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Like many other 2010 gubernatorial candidates, Republican Terry Branstad promised to reduce government costs. Since edging out Democratic Gov. Chet Culver in the November election, Branstad is holding up his end of the bargain — and it’s affecting the state’s proposal to implement higher-speed rail service between Chicago and Iowa City.

In late January, Branstad unveiled a fiscal year 2012-13 spending plan that’s nearly $200 million smaller than the previous biennium budget. Among the cuts: Funds that had been appropriated for 2012 by the general assembly last year.

“The governor has a lot of interest in the project, but also has a lot of concerns with the operating subsidy,” says Tamara Nicholson, director of the state’s Office of Rail Transportation. “But he has indicated that the budget last week is not a signal that he’s turning back the federal funds.”

Last year, the Federal Railroad Administration (FRA) announced it was awarding $230.4 million in FY2010 transportation appropriations funds to create a new intercity passenger-rail service between Chicago and Iowa City via the Quad Cities. The project calls for upgrading 131 miles of track to meet FRA Class IV requirements, which will enable 79 mph passenger-train operations. The project also includes installing a centralized traffic control signal system and constructing three stations, as well as updating the Iowa Travel Analysis Model to incorporate freight- and passenger-rail elements.

The FRA grant requires a 20 percent match from Iowa and Illinois. The Iowa Department of Transportation currently has $3.5 million available for its portion of the match, which was allocated through 2010 and 2011 appropriations. That money will be enough to enable the Iowa DOT to continue developing the project for the next 18 months or so, says Tamara Nicholson, director of the state’s Office of Rail Transportation.

“That [money] is getting us through the environmental studies and preliminary engineering,” she says.

When Iowa might have the remainder of its matching funds is unclear, although Nicholson doesn’t seem too worried. The state doesn’t need to come up with its total funding match until the project is in the construction phase.

“In our application [to the FRA], we said we have a legislative intent over the next four years for Iowa to provide the full match that’s needed,” Nicholson says. “Our current legislature can’t appropriate funds X-number of years into the future, so that legislative intent was important in recognizing the funds would need to be there in the future.”

In the meantime, Iowa will rely on the funds it does have, as well as funding from the Illinois DOT, which has received its entire portion of the matching funds through the state’s capital budget.

The Iowa and Illinois DOTs also still are in the process of completing a grant agreement with the FRA. The agencies currently are working with host railroads BNSF Railway Co. and Iowa Interstate Railroad to reach contract terms.

“It takes a lot of coordination,” says Nicholson. “We just don’t know how long it’ll take — it might take a few months, six months or longer.”

Also on Iowa DOT’s agenda: examining other funding sources to help fund the line’s operation, as directed by Branstad. Officials plan on exploring options using public funds, private funds and other transportation dollars, although Nicholson doesn’t yet have specifics.

“There’s a lot of different things we’re investigating,” she says.

— Angela Cotey