Recent Minnesota House Transportation Commmittee Hearing - Questions about operating subsidies for the 2nd Train

April 3, 2021

On March 23, All Aboard Minnesota provided "testimony" for one of Rep Alice Hausman's bills to provide the state match for the 2nd Train frequency between the Twin Cities and Chicago. During that hearing, several questions came up about the on going operating subsidy for this train, such as "How will we pay for it if costs increase in the future?" All Aboard Minnesota provided more information about the operating subsidy, how the 2nd train project will ultimately pay for itself, and more context about how other "corridor" services are performing. Please feel free to use any of this content, including the attached document below on Midwest Passenger Rail Corridor development. You can read our response below:

During the House Transportation Committee meeting on March 23 regarding the 2nd Train and NLX, questions were raised about the operating subsidy and the ongoing support of such subsidies. Below is information on these topics:

  1. A Benefit-Cost Analysis prepared for the proposed 2nd Train Frequency (2nd Train) between the Twin Cities and Chicago Project and included in the FRA- CRISI Grant Application for the Federal Matching Funds, showed that over a 30 year period the 2nd train project would more than pay for itself with all capital, maintenance and operating costs included. There would be a net benefit to the state of $63M over this time period. (This does not include the economic impact associated with wages related to jobs created, money spent by Amtrak in Minnesota to operate the service or the increased economic activity associated with increased ridership, including additional tourism expenditures.)
  2. The 2nd Train service will be coordinated with the existing Amtrak Hiawatha service connecting Chicago and Milwaukee. Ridership on the Hiawatha service has doubled since 2003, and has increased 9% since 2014. (Source – WisDOT).
  3. The Hiawatha service in 2019 had an 85% farebox cost recovery. (Source – WisDOT). Operating subsidies have decreased over time for this service due to increasing ridership. This is a lower subsidy than most road projects which are subsidized with state and federal general funds and property taxes. Other corridors have seen similar results such as North Carolina, and Virginia.
  4. There are cost savings provided by the 2nd train vs expanding other modes: cost avoidance from highway maintenance, environmental, safety, upkeep to other modes, improved freight performance, and revenue from local investment and tourism, as an offset to annual operating subsidies. Please consider these specific benefits:
    1. The 2nd Train will reduce car miles in the corridor by 15M, reducing highway maintenance costs by $32M – (Source Rail Passengers Association (RPA) Study)
    2. The proposed 2nd Train frequency between the Twin Cities and Chicago alone would generate economic returns eight to ten times for Minnesota’s spending on the service (total economic benefit of $25M, cost $2-3M, estimated-(Source RPA Study)
    3. Taking a train versus a car reduces carbon emissions by 80% - (Source - OurWorldinData.org)
    4. Many states in the Mid-West are investing in rail passenger corridors as they see the economic and mobility benefits. See attached document for specifics (written by an All Aboard Minnesota (AAMN) member and compiled from MIPRC and industry publications.)

Summary -

A $10 million state match for the 2nd train will leverage a $32 million federal capital grant and a $12.5 million operating grant. This is a return of $4 for each state dollar invested. This federal funding for intercity rail (which also benefits freight rail) is not transferable or available for road projects. There is no significant competitive federal grant program for road projects.