The Money Pit

Last month, the Department of Transportation announced 2018 “BUILD” grants totaling $1.5 billion. BUILD, which stands for Better Utilizing Investment to Leverage Development, is the successor to TIGER, which stood for Transportation Investments Generating Economic Recovery. TIGER was a part of the 2009 American Recovery and Reinvestment Act and should have ended after the economy had recovered. But Congress had so much fun spending other people’s money that it simply renamed the program and kept it going.

The 2018 BUILD grants include 91 projects in 49 states — only Hawaii got left out — including such things as highway expansions, bus-rapid transit, port facilities, and autonomous vehicle services. Regardless of what they are, virtually all of the projects are local and should have been funded locally and not out of federal deficit spending.

One project the Antiplanner is familiar with is the Coos Bay rail line, which goes west from Eugene, Oregon to Florence, and then south along the Oregon Coast to Coos Bay, then east to Coquille and (at one time) Myrtle Point and Powers. The Myrtle Point/Powers rails have been torn out but the rest of it remains.

The line was originally built by Southern Pacific when that railroad was controlled by Edward Harriman. Harriman probably ordered its construction because his rival, James J. Hill, had a rail line on the northern Oregon coast, and Harriman wanted to secure the best rights of way along the coast to prevent Hill from extending his line to California. The line may have made money for a few years serving Coos County lumber mills, but by the early 1990s Southern Pacific decided it wasn’t worth keeping.

In 1994, SP sold it and the railroad’s Siskiyou Line between Springfield and northern California to RailTex, a regional railroad operator. But, due to the high cost of maintaining bridges and tunnels, RailTex’s successor, RailAmerica, decided to stop using the Coos Bay line in 2007. The Port of Coos Bay bought the line and, with a variety of federal grants, has been rehabilitating the bridges and tunnels. The 2018 BUILD grant provides another $20 million for bridge rehabilitation.

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The history of the port’s ownership of the rail line is basically a succession of federal and state grants to keep it running. In 1998, the port received a $7.2 million federal grant to rehabilitate a swing bridge across Coos Bay. Rather than fix the bridge, it diverted the money to other projects, leading to problems when the bridge broke down in 2018. In 2009, the port received $2.5 million of economic stimulus funds, plus $16 million more in 2010 along with $8.8 million from the state.

Local critics charge that the Port of Coos Bay is little more than a good old boys’ network that funnels tax dollars into the hands of favored contractors. This network has advocated for a series of “get-rich-quick” schemes, such as subsidies to a proposed steel mill, a natural gas pipeline into the county, construction of a new airport terminal, and, none of which worked out. (The steel mill was never built and the subsidies for it were diverted into the pipeline which generated no new business; the air terminal resulted in a loss of air service from four planes a day to one.) The railroad has become just another one of these schemes.

According to the port’s most recent audited financial statement, the rail line earned less than $4.2 million in operating revenues in fiscal year 2017 while operating costs totaled nearly $4.5 million not counting debt service or capital expenses. So just operating the rail line requires subsidies, which is why both Southern Pacific and RailAmerica gave it up.

Unlike the Coos Bay rail line, some of the 91 BUILD projects may actually be worthwhile. But if they are, then the local governments should have been able to find local funding for them. While some of the road projects may not be worthwhile, it is almost certain that government-owned rail lines that receive grants in Ohio, Vermont, Washington and other states are, like the Coos Bay line, just local boondoggles that don’t deserve tax subsidies.