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Thread: Amtrak's Budgetary Crapshoot

  1. #1

    Default Amtrak's Budgetary Crapshoot

    November 3, 2003

    Amtrak's Budgetary Crapshoot

    Washington lawmakers are haggling over next year's budget for passenger rail. They could force Amtrak to shut down, allow it to limp on while deferring important maintenance, or cover its needs. The right choice covering its needs is clear. But Amtrak is vulnerable because unlike all other intercity transportation, rail does not have a trust fund with a steady stream of public funds.

    This is more than a little shortsighted. The development of high-speed trains along a few heavily traveled corridors is crucial in the long term to alleviating highway and airport congestion. But neither the Bush administration nor Congress has a realistic vision for pursuing this goal.

    In theory, the administration wants to someday allow private train operators to take over certain Amtrak routes and have state governments help subsidize the service. In reality, however, it has proposed a paltry $900 million subsidy for fiscal 2004 that would bring all trains to a halt within months, and force the dismantling of a system that could not easily be put back together again. The amount is not enough to cover operating deficit, debt service and other fixed expenses, yet House Republican leaders want to hold Amtrak to it.

    The Senate has approved $1.35 billion for Amtrak. That's $350 million less than the railroad requested, but allows it to limp on by putting off less essential maintenance. Of course, "less essential" is a relative term for a railroad that along the heavily traveled Northeast corridor relies on ancient infrastructure. The line's electric cables linking New York City to the rest of the country date back to the early 1930's. After the recent blackout, two of three were out. A loss of the third cable would have interrupted not only Amtrak traffic, but also commuter rail traffic, possibly for months.

    David Gunn, Amtrak's president, has an ambitious plan for repairing the railroad, which this year is seeing record passenger levels. Even those who want to privatize the system should realize that it must be fixed before it can be sold. Budget battles in Congress can seem abstract, and the budgetary tug of war here does not involve that much money within the broader context of all transportation spending. But refusing to invest enough in Amtrak's infrastructure now is to deny any plausible future for passenger rail in this country.


    Copyright 2003 The New York Times Company

  2. #2

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    While reading the article about the problems at Teterboro Airport, railroads came to mind.

    We are moving in the wrong direction.

  3. #3

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    Thank the stingy rednecks in Washington.

  4. #4
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    Washington Post -- Op Ed page -- Monday, January 3, 2005; page A13

    Beyond Amtrak
    Federal Funding for Trains Should Be Similar to Highway and Airport Programs

    By James Coston

    America's intercity passenger rail company, Amtrak, cannot survive much longer -- at least not in its current size and shape -- on the amount of annual funding that Congress and the administration provide. That was the conclusion of the Transportation Department's inspector general, Kenneth M. Mead, in a report delivered Nov. 18. It ought to be heeded.

    The administration wanted to provide Amtrak with $900 million this fiscal year. Congress came through with $1.2 billion, but Mead agrees with Amtrak chief executive David Gunn that even the higher figure is not enough to keep the full operation going.

    "Unsustainably large operating losses, poor on-time performance, and increasing levels of deferred infrastructure and fleet investment are a clarion call to the need for significant changes in Amtrak's strategy," the inspector general wrote. "Continued deferral brings Amtrak closer to a major point of failure on the system but no one knows where or when such a failure will occur."

    Mead noted that on the Boston-New York-Washington Northeast Corridor, the only substantial piece of railroad that Amtrak owns and controls, century-old movable drawbridges could fail at any time for lack of upkeep or replacement. One such failure would close the line, forcing a massive, expensive and probably unmanageable diversion of the region's business and personal travel to already overburdened highways and airports.

    Outside the Northeast Corridor, Amtrak rents track space from the privately owned freight railroads. That infrastructure is more sound, but freight-train congestion and antique signaling throw passenger trains off schedule. Meanwhile, Amtrak's diversion of scarce capital funds to patch track along the Northeast Corridor leaves no money to rebuild or expand its small rolling-stock fleet. Ridership grew by double digits on key corridors in California, Washington state and in the Midwest last year -- but no funds are available for more cars or locomotives.

    Whether it's the railroad falling apart in the East or the fleet failing in the rest of the country, Amtrak is not getting the federal support it needs to meet demand.

    Mead did not say why this is happening or what needs to be done about it. As a veteran Washington bureaucrat adept at ministering to multiple contending constituencies, he eschews the blame game. Instead, he handed the job of sorting it out to Congress, which, after all, is the body that will have to fund any solution.

