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March 7th, 2012 KARA WILBECK | News Stories
 

The Train To Zero

Union Pacific conceded up front that state subsidies to improve its rails wouldn’t create jobs.

news2-unionpacific_3818ILLUSTRATION: Jonathan Hill
Over the past six years, the state of Oregon has handed out $295 million in subsidies to local governments and private companies to help build and repair ports, rail lines and public transit.

The ConnectOregon program is specifically supposed to subsidize projects that are crucial to helping create jobs. 

The law that authorizes the program says the grants should be handed out based in part on “whether a proposed transportation project creates construction and permanent jobs in this state. 

But that doesn’t seem to apply to everyone getting the money—namely, rail giant Union Pacific.

As WW reported last month, Union Pacific has been given $24.7 million in subsidies from the state, even though the company posts profits in the billions [“Gravy Train,” Feb. 8, 2012].

The 2005 Legislature approved ConnectOregon to finance transportation projects that don’t include building roads and highways. The program borrows money to help finance projects, then uses lottery profits to pay off the bonds.

Most of the money has gone to local governments and port districts, but a good portion has also gone to private rail companies. The biggest is Union Pacific.

In the three rounds of ConnectOregon grants awarded since 2006, Union Pacific has applied for 11 and received four. All of the corporation’s applications have declared how many jobs each project would create.

The answer?

Zero. Zip. Not one.

In the first round of ConnectOregon grants, Union Pacific won a $7.4 million subsidy to improve a rail yard in Hermiston. When asked how many jobs the project would create, the company said none.

“Work on this project will be performed by existing Union Pacific personnel,” the company’s application says. “Thus, new construction jobs will not be created by this project.”

Union Pacific pointed out the new rail yard might help create jobs indirectly by improving the state’s transportation system.

But the company’s later applications didn’t make even that promise.

In 2008, the state gave Union Pacific $7 million to repair rails in the St. Johns area. The application for that grant asked, “Does this project benefit the Oregon economy by providing improvements that ensure specific non-speculative job creation or retention (beyond short-run construction jobs)?”

Union Pacific’s answer: “No.”

The company gave essentially the same answer when the state gave it $10.3 million in 2010 for projects in Portland and Albany.

Union Pacific has applied for an $8.2 million grant in the next round of subsidies, valued at $40 million, which the Oregon Department of Transportation is expected to approve this spring.

Union Pacific spokesman Aaron Hunt says his company's projects met other criteria weighed by ODOT. "The four Union Pacific ConnectOregon projects were selected due to the various transportation benefits they would produce in Oregon," Hunt wrote in an email to WW.

ODOT spokeswoman Shelley Snow says a grant application that doesn’t promise to create jobs won’t be automatically dismissed.

“If the project creates jobs, that’s a bonus point for it compared to other projects,” Snow says. “Job creation is important, but it is just one of several criteria that are being reviewed.” 

 
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