Program: Intercity Passenger and Freight (Section 117)
Special Revenue Funds:
appropriation funds a variety of programs intended to foster intercity bus and
interstate rail passenger service, a state-owned rail line, and subsidies of
private rail lines.
All line items under section 117
of the state MDOT budget could be eliminated. There are no programs in these
sections of the budget that cannot be performed by the private sector or funded
by the private firms and users who benefit from them.
Rail Freight programs.
The three programs that
subsidize rail freight services in Michigan — freight property management,
freight preservation and management and the rail infrastructure loan program —
could be terminated. Rail freight service is operated on a profitable basis
throughout the country, and in those areas where such service is uneconomical
because of limited traffic, alternative service can be readily provided by
trucks. Programs could be terminated and Michigan’s 700-mile state rail system
could be sold by competitive bid. Savings: $7,192,900.
Detroit/Wayne County Port
in 1978, the D/WCPA is a nonprofit, government-supported operation that promotes
and plans shipping transportation involving Detroit and the surrounding area.
The Authority does not own, nor does it operate, commercial terminals, but it
has wanted to create new revenue streams for years and has recently revived an
idea to create a passenger terminal to encourage passenger ships to visit
Private commercial marine
operators have questioned the need for the Authority’s very existence. This government entity performs services that already are provided
by the private sector. The Authority can safely be eliminated. Savings:
Rail Passenger Service.
This program subsidizes service on two routes — Port Huron to Chicago and Grand
Rapids to Chicago — operated under contract by Amtrak. Nationwide, Amtrak
serves only 0.6 percent of the inter-city passenger market, and because service
on its Northeast corridor accounts for nearly 60 percent of its passengers, it
is likely that its share of the market in Michigan is substantially smaller,
probably no more than 0.2 to 0.3 percent. If Amtrak service in the state is terminated, that tiny fraction
of travelers can shift to cars and/or to unsubsidized inter-city buses that
serve the same routes at less cost. Because Amtrak is in serious financial
difficulties, its new president claims that in the future states will have to
pay more for what passenger rail service they now have, indicating that
Michigan’s share will likely go much higher than current levels, which have
already more than doubled since 2000. Savings: $11,300,000.
Intercity Bus Equipment and
These two programs subsidize private bus carriers who provide intercity service
to communities that might not otherwise have it, have it with lower frequency,
or have it at higher costs. Because intercity bus service accounts for only
about 1.4 percent of the nationwide intercity passenger market, the number of
passengers adversely affected by its termination would be small. Expenditures on bus equipment have already doubled from the annual
levels of spending in fiscal years 2000 and 2001. Savings: $5,850,000.
Detroit/Wayne County Airport.
This program subsidizes
operations at the Detroit/Wayne County airport. Passengers and airlines that
use and benefit from the airport should pay the full cost of the airport’s
operations, not the general taxpayer. Moreover, the airport could be
privatized, as has been occurring in Europe and Australia to the considerable
benefit of the users and the public at large. An earlier analysis of the
airport’s value suggests that it might have a gross value (before debt and other
liabilities) of as much as $2.5 billion. If sold, net proceeds could be used for tax relief or to provide
other services. As a private, for profit entity, the airport would pay taxes
instead of consuming taxes paid by others. Savings $500,000.
Marine Passenger Service.
This program subsidizes ferry service on the St. Mary’s River and to Beaver
Island. Individuals who choose to live in relatively remote and inaccessible
regions should bear the cost of that lifestyle choice. Savings: $800,000.
This program subsidies the construction and improvement of a variety of
passenger facilities throughout the state. As subsidized transportation
services are terminated or privatized, the state’s provision of this service is
no longer required. Savings: $2,884,800.