September 18, 2002

CHICAGO (Sept. 18)–A major voice of this city’s business community has come out strongly in favor of a federally funded solution to antiquated track, signals and interlockings that are clogging the movement of freight trains across the metropolitan area.

The editors of the weekly Crain’s Chicago Business backed the federal-aid proposal in an editorial in the September 16 edition. The newspaper also endorsed a proposal by U.S. Rep. William O. Lipinski (D-Chicago)that the 4.3-cent-per-gallon diesel-fuel tax currently being paid by the railroads be diverted to a special trust fund dedicated to paying for rail infrastructure improvements.

“The tax generates $170 million a year,” Crain’s said, but the editors noted that the total falls far short of the estimated $1 billion needed to update the Chicago area’s obsolete network of main lines, yards, junctions and grade crossings.

To fill the funding gap, Crain’s said, “Mr. Lipinski is exploring other options, including proposed additional federal taxes on cargo or railcars that could raise another $300 million to $400 million a year.”

The Crain’s editors explained their support for the Lipinski proposal by saying, “Federal action is needed because the railroads have been slow to acknowledge the problem and propose solutions.”

“They say they have traditionally funded capital expenditures at their own pace, and don’t seem to relish public participation in an issue with ramifications far beyond railroads and shippers” the Crain’s editors wrote. “We can only hope they will begin to see the scope of the problem, and that a broad public-private partnership will be needed to solve it…Mr. Lipinski is on the right track.”

UTU Illinois Legislative Director Joseph C. Szabo said that although funding mechanisms for an infrastructure update are still being explored, he was pleased with the Crain’s editorial for explaining to the Chicago business community the commercial considerations that have prevented the railroads from attacking the backups on their 893 miles of Chicago-area track.

“Crain’s has come very close to pinpointing the railroad industry’s dilemma,” Szabo said. “Railroads are the nation’s only mode of transportation that owns its own right of way. That means railroads not only pay hundreds of millions of dollars each year in local property taxes, but that they also must pay top dollar in the commercial markets for the capital needed to improve their infrastructure. Their competitors, the truckers, airlines and towboat companies, get to use a government-owned infrastructure paid for with cheap public capital that is not totally recovered from user fees.

“Bottom-line, those economics mean that the air, highway and waterway technologies keeps advancing while rail technology gets stuck,” Szabo said. “And there’s no place in the country where the ‘rail funding gap’ hurts more than in Chicago. The high costs that the railroads have to pay for their capital are what’s keeping the railroads here from building a modern infrastructure capable of competing with the truckers for premium freight.”

Szabo said that, “In a time of increasing highway congestion and pollution, shippers ought to be switching more and more of their loads to rail. But they’re not switching fast enough because the trains aren’t fast enough. With their antiquated grade-level junctions and 19th-century signaling systems the railroads just cannot deliver a truck-competitive service for most shippers. Trains that should be able to get through Chicago in six or eight hours are taking a day or more to cross the city, and frustrated intermodal shippers are de-ramping containers from the western railroads and driving them across the city to an eastern carrier’s yard because if the containers stay on steel rails they’ll spend an extra day loitering around Chicago.”

Infrastructure improvements, financed with federal money, if necessary, are the only solution, he said.

“I am highly encouraged by Congressman Lipinski’s willingness to display leadership on this issue,” Szabo said. “Better railroad performance is going to require a certain amount of public capital, and what better place to start than Chicago’s massive but obsolete track network? We’re delighted that the city’s business community has recognized this problem and we look forward to working with its members, with Congressman Lipinski and with the railroad industry to devise an acceptable solution.”