    "Congress needs to provide clear direction for Amtrak's operating and capital investment priorities as well as Federal funding levels in reauthorization legislation," Mead wrote. He suggested five possible strategies: refocus on under-500-mile corridors, where fast trains outperform air and auto transportation; cut low-performing operations; increase funding to develop the entire existing system; fund only to maintain the status quo; or "any combination of the above."

    That's an interesting slate of choices, but all of them amount to micromanagement unless Congress first takes another, global step: It has to stop treating passenger trains as a business and start treating them as a federal transportation program.

    What does a federal transportation program look like? Simple: like our highway and airport programs. The federal government doesn't operate the vehicles or market the service. There's no such company as "Amcar" or "Amflight." Instead, Washington helps the states to fund a state-of-the-art infrastructure that private operators can have access to -- highways for private cars and commercial motor coaches, airports for airliners. Congress needs to stop focusing solely on Amtrak, a government-owned train company operating on obsolete private and public infrastructure, so that it can refocus on getting matching funds out to states and communities that want to build up their intercity railroad tracks and start running fast, frequent, comfortable trains that people will pay to ride.

    Several impatient states -- California, North Carolina and Washington -- couldn't wait for a federal program, so during the go-go '90s they spent some of their taxpayers' money to build track capacity and buy trains on their own. Their programs are successful -- California's 60 daily departures are carrying more than 4 million riders a year, and growth is quickly surpassing the capacity of the state-owned fleet.

    But even rich states such as California have hit the fiscal wall, much as Pennsylvania did in 1939, when it ran out of money to finish its new turnpike and had to wait for an emergency grant sought by President Franklin D. Roosevelt. Unless Congress develops a federal-state matching-grant plan for railroad tracks like the highway program it started in 1916 and the airport aid program it passed in 1946, passenger trains will continue to starve, highway and airport backups will grow, and Mead's successors at the Transportation Department will continue to scratch their heads about why the federal government can't seem to run a profitable train business.

    Passenger trains used to be a profitable business in this country -- many, many years ago, when railroads enjoyed a monopoly over mechanized overland transportation and the federal government was not yet building and subsidizing two competing travel systems. But those days are gone. To expect a passenger train company to earn a profit on today's underfunded, obsolete and downsized track network is an exercise in nostalgia.

    But to expect fast, frequent, efficient trains to carry masses of travelers who now fly, drive or stay home is the height of reality -- provided the funding is there for a railroad infrastructure as modern as the ones government provides for cars and airplanes. The key is our proven federal system of matching grants. It's amazing how much money a state legislature will appropriate for a project when it knows there's money waiting in Washington to match it. And it's amazing how eager entrepreneurs are to provide quality transportation once they're sure government will keep funding the infrastructure.

    Look at the airlines. They're broker than Amtrak, but they keep trying, because win or lose, they know government will keep paying for the airports. Infrastructure assistance, not operations, is the federal government's proper role in a better train system.

    The writer has worked for Amtrak and served on the Amtrak Reform Council. He is chairman of NewTrains Leasing System, which provides financing for passenger train equipment and infrastructure.

    2005 The Washington Post Company

  5. #5

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    November 10, 2005

    Amtrak Fires Its President in Dispute Over Future

    By MATTHEW L. WALD

    WASHINGTON, Nov. 9 - Amtrak's board fired the company's president on Wednesday morning, widening a divide between the Bush administration and Congress over the future of the railroad.

    The board chairman, David M. Laney, said that the president, David Gunn, helped develop a strategic plan that would have injected more competition into passenger operations, but that Mr. Gunn's "enthusiasm and commitment seems to have drained away."

    Mr. Laney said Mr. Gunn had failed to move forward on simpler initiatives, like outsourcing maintenance and catering in a way that would cut expenses.

    But in a letter to the board dated Nov. 9, Mr. Gunn said, "I can assure you that we have already begun to work on those initiatives that are wholly within our control." In a telephone interview Wednesday he said some changes would require action by Congress.

    Mr. Gunn, who is credited with turning around New York City's subway system in the 1980's and came out of retirement three years ago to steer Amtrak successfully during a financial crisis, described the reason for his dismissal as "ideological."

    "Obviously, what their goal is - and it's been their goal from the beginning - is to liquidate the company," Mr. Gunn said in the interview.

