Should the State Subsidize Pittsburgh to Harrisburg Train Service?

AMTRAK has informed Pennsylvania that the Pittsburgh to Harrisburg service-known as the Pennsylvanian-would likely be suspended unless the state comes up with the $5.7 million needed to cover the subsidy now being covered by money from the Federal government. 

 

 

 

The Keystone train service between Harrisburg and New York via Philadelphia offers several departure and arrival times each day. The Pennsylvanian, on the other hand, provides only one train a day inbound to Pittsburgh and one train outbound from Pittsburgh to Harrisburg with continuing service to New York City.  The single inbound train arrives in Pittsburgh at 8:05 PM having left New York at 10:52 AM and Harrisburg at 2:36 PM. Outbound from Pittsburgh departs at 7:30 AM and arrives Harrisburg at 12:55 PM and New York at 4:50 PM.

 

 

Does it make good economic sense for the state to contribute such a large sum to keep the Pennsylvanian running? The following discussion of the train’s status and some key data will shed light on the advisability of the state government subsidizing half the annual cost of operating the train between Pittsburgh and Harrisburg.

 

 

For fiscal year 2012, there were 129,372 boardings and disembarkings at the Pittsburgh station for both the Pennsylvanian train and the Capitol Ltd. service that goes on west to Chicago by way of Cleveland and east to Washington DC. The Capitol Ltd service is also one train per day in each direction leaving for Chicago at midnight and DC at 4:50 AM. Total ridership on the Capitol Ltd and Pennsylvanian are very nearly the same, posting just over 100,000 passengers each in the first six months of fiscal 2012.

 

 

The Pittsburgh station passenger count has fallen substantially since 2008 when it was well above 140,000. In any case, even if the majority of passengers at the Pittsburgh station are from the Pennsylvanian, the number of Pittsburgh passengers from that service is almost certainly fewer than 100,000 per year or 270 people per day-probably about evenly split between boardings and disembarkings.

 

 

Furthermore, the passenger count at the Altoona station, the busiest between Pittsburgh and Harrisburg, has fallen from 35,850 in 1998 to 26,798 in 2012, a drop of 25 percent. Thus, the recent trend of ridership on the Pennsylvanian is clearly down.  The key question is, “will the downward trend be reversed soon?” If not, should the state be putting money into a train route that will require increasing subsidies year after year as the gap between revenues and costs widens?  Obviously, with falling passenger counts, raising ticket prices to offset the loss of riders is not a viable option as an effort to raise revenue. 

 

 

Moreover, the single daily train in each direction way is obviously a weak selling point.  The departure and arrival times in Pittsburgh (the biggest station on the line) is not convenient for many potential passengers.  Then too, the five and half hour travel time to Harrisburg is off putting considering the alternatives.  Granted, the trip from Altoona to Harrisburg is shorter and if the final destination is Philadelphia or New York the trip times are much more comparable to travel by car or bus. But, that being the case, why has the passenger count at Altoona fallen so steeply?

 

 

Passengers going from Pittsburgh to Harrisburg on the train will pay $40 for the trip. Meanwhile, passengers traveling by MegaBus from Pittsburgh to Harrisburg pay $14 or $16 depending on which of the three daily departure times they choose. The MegaBus trip is a three and half to four hour journey with no stops.  Thus, the advent of the MegaBus has created major competition for the train in terms of departure time convenience, travel time and cost. By way of note there are three return trips from Harrisburg by MegaBus as well.

 

 

And without question, for most people making the trip to Harrisburg, especially people on business, getting to the Harrisburg train station is just the start of the excursion.  If they want to go to a meeting in Swatara or other neighboring communities, they will need transportation.  Unless someone is there to provide transportation, it will mean getting a cab or renting car. Either would represent considerable extra expenditure of money and time.  Moreover, the business person going to New York would not arrive in NYC until very late in the afternoon and would have missed most of the work day, meaning a night in a hotel. Whereas a flight leaving Pittsburgh at 7:30 AM or so would have the person in NYC in time to get in several hours of meetings or sales calls and still catch a late afternoon or early evening flight home.

 

 

In short, business travelers are unlikely to ever make up a big part of the Pennsylvanian’s passengers. And non-business travelers seeking to save time and money now have a much better alterative in MegaBus.

