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March 2011
— by Pat Foran, Editor
These days, the sound of elected officials struggling to address existing or projected budget deficits is deafening. In some state capitol rotundas, citizens also are weighing in, pumping up the volume another notch. The cacophony isn't just about ledger lines. In some instances, the roars are about reaffirming or redefining the role of government. Whether we reaffirm, redefine, merely tweak or simply keep shouting remains to be seen. The impact on rail? Potentially, it's huge. It depends on the region/state/community budget in question. Take the scenario playing out in Denver.
In 2004, Denver-area voters approved a sales tax measure to fund the Regional Transportation District of Denver's (RTD) FasTracks program, a $4.7 billion initiative to build 119 miles of light- and commuter-rail lines throughout the metropolitan area and redevelop Denver Union Station by 2017. Plagued by high material costs and a dramatic decline in sales tax revenue, FasTracks is now a $6.7 billion program. If RTD can't find additional revenue sources, the agency won't finish FasTracks until 2042, as Associate Editor Angela Cotey notes in this month's cover story.
Residents don't want to wait 30 years for rail service, say RTD officials, who in early March were trying to decide whether to place a sales tax measure on the November ballot. RTD had recommended a 0.2 percent hike; the Denver Metro Chamber of Commerce recommends a 0.3 percent or 0.4 percent increase, citing a December 2010 poll that suggests voters would support it. The Metro Mayors Caucus backs the higher hike, as well.
We'll see if citizens vote the way the poll suggests or if they even get a chance. At least one pro-FasTracks group told the RTD board to hold off on seeking the tax hike, citing public sensitivity to state and federal financial crises. The RTD board was to make the call on March 8.
I'm sure the "What-to-do-about-FasTracks?" quandary hasn't been rancor or rhetoric free. But at a time when reining in costs reigns supreme, Denver-area elected and business leaders have reaffirmed the need to invest in rail (and, so, the future), and it's good to hear. We'll keep listening for the sound of constructive dialogue with respect to budget deficits, the future of government and rail investment, whether it emanates from RTD or elsewhere.
Mike Haverty, executive chairman of Kansas City Southern, recently was named the recipient of Progressive Railroading magazine's "Railroad Innovator Award." We'll present it to him at our annual RailTrends conference, Nov. 1-2, 2011, at the W New York in New York City.
Haverty's got a knack for making innovation seem run of the mill. As Santa Fe Railway President in 1989, he brought together two unlikely business partners by initiating the J.B. Hunt and Santa Fe intermodal service. After taking the reins at KCS in 1993, Haverty repositioned the railroad as a north-south carrier to be reckoned with — notably via the KCS-Transportación Marítima Mexicana joint venture's $1.4 billion bid in 1996 for Mexico's 2,445-mile Northeast Railway, in which KCS acquired the controlling interest in 2005.
To me, he's a strategic thinker who's able and (just as important) willing to read between the North American rail map's lines, make sense of what he's read, and plan/manage accordingly. He's an innovator who can execute, then ... and is well deserving of this recognition.
Congratulations, Mike. Thanks for the indelible mark you've made to date, and in advance for the contributions to come.
Of this, Warren Buffett is certain: His all-in wager on the economic future of the United States looks even better now than it did when he placed it a little more than a year ago.
In a Feb. 26 letter to Berkshire Hathaway Inc. shareholders, Buffett noted that the company's highlight of 2010 was the BNSF Railway Co. acquisition — "a purchase that's working out even better than I expected," he wrote. And he expects more good things to come, citing rail's cost and environmental advantages over trucking.
"Over time, the movement of goods in the United States will increase, and BNSF should get its full share of the gain," Buffet wrote, adding that to get it, BNSF must "invest massively."
No worries there. "No one is better situated than Berkshire to supply the funds," Buffett wrote. "However slow the economy, or chaotic the markets, our checks will clear."
And that all-in bet will pay off — for Berkshire and beyond, Buffett believes.
"No matter how serene today may be, tomorrow is always uncertain," he wrote. "Don't let that reality spook you. ... America's best days lie ahead."
Rail's, then, too.
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