Gov. Scott Walker announced Tuesday morning that Wisconsin will apply for $150 million in federal funds to improve the Hiawatha Amtrak railroad connecting Milwaukee and Chicago.

“Upgrading the Hiawatha line will save the state money and improve rail service for Wisconsin customers,” Walker said in a statement. “The state will save money immediately on capital costs and in the long-term with lower operating costs. Service improvements will also enable the state to recover more from ticket sales.”

The $150 million grant would permit Wisconsin to purchase two train sets and eight locomotives. The money would also allow for the construction of a maintenance facility at Century City that is expected to create around 1,000 jobs.

Milwaukee Mayor Tom Barrett, who ran against Walker in the 2010 Governor race, said he supported Walker’s grant application.

“This is an important step forward toward improving the rail connection between Milwaukee and Chicago,” Barrett said in a statement. “The Hiawatha is a popular route with a growing number of riders, and it provides a valuable economic link between Illinois and Wisconsin.”

He added most of the upgrades involved with the train project would be constructed in Milwaukee, providing employment to citizens in a time of high unemployment.

Tuesday’s announcement has caught a number of local officials and Wisconsinites off guard after Walker refused to accept an $810 million federal grant to construct a high-speed railway connecting Madison and Milwaukee back in December.

Madison’s Mayor Dave Cieslewicz said the governor’s decision was surprising.

“It’s mind-boggling that the governor turned down $810 million that we had in hand, only to turn around and apply for this $150 million grant,” Cieslewicz said.”The $810 million would have done everything he has asked for now, plus it would have added a passenger rail service between Milwaukee and Madison.”

Cieslewicz said he is confident the connection between Chicago and the Twin Cities, which will most likely contain stops in Madison and Milwaukee, will be revisited in the future. However, Cieslewicz said he did not expect Walker to reconsider the issue during his term as governor.

Cieslewicz said he agreed the governor’s decision would benefit Milwaukee but he would have liked to see the same benefits stretched to Madison.

Rep. Brett Hulsey, D-Madison, said he too would have liked to see a railroad project impact the entire state and said the project Walker passed up would have created jobs to help the economy.

“Our goal was to use the $810 million in federal grant money to create 5,500 train jobs, upgrade our freight lines and improve and restore train service to all of Wisconsin,” Hulsey said. “Milwaukee already has this service, and it will be made better, but we were, and still are, hoping to extend this across the state.”

Currently the Chicago-Milwaukee route is ranked one of Amtrak’s top 10 rail corridors in the country, carrying a record 800,000 passengers this past year, Chicago Amtrak spokesperson Marc Magliari said.

“The route is very popular, and an improvement will be very beneficial not only to our current passengers but in attracting more,” Magliari said. “The route has been showing strong ridership and continues to grow every year.”