The Passenger Rail Investment and Improvement Act of 2008 ended the federal government's financial support of many passenger rail routes. The federal subsidy for the operational costs for the Wolverine passenger rail service running from Pontiac-Detroit-Chicago, for example, has ended.

The Michigan Legislature, however, included an extra $19.3 million in the budget for the 2013-2014 fiscal year to replace the lost federal funds. This sum represents a tripling of the state subsidy required to cover Amtrak's operating costs compared to the previous year.

Two other Amtrak lines, the International/Blue Water (Port Hudson-Chicago) and Pere Marquette (Grand Rapids-Chicago), have been running on Michigan taxpayer money since their inception in 1974 and 1984, respectively. Their combined operating costs, not including routine track maintenance, rose from $1 million in 1994 to $8.7 million in 2012. Now that Michigan must also subsidize the Wolverine, the impact on the state budget is substantially larger. 

The total state budget for operational costs, capital investments and routine track maintenance in fiscal 2014 is $40.6 million. Assuming a 3 percent increase in total ridership (which is same growth in total ridership last year), taxpayers will provide $98.11 per roundtrip passenger in fiscal 2014. A lower bound estimate, using only the budgeted operating costs, results in an expected subsidy of $49.51 per roundtrip this year.  

Under what circumstances should taxpayers subsidize passenger rail services?

Economists tend to favor subsidies only when the benefits of a service cannot be restricted to those who pay — that is, when the service has what economists describe as "public good" characteristics. Classic public goods are clean air and the defense of a country. The benefits of both cannot be easily restricted to those who pay a fee to a private provider of such services, and thus any company that tried to provide clean air or defense would raise insufficient revenue to cover the costs of providing those services.  

But passenger rail service is not a genuine public good like defense and clean air and thus does not have to be provided by government. It is a private good that happens to receive taxpayer support. In fact, up until 1970 and the bankruptcy of the Penn Central railroad, passenger railroad service was not subsidized by taxpayers. In other words, only those who benefited from passenger rail directly were required to pay for it. 

For this reason, passenger rail subsidies, like the ones Michigan taxpayers are forking over this year, should be discontinued. The same logic applies to subsidies for any mode of transportation, because none are genuine public goods. Ending these subsidies would not harm transportation in Michigan or the United States — it would simply mean that travelers will pay the full price of their chosen method of transportation, without having to subsidize someone else's preferred choice of travel. 

Two common arguments made for subsidizing passenger rail despite it not being a public good are that it reduces highway congestion and is more environmentally friendly. However, in 2007 a federal transportation study found that inter-city bus transportation was nearly three times more energy efficient per passenger-mile than passenger rail. Additionally, the congestion increase of switching from rail to bus would be negligible; Michigan’s three Amtrak lines carried around 1,100 roundtrip passengers per day in 2013, which could have been replaced by fewer than 22 inter-city buses. 

Michigan subsidizes Amtrak by diverting revenues raised through fuel taxes and vehicle registration fees, which historically were meant to pay for public highways by the motorists who use them. In an economically efficient and sustainable system, the funds supporting one method of transportation would not be taken away and provided to another.

The people and policymakers of Michigan should ask themselves whether it is a good idea to continue forward with a transportation system that is distorted in these ways.  

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Michael Farren is a doctoral candidate in applied economics at Ohio State University.  He is a licensed professional engineer and also earned his master's degree in transportation engineering from the same institution.

More than half of the third graders at Three Lakes Academy in the Upper Peninsula failed to score proficient on the state reading test in 2010-2011.

But none of the school's 14 third-graders were held back.

At Howell Public Schools, none of the 35 third-graders who didn't rate proficient at reading were held back.

However, a proposed bill would require those students show they are proficient at reading before advancing to fourth grade.

House Bill 5111 would hold back third grade students who were not proficient in reading on the state assessment. The bill grants exemptions for students with a disability or those with a limited proficiency with the English language.

Between 52,000 and 60,500 Michigan students were held back in all grades from 2007-08 to 2010-11, the latest years data is available.

Holding students back more often should be considered because it sends a message to school districts how important reading is, said Audrey Spalding, education policy director at the Mackinac Center for Public Policy.

The proposal before the Legislature could eventually lead to a better system where students are not grouped by age, but by proficiency, and classrooms would have a mix of ages, she said.

"You are not doing the kid any favors if they are not reading and you keep passing them up through the school," Spalding said. "You are certainly penalizing a student then because you are setting them up to fail."

According to a Harvard study, 14 states and Washington, D.C., have policies that require students who don't have basic reading proficiency at the end of third grade be held back. The study looked at Florida's retention of third-graders starting in 2002 and found that there were "substantial positive effects" on reading and math achievement in the short run. The study couldn't prove the practice was beneficial in the long run.

Some school administrators are against the proposal.

"You see numbers on a piece of paper and I see genuine faces, every day, affected by influences outside of their control," said Sue Pann, administrator at Three Lakes Academy, in an email. "We are lucky if half of our students have parents who get up with them in the morning, feed them, and get them off to school. … What happens now, is we meet with parents after collecting hard data and plan a course of action.  Sometimes, it leads to retention, sometimes not. Often the family just moves to another school district and continues the cycle."

Howell Public Schools Superintendent Ron Wilson said it is uncommon for his district to hold back a student who is struggling in one area. He said he didn't like that the bill took the parents out of the decision to hold their children back.

"To have legislation that doesn't give parents the choice, I think is somewhat reckless," Wilson said. "I think the parents and the teachers are the ones best qualified to make that decision. To mandate it …. and basing it on a test, it's just not something I would have brought forward."

Gary Naeyaert, executive director of the Great Lakes Education Project, said there were 33,600 students who were "partially proficient" or "not proficient" on the state reading test, according to the Michigan Department of Education.

He said if Michigan had a three-year phase in and if there were the same type of positive results as those that took place in Florida, the Great Lakes Education Project thinks that there would be 17,000 non-proficient third grade readers and half of those would qualify for exemptions.