At issue is what to do about Amtrak, a monopoly corporation set up by Congress in 1970 to take the burden of money-losing passenger service off the freight railroads. It has been through periodic funding crises ever since and another is looming at the end of Fiscal Year 2002--a crisis that could affect not only Amtrak's viability but also many state and local efforts to increase rail ridership as a way to reduce congestion on highways and at airports.
Three factors are fueling the forthcoming fiscal debates. First, it appears unlikely that Amtrak will be able to comply with a 1997 law requiring it to cover its operating costs by 2003. Second, even if it succeeds in this ambitious goal, federal and state policy makers still must decide whether and how to provide Amtrak with the money it needs to maintain existing facilities and trains. Finally, there is pressure to create new federal-state partnerships to develop high-speed rail service all over the nation.
Operating funding is the most immediate problem. Amtrak officials claim they are on their way to becoming self-sufficient by focusing on a combination of service improvements (including a new high-speed service between Boston and Washington). Amtrak also has entered into financial partnerships with 36 states (from California to North Carolina) both to improve existing intercity rail services and in many states to begin developing new high-speed rail services as well. Amtrak, finally, is entering into new business ventures, notably providing express freight service in partnerships with private-sector firms, such as United Parcel Service.
Both the U.S. General Accounting Office and the U.S. Department of Transportation's Inspector General have found that Amtrak's costs have been growing almost as fast as its revenues, so little progress has been made in closing its historic budget gap. They found, moreover, that Amtrak has yet to identify the bulk of actions it will take to close its operating deficit.
What happens if Amtrak isn't self-sufficient? Under the 1997 law, an independent bipartisan commission called the Amtrak Reform Council is charged with developing "an action plan for a restructured and rationalized national intercity rail passenger system." Second, Amtrak must prepare a liquidation plan for Congress, which must then decide what to do.
Even if Amtrak finds a way to cover its operating costs, the railroad has enormous capital needs--perhaps as much as $9 billion dollars between now and 2015. Many of those costs are centered on the Northeast Corridor--between Boston and Washington--where Amtrak actually owns most of the tracks and stations. (In most other parts of the country, Amtrak uses tracks owned by freight railroads.) These needs include catching up with deferred maintenance, badly needed safety improvements to tunnels that lead into New York's Pennsylvania Station, and replacing an overhead electrical system between New York and Washington that dates from before World War II.
Such repairs would benefit much more than Amtrak. More than 90 percent of the 1,200 trains that use these tracks and stations each day are commuter trains run by the various state transit agencies in the corridor. The agencies, however, pay only a small portion of the corridor's costs, meaning that cash-strapped Amtrak is subsidizing a host of local transit agencies.
This situation recently led the staff of the Amtrak Reform Council to resurrect an intriguing proposal originally made in 1997: Congress would divide Amtrak into a firm that would operate trains and one that would own and maintain tracks and stations. This would align rail with other modes of transportation. Airlines, for example, don't own airports or the air traffic control system; truckers and automobile drivers don't own highways. The infrastructure is provided through programs organized and funded by federal, state and local governments. To date, prominent federal and state officials have not given the idea serious consideration.
Beyond the immediate capital needs, there is a looming question of the role Amtrak should play in developing new high-speed rail corridors across the country. Mayors and governors in jurisdictions to be served by such proposed services have strongly backed proposals to fund new services on the grounds--some call it an unrealistic assumption--that the trains would reduce highway and airport congestion and help spur downtown revitalization.
This fall, Amtrak unsuccessfully sought legislation giving it authority to borrow as much as $10 billion to support new high-speed rail initiatives. Meanwhile, Amtrak President George Warrington has already told Congress that it might cost several hundred billion dollars to build a national high-speed rail system.
Congress will soon be confronted with difficult, important--and expensive--choices to make about Amtrak, choices that many state and local officials see as critical to their futures.
