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Rail Runner Faces Hidden Costs

Add it to the bill.

Just as weekend Rail Runner service to Santa Fe is set to end due to financial woes, it turns out the state needs to shell out an additional $16 million for track and system maintenance.

That’s on top of the projected $25 million in yearly maintenance and operational costs – before the weekend service cuts – that have already created a budget crunch for the Belen-to-Santa Fe operation.

The train has about 4,500 weekday boardings going one way and is expected to generate about $3.2 million in fares.

The state Department of Transportation had hoped to win a federal stimulus grant in 2009 to pay for required track improvements, but that didn’t happen, a DOT spokeswoman said last week.

Records reviewed by the Journal show an estimated $8 million is needed to replace rail ties and another $8 million for a federally mandated train control system that must be installed by December 2015.

Though the state plans to reapply for federal funds, the grant request “rekindles the debate over the hidden maintenance costs to which the state is exposed,” according to a Legislative Finance Committee report.

What is the true cost of the premier transportation project of the administration of Gov. Bill Richardson? And what are taxpayers in for?

A House memorial approved earlier this year seeks to get a clearer financial picture.

Under the measure sponsored by Rep. Alonzo Baldonado, R-Los Lunas, the LFC has been asked to coordinate a study to assess costs, benefits, efficiencies and inefficiencies of the Rail Runner Express.

And that may help decide the future of its operations.

“The question today isn’t whether it was prudent to make a half-billion dollar investment, but what use of the half-billion dollar investment is prudent,” said LFC director David Abbey.

Baldonado said that as a freshman legislator he tried to get some answers about the Rail Runner’s financial viability.

“To my knowledge, nobody’s really taken a look at it. As I was running for office, people would approach me and say, this Rail Runner is costing us X, Y, Z dollars. Certain people would have different numbers. It was just getting kind of frustrating.”

The memorial, which asks for the study to be completed by November, would look at operating costs, ridership, ticket prices, optimum frequency of trips and stops, maintenance issues, liability and what maintenance will be needed for the 10 passenger rail cars and five locomotives.

That “rolling stock” cost $34 million. The initial investment that included purchase of the track, insurance, escrow costs and construction of train stations was close to $500 million.

With financing through the life of transportation bonds to be paid off in 2027, principal and interest will be about $834 million. That includes two balloon payments of $235 million.

Records show the LFC has for years criticized a pay-now, plan-later approach to operating the Rail Runner.

Richardson pushed for a “bullet train” early in his administration and set a deadline of December 2008 for the completion of the entire 99-mile project from Belen to Santa Fe.

However, neither the equipment nor track is designed for high-speed interstate rail travel.

Federal funding was minimal, in part because applying for special appropriations would have taken too much time, officials said back then.

“Detailed analyses to determine viability, operational requirements, and future revenue sources were not performed prior to funding and implementation,” said an LFC analysis in January 2005. “Future operational revenues are uncertain.”

Running on empty

Operational costs, including weekend service, have been projected at nearly $25 million a year – about $5 million higher than original estimates.

State officials have known for at least five years that federal air quality funds used to offset operational costs would be exhausted by next July.

“The potential elimination of these funds in FY 13 could place a significant burden on the state,” warned one LFC report that recommended the creation of a transition plan.

Revenue from a 1/8 cent gross receipts tax approved by voters in seven New Mexico counties was supposed to help offset operational costs, LFC documents show. But collections have been below expectations.

Fares are expected to produce about $3.2 million in revenue this year, still leaving a projected budget shortfall of $1.2 million.

Next fiscal year, more than $5.4 million will be needed to balance the Rail Runner budget once the federal funding dries up.

The average one-way weekday boardings in May totaled about 4,500, with Saturday boardings estimated at 2,500, and 1,000 one-way trips on Sundays.

Weekend service is supposed to end in mid- to late August, according to the Rail Runner website.

Rail work

Back in 2006, the LFC warned about the liabilities and costs associated with purchasing the train track from BNSF Railway, which one LFC report said was “one of, if not the largest property acquisitions in state history and was done without public and legislative overview and input.”

The track cost the state $75 million.

Now the $16 million in track improvements is looming.

Rail ties between Waldo and Bernalillo need to be replaced, because “no real tie work had been done for the past 20 years,” according to a January 2010 LFC document.

And a federally mandated “positive train control system” has to be installed between Isleta and Lamy. The signal, communication and train control technology controls train movement to assure safe operation of trains that include the Rail Runner, Amtrak and BNSF freight trains that use the line.

Baldonado said he is neutral in the debate over whether the train is a good or bad investment for New Mexico.

“I ride the train to Santa Fe when I go to my interim (legislative) committee meetings. I always make the argument that in my full-size pickup it would cost me roughly $30 to $35 per trip, and I get a round trip from Los Lunas for $9. So maybe we’re not charging enough.”

Baldonado said it’s a given the train project “has lots of strings attached” and is probably never going to break even.

“How do we lose less money is the question.”
— This article appeared on page A1 of the Albuquerque Journal

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