments and letter to U.S. Transportation Secretary Ray LaHood, Scott carefully analyzed the pros and cons of the high-speed rail. And in the same fashion that he has always done as a CEO, he examined both sides of the coin — what the return on investment would be if Florida did the rail versus what the return on investment would be if Florida did something else. Most logical thinkers already knew there would be and could be no other conclusion than the one Scott reached — that is, there is no economic or moral justification whatsoever for the high-speed rail line. We’ve reported it before, and Scott found out for himself what the California-based Reason Foundation has reported for many years: In the history of high-speed and light-rail projects around the world, all of them have cost more to build than projected and all but one or two has produced the ridership the promoters projected. Scott is likely to hear a lot of carping from the political class, the global-warming greenies, mainstream media editorialists, Euro-trainistas and big-business contractor types for passing up a huge job stimulus and environmental savior. And indeed, within hours of Scott’s decision to reject the federal
money, three of Tampa’s mayoral candidates ripped away at Scott in interviews with the St. Petersburg Times. Ed Turanchik, a big rail promoter: “This ranks up there as one of the worst decisions I’ve ever seen.” Bob Buckhorn: “It was a once-in-alifetime opportunity to move this state forward. Instead, it looks like we aspire to mediocrity, and we’re going to get there … To say we’re … going to rely solely on automobiles as the transportation of the future is ludicrous.” But read the full text of the accompanying Scott press release explaining his decision, along with the excerpt below of Scott’s letter to U.S. Transportation Secretary Ray LaHood. You will see Scott makes far more sense than does the idea of a high-speed train between Orlando and Tampa. Last week in Naples, Scott told attendees at a Cato Institute luncheon he intends to “stay the course” of what he outlined during his campaign — cut government spending, create a climate that fosters economic growth, reduce taxes and improve education. “We are going to be a model for America,” he said. This was one big step toward delivering on his promise. Run it like a business.
+ Pension problems
Public and elected officials far and wide have suddenly found religion when it comes to public pensions. The movement, indeed, is reaching a crescendo in the city of Sarasota, in particular among the candidates for City Commission. To wit: In separate interviews with opponents Commissioner Dick Clapp and Paul Caragiulo, asked what they see as one of the top four priorities for the next City Commission, both said the No. 1 priority is solving the city’s pension problems. Those problems are substantial, as the box indicates — $74.4 million in unfunded
UNFUNDED LIABILITIES Because of the generous pension plans given to the city of Sarasota employees — general, police and former firefighters — and because of the multi-year declines in stock market investments over the past four years, city pension fund investments have not increased in value fast enough to keep the pension plans fully funded. The following figures show the value of the unfunded liabilities in the city’s three pension plans for the fiscal year ending September 2009. This the amount of money taxpayers will have to pay in the future through increased taxes if the investment funds do not generate large enough returns. General employees.......$19,538,991 Firefighters.................$37,514,072 Police.........................$17,395,906 Total..........................$74,448,969
liabilities. On top of that, the amount that city (and county) taxpayers must contribute every year to make up for the previous investment shortfalls is also substantial. City and county taxpayers had to kick in $10.5 million in fiscal 2009 to cover the required contributions to the three plans. Most everyone has realized these public pension plans are unsustainable, except perhaps the police and firefighter unions. They’re resisting any changes. But be assured: Just as the federal government must face the reality that its spending is unsustainable and must cut back, the next group of sitting commissioners already knows the city’s pension plans must be revised.
WHY GOV. SCOTT REJECTED THE FEDERAL HIGH-SPEED RAIL FUNDS Here is the unabridged press release Gov. Rick Scott issued regarding his rejection of federal high-speed rail funds.
Higher taxes and more government spending are a recipe for disaster. Government has become addicted to spending beyond its means and we cannot continue this flawed As you know, I was elected to get Floridians policy. back to work and to change the way governLet us never forget, whether it is ment does business in our state. Washington or Tallahassee, government has I am committed to making good on those no resources of its own. Government can promises. only give to us what it has previRecently, I sent a budget proously taken from us. posal to the Legislature that That is why today I am reduces the size and scope of govannouncing my decision to reject ernment; reduces the costs of that the Obama administration’s plan government and passes those cost to partially fund the costly Tampa savings on to taxpayers so that to Orlando high-speed rail project. we can create new jobs and turn Moments ago I spoke with U.S. Florida’s economy around. Transportation Secretary Ray I believe when you reduce govLaHood to inform him of my deciernment’s reach and hold that govsion. I appreciate the secretary’s ernment accountable, you create Gov. Scott efforts to work with us, and I look an environment where the econoforward to working with him in my can flourish. the future. When you reduce taxes and put that My decision to reject the project comes money back in the hands of hard-work- down to three main economic realities: ing Floridians and Florida businesses, that • First, capital cost overruns from the projmoney will be spent on creating private- ect could put Florida taxpayers on the hook sector jobs for an additional $3 billion. As you know, my background is in busi• Second, ridership and revenue projecness, not politics. But you don’t have to be an tions are historically overly optimistic and economics expert to understand that if you would likely result in ongoing subsidies that spend more money than you take in, your state taxpayers would have to incur (from business will fail. $300 million to $575 million over 10 years). Unfortunately, politicians haven’t always Note: The state subsidizes Tri-Rail $34.6 seemed to grasp that same principle. million a year, while passenger revenues In fact, the Obama administration just cover only $10.4 million of the $64 million announced a $3.73 trillion budget that annual operating budget. includes the largest budget deficit in our • Finally, if the project becomes too costly nation’s history ($1.65 trillion). for taxpayers and is shut down, the state The president’s budget includes $1.6 tril- would have to return the $2.4 billion in fedlion in higher taxes. eral funds to D.C. Those higher taxes will impact Floridians The truth is that this project would be far and our competitiveness worldwide. We too costly to taxpayers, and I believe the risk cannot expect individuals to build businesses far outweighs the benefits. in America if our taxes are higher than other Historical data show capital cost overruns countries. are pervasive in nine out of 10 high-speed
rail projects and that two-thirds of those projects inflated ridership projections by an average of 65% of actual patronage. It is projected that 3.07 million people will use the train annually. Keep in mind that Amtrak’s Acela train in Washington, D.C., Boston, Philadelphia, New York and Baltimore only had 3.2 million riders in 2010. And that market’s population is eight times the size of the Tampa/Orlando market. President Obama’s high-speed rail program is not the answer to Florida’s economic recovery. We must make investments in areas where we will get a return for the shareholders — Florida’s taxpayers. Rather than investing in a high-risk rail project, we should be focusing on improving our ports, rail and highway infrastructure to be in a position to attract the increased shipping that will result when the Panama Canal is expanded when the free-trade agreements with Colombia and Panama are ratified and with the expansion of the economies of Central and South America. By capturing a larger share of containerized imports entering our seaports, expanding export markets for Florida businesses and emerging as a global hub for trade and investment, we can create an additional 143,000 jobs, according to a recent chamber of commerce study. It is absolutely critical that we make smart investments with taxpayer dollars, whether state or federal, and I believe our state will be better served by spending these funds on projects that will benefit Florida and not turn into a spending boondoggle. The answer is to reduce government spending, cut government’s leash on our state’s job creators and then hold that government accountable for the investments it makes. That is what I was elected to do, and that is how I plan to govern. Let’s get to work!