 

 

For the state to ante up the $5.7 million, which is about half the estimated cost of running the Pennsylvanian service, it will have to justify the expenditure of funds on other than economic considerations. Indeed, the state ought to survey the ridership to ascertain whether subsidizing half the cost of the trip is warranted.  Do passengers have alternatives or are they too poor to travel any other way? Are they riding the train simply because they enjoy the train ride experience and are happy that taxpayers are paying half the cost of the ride? What, if any, non-transportation benefits accrue to spending millions in subsidy to keep the Pennsylvanian running?

 

 

Absent compelling answers to these questions in favor of providing the subsidy, the only other reason to keep the line going would be to have it available and in working condition against the possibility of a major long term east-west corridor highway outage or restriction. Or perhaps Turnpike tolls will rise to a point that people will abandon the Turnpike in favor of a train ride.  

 

Romantic notions surrounding train travel should not drive the decision. The Commonwealth does not have money lying around that is not needed more elsewhere. Roads and bridges and unfunded pension fund liabilities come to mind.

Council Lady Displays Woeful Ignorance about PAT

The following paragraph is taken verbatim from a sitting member of Pittsburgh’s City Council and illustrates perfectly how the City got into financially distressed status and why it is likely to remain there if her views continue to guide policy decisions. Writing in the Post Gazette editorial pages Councilwoman Rudiak says, "We live in an extraordinarily wealthy country that can afford the vital, world-class public services that have provided the foundation for our economic prosperity. Unfortunately, our priorities have shifted. Many of our elected officials have decided that maintaining public services is not important and that our nation’s wealth is best kept in a few hands."

This paragraph is part of an editorial in which the Councilwoman bemoans the fact that the state is not rushing to pour more money into Allegheny County’s outrageously expensive and effectively bankrupt public transit system. According to the Councilwoman it is mere selfishness on the part of Harrisburg officials by which she undoubtedly means the Governor without saying as much.

Ms. Rudiak either has no conception of the extraordinary burden imposed by legacy costs at the Port Authority or the extremely high wage rates and benefits paid by the Authority or chooses to ignore them while slamming elected officials who have the responsibility of seeing that public dollars are used wisely.

But most ridiculous of all is the argument that world class public services are the foundation of our prosperity. The foundation of prosperity is a free enterprise system that allows free people to start businesses and use their talents, hard work and creativity to generate income and wealth. The rule of law and protection of individual and property rights are the foundation of prosperity; infrastructure and adequate public services are facilitators. As we have plainly witnessed in the Soviet Union, a good mass transit system and huge expenditures on "public services" did not create prosperity.

And to argue that the wealthy are being allowed to keep too much of their income and wealth is simply devoid of any factual basis. It is a known fact that the top 10 percent of income earners pay the lion’s share of all Federal income taxes. Ms.Rudiak quotes a study claiming that high income earners in Pennsylvania pay a much lower share of their income in state and local taxes than do middle income earners, 4 percent for over $428,000 as compared to 9 percent for $35,000 to $56,000. But the proviso is that the 4 percent is after Federal offsets, whatever that means.

It would not be surprising to learn that very high income earners pay a lower share of income in sales taxes or property taxes but not low enough to make their state and local share only 4 percent. In absolute terms those taxpayers are paying a large amount of state and local taxes. The state income tax is a flat 3 percent and there is no way their combined property and sales taxes account for only one percent of their income. For that to happen they would have to spend most of consumption dollars out of state and own very little taxable real estate.

One of the crises facing Pittsburgh, Pennsylvania as well as many states and cities across the nation is the financial burden of pension costs of public employees whose benefits are far greater than most private sector workers. With a greater and greater share of tax dollars going to pay for legacy costs, there will be fewer dollars to pay workers to perform for public services. Unless, of course, taxes are raised which will in turn stifle the income producing private sector that is needed to support all the public spending.

Ms Rudiak-and the other elected officials who believe that higher taxes are the answer to the economy’s problems-is a main reason the country and many states are in the shape they are in financially. How easy it is to believe that taxes can be raised willy-nilly to fund ever less efficient government and its rising costs without serious consequences to the city, state and nation. For these folks, there is never enough government or publicly provided services.