    The Bush administration has proposed putting the railroad tracks of the Boston-to-Washington Northeast Corridor, which are Amtrak's major asset, in the hands of a federal-state consortium, an idea Mr. Gunn has vehemently opposed. The board has voted for now to put the corridor in a separate subsidiary.

    Mr. Gunn said he did not oppose injecting some competition into the system if it was done carefully. He pointed out that the administration had discussed bankrupting the railroad, which would mean breaking it up, as a way to reorganize.

    "They want at least one transportation mode that is totally free market," Mr. Gunn said.

    But highways, airports and ports are all federally subsidized, he said, decrying "all this angst over an operating deficit of 500 million bucks for the whole country, and the bulk of money going into capital or infrastructure."

    The action Wednesday was a sharp turnaround for the board. Asked in September about Mr. Gunn's performance, Mr. Laney told a Senate subcommittee, "Mr. Gunn has done, as far as I am concerned, a splendid job."

    He said Mr. Gunn had "righted a ship that was listing and about to spill over."

    Mr. Gunn is known as a rail-turnaround artist. He was brought in to fix the New York City subway system in the 1980's, and provided leadership in the construction of the subway system in Washington.

    Amtrak's supporters in Congress reacted swiftly and bitterly to Mr. Gunn's removal. Democrats sought to contrast what they said were his successes, including cutting expenses, increasing ridership and improving the railroad's physical condition, with the recent failures of the Federal Emergency Management Agency after Hurricane Katrina.

    "We have learned recently that there is room for cronies in this administration," said Senator Byron L. Dorgan, Democrat of North Dakota, "and we've learned the cost of cronyism. And now we've learned today there is not room for straight shooters."

    Senator Charles E. Schumer, Democrat of New York, questioned the board's legal ability to fire Mr. Gunn. Only one board member, Mr. Laney, has been appointed by the president and confirmed by the Senate, Mr. Schumer pointed out. The secretary of transportation is, by statute, a member, and two other members are recess appointments, whose terms will expire when Congress goes home in a few weeks. There are three vacancies.

    "Gunn is more legitimate than the board is," Mr. Schumer said.
    He asserted that Mr. Gunn was fired over policy, saying: "The policy difference is that the board wants to kill Amtrak and Gunn wants it to prosper. It's that simple."

    The railroad announced Wednesday morning that Mr. Gunn had been "released" from his job, then notified Mr. Gunn. He replied with a memorandum to the board: "For your information, I did not resign. I was removed. It's been fun. Good luck."

    Mr. Gunn, 68, was paid $275,000 a year. An Amtrak spokesman, Clifford Black, said he did not know if there was a severance package.

    On Sept. 30, the railroad ended the fiscal year with $120 million in cash as operating capital, a strong performance, Mr. Gunn said, especially considering that the Acela express train was out of service for most of the summer because of a brake problem. The Senate just voted 93 to 6 to authorize $11.6 billion for Amtrak over the next six years, although the vote did not actually appropriate any money. That measure, which will probably go to a conference committee to work out differences with a House version, would make the Amtrak president a member of the board.

    Both the House and Senate have supported aid packages for the current fiscal year that are far more generous that the White House has proposed.

    But the Government Accountability Office said last week that while progress had been made at the railroad, Amtrak needed "fundamental improvements."

    Mr. Gunn is widely credited with improving the railroad's management, cutting costs, imposing better financial controls and improving the state of repair of Amtrak's locomotives and passenger cars, which are old, and its tracks, signals and electrical systems, which are truly antique. But while ridership has recently risen to record levels, government auditors predicted that Amtrak's budget deficit would grow sharply in the next few years. The administration has said it is determined to end the perennial subsidies to the railroad, which was created 30 years ago to take over passenger service as the commercial railroads abandoned that business as unprofitable.


  6. #6

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    Quote Originally Posted by ZippyTheChimp
    The administration has said it is determined to end the perennial subsidies to the railroad
    Cheap political posturing that panders to the vast majority of Americans who never ride a train. To be consistent, he'd have to vow to end highway and air travel subsidies.

    This is like everything else about this administration. The question is never "what's really right for the country"; it's always "what's politically expedient."

  7. #7
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    Typical Republican BS: Trash the use of "subsidies" for programs that they don't like, but maintain them for their corporate pals in Agri-business, etc.

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