Talgo Files Claim Against State
State would have to pay $136 million for canceling train contract.
As Patrick Marley and the Milwaukee Journal Sentinel reported today, the U.S. arm of the Spanish train-maker Talgo has filed a $65.9 million claim against the state, “setting up a likely lawsuit and reviving debate over Gov. Scott Walker‘s rejection of $810 million in federal stimulus money for a high-speed rail line.”
Talgo’s $65.9 million claim against the state Department of Transportation includes $18.6 million in unpaid invoices and interest, $23.5 million in lost business, $10.5 million in damage caused by state officials “continually defaming” Talgo’s reputation and $9.8 million in lost maintenance work.
If Talgo was successful in its suit, taxpayers would have to pay Talgo $65.9 million “and immediately refund $70 million to bond holders rather than paying that sum off over the coming years,” Marley writes.
Talgo has filed this claim with the Wisconsin Claims Board. “If the Claims Board were to agree with Talgo,” writes Scott Bauer for the Associated Press, “the Republican-controlled Legislature and Walker would also have to sign off, something unlikely to happen. If the claim is rejected, Talgo could take its case to court.”
In short this dispute is likely to take some time to settle.
Though Gov. Walker put an end to the high-speed rail plan for Chicago to the Twin Cities via Milwaukee and Madison, Walker made it clear he would honor the state contract with Talgo for the Hiawatha line from Chicago to Milwaukee. “Gov Walker called us,” Friend recalls. “He said I am a supporter of the Hiawatha Project. I have no issue with it.”
But the Walker administration was painted into a corner on this issue by Republicans on the Legislature’s Joint Finance Committee, who wanted no part of any contract with Talgo.
The result was a colossal waste of government spending. In Wisconsin, the state signed a July 15, 2009 contract to pay $47.5 million to purchase two trains, and a December 30, 2009, contract to pay Talgo $4 million annually for 20 years for maintenance of the trains. To help attract Talgo’s plant to Milwaukee, the city spent nearly $11 million and state invested another $3.5 million to upgrade the 82-acre site Talgo still occupies.
If Talgo is successful with its suit, the bill for taxpayers would rise much higher.
Update 3:25 p.m. November 8: A new story by the Washington Post portrays Wisconsin as the classic example of how Republican governors like Scott Walker help defeat — in many areas of the country — President Barack Obama’s vision for a network of high speed rail in America. The story also offers opposing takes on the issue from Walker and Milwaukee Mayor Tom Barrett.