Leaders of a House subcommittee on Tuesday questioned whether it makes financial sense for Amtrak to continue to operate long-haul service routes during a hearing that may foreshadow one of the key topics of the next rail bill.
This is a pivotal time for Amtrak: the Passenger Rail Investment and Improvement Act expires in September, and re-authorization is one of the most significant pieces of legislation facing the House Transportation and Infrastructure Committee.
Republican Rep. Jeff Denham of California, a frequent critic of rail spending, which he often characterizes as wasteful and inefficient, is the chair of the rail subcommittee. Republican Rep. John Mica of Florida, the former chair of the House Transportation and Infrastructure Committee and another strong critic of Amtrak, is also a member. That means two of the biggest critics of the way passenger rail currently operates could play a role in shaping legislation that affects it.
On Tuesday, Denham's questions focused on the efficiency of Amtrak's long-haul service, which operates at a financial loss.
While Denham had positive comments about Amtrak service on the Northeast Corridor (where it has an operating profit) and its medium-length routes under 750 miles (which get financial support from states), he questioned the value of pumping federal money into the system's longest routes.
According to Denham, those long-haul routes lost a combined $600 million in 2012. "We simply cannot afford to continue these levels of subsidized losses year after year," Denham said in his prepared remarks.
Since PRIAA became law in 2008, the Northeast Corridor's profits have increased by 143 percent and the state-supported routes have shrunk their losses by 24 percent, but long-distance routes have increases their losses by 11 percent, according to Denham.
In a statement released during the hearing, Amtrak argued that a federally-funded rail system is the "best way to keep costs low, provide customer choices that build ridership and develop economies of scale."
Joseph Boardman, the president and CEO of Amtrak, said he doesn't see long-distance service ever being profitable. But he also said the rail provider is required by existing federal law to operate the rail system, including long-distance routes. He said long-distance ridership is up nearly 27 percent since 2006, and in some places it's the only mode of transportation besides driving that connects communities.
Tuesday's hearing comes on the heels of a Brookings Institution report released this spring that calls for states to take on a greater role in providing financial support for Amtrak's long-distance routes. The current rail law requires states to provide operational funds to help support passenger rail corridors of less than 750 miles.
"If there's no state support for these routes, they should not be operating," author Robert Puentes, who testified at Tuesday's hearing, told Governing this spring. "It shouldn't be something Washington is dictating."
But Boardman said Washington may not find savings it expects if it starts cutting support for long-distance service, and the feds risk turning the passenger network into a series of "dangling pieces" that aren't properly linked.
Ross Capon, president and CEO of the National Association of Railroad Passengers, testified that eliminating any long-distance route could affect a network that impacts other routes, making it difficult to estimate the financial impact of scrapping service.
While several of the committee members argued the long-haul routes are impractical -- in some cases, they're more expensive and time consuming than taking the bus -- Capon said the long-distance routes are used heavily by passengers who are only traveling a portion of the route. And, he added, long-distance routes are the only Amtrak service in 23 states.
He also argued against the Brookings proposal, noting that in order for a long-distance route to survive, seemingly every state it travels through would have to agree to fund the service. "Any single state not cooperating could torpedo an entire route," Capon said.
Denham also questioned why Amtrak is in collective bargaining negotiations that could result in a 15 percent pay raise for its employees. Boardman said those raises would be implemented over five years and are in line with industry wages.