Alex Goldmark is a senior producer in the newsroom for New Tech City and Transportation Nation.
Amtrak: 'We're 85% Self-Sufficient'; Pols: 'Not Good Enough'
Thursday, September 20, 2012 - 03:33 AM
The House Transportation and Infrastructure Committee meets this morning to hold Amtrak to the fire over taxpayer subsidies to the national rail network. Amtrak, founded in 1971, has never made a profit. Over its four decades of operating a for-profit passenger service on 44 rail routes, Amtrak has received about $40 billion in subsidies for capital and operating expenses.
Transportation Committee Chair, John Mica (R-Fla.) says a big chunk of those subsidies are wasted. In recent months, Mica has been shining a brighter spotlight on what he sees as unnecessary spending and mismanagement at Amtrak. Today's hearing will be the third of three discussing Amtrak operations. The head of Amtrak, Joe Boardman, (interviewed by TN here) will be on the stand along with representatives from the bus industry, a rail passenger group and the conservative Cato Institute.
Mica's office and Amtrak have each issued statements that hint at how this hearing will play out. We've pasted them below. Consider it a tale of dueling press releases.
The announcement from Mica's office states the purpose of the hearing bluntly: "to review Amtrak operations and the need for reforms to significantly cut the unnecessarily high costs of U.S. passenger rail service."
Late yesterday afternoon, Amtrak issued a retort that touted record ridership and a consistent decline in subsidies that peaked in 2004. The proud subject-heading on Amtrak's email blast is a direct response to Mica's criticism: "Amtrak Covers 85 Percent of Operating Costs with Ticket Sales and Other Revenues." That still leaves $466 million in annual subsidies. And that means each passenger trip on Amtrak costs the government $46, more than ten times what other modes receive according to figures cited in Mica's statement, which quoted from a recent study funded by the bus industry.
Mica also offered a pair of line items he'd like to see slashed. One of the lines costs Amtrak $200 million on overtime pay annually, he says. Then there's the hamburgers. Mica devoted a whole press conference last month to lambasting Amtrak's $16 money-losing burgers and the $83 million the company loses from on-board food and beverage service. Mica says that's a glaring example of mismanagement, particularly considering Amtrak's failure to meet a Congressional mandate to break-even on food.
Congressional mandates, Amtrak has said in the past, are exactly the reason the company runs in the red, at least on certain routes. Amtrak was founded to operate a rail network as a for-profit company but also a national public good. Commercial passenger rail had all but failed by 1971. Freight companies were required to operate passenger service. Amtrak was the replacement for that unpopular system. (See these historical press releases from Amtrak's early days for a sense of the thinking in the early 1970s).
Many routes travel through sparsely populated towns with stops chosen as much by political negotiations -- or even mandate -- as passenger demand. Amtrak's long distance routes lose the most money. The worst performer of all is the Sunset Limited line from Los Angeles to New Orleans. As we reported last month, local officials are now agitating to restore that service along the Gulf Coast despite the fact that some stations had passenger numbers in the single digits.
If you want more data from the Transportation Committee, the briefing memo from Mica is here.
Amtrak funding has come to be a political football as a symbol of big government. Today's hearing is sure to be gripping political theater ... for us rail geeks, anyway.
Watch it here starting at 9:30 a.m.
Full Press Releases, first Mica, then Amtrak:
Billions in Taxpayer Subsidies for Amtrak to be Focus of Hearing
Washington, DC – The $40 billion cost to taxpayers in subsidizing Amtrak over the years will be the subject of a Transportation and Infrastructure Committee hearing on Thursday.
The Full Committee hearing, chaired by U.S. Rep. John L. Mica (R-FL), will investigate the monetary losses associated with Amtrak’s operations, explore and compare Amtrak’s level of federal subsidy with the subsidies provided to other modes of passenger transportation, and examine management deficiencies identified by the Amtrak Office of Inspector General.
Funding for Amtrak’s capital and operating expenses comes from operational revenues and appropriated funds. Amtrak’s operations have never resulted in a net profit with most of its routes losing money. The system as a whole only accounts for 0.1 percent of America’s passenger travel, but its per-ticket subsidy level is dramatically higher than other modes of transportation. Over the past 41 years, Amtrak has received nearly $40 billion dollars in taxpayer subsidies. According to a recent study comparing FY 2008 levels of federal subsidy by mode, aviation received $4.28 per passenger trip, mass transit received $0.95 per passenger, intercity commercial bus received $0.10 per passenger, and Amtrak received $46.33 per passenger.
Various factors result in Amtrak’s more than $460 million in annual operating losses, including $83 million per year in food and beverage operating losses (despite a long-standing Congressional break-even requirement), and more than $200 million annually in overtime pay (despite a Congressional cap on the amount of allowable overtime).
This will be the third in a series of Committee oversight hearings to review Amtrak operations and the need for reforms to significantly cut the unnecessarily high costs of U.S. passenger rail service. Click here for more information about Thursday’s hearing.
And from Amtrak:
AMTRAK COVERS 85% OF OPERATING COSTS WITH TICKET SALES AND OTHER REVENUES
Federal operating grant reduced nearly 50% since FY 2004
WASHINGTON - Amtrak President and CEO Joe Boardman will appear before a Congressional committee tomorrow and testify that with record ridership of 30.2 million passengers, Amtrak now covers 85 percent of its operating budget with ticket sales and other revenues, reducing the federal operating need to just 15 percent.
In addition, he will inform the committee that the FY 2012 federal operating grant of $466 million is significantly down from a peak of $755 million in FY 2004, or a reduction of nearly 50 percent in inflation adjusted dollars.
"Amtrak uses federal operating support to achieve the mission given to us by Congress to deliver the mobility, connectivity and economic benefits of a national passenger rail network, particularly long-distance train routes," Boardman stated.
Through dispatching services, operating contracts and access to Amtrak-owned and maintained infrastructure, Amtrak also supports the safe movement of more than 230 million commuter rail passengers and more than 300,000 carloads of freight rail service each year.
He also will reiterate that for FY 2013, Amtrak is requesting $450 million in federal operating support, an amount lower than what Congress appropriated for the current year. This is possible as a result of improved management and financial performance.
"The federal government has long been in the business of subsidizing all modes of transportation, yet no one can agree on what numbers to use to quantify the benefits of these investments," Boardman said. "Record ridership and revenue, best farebox recovery in the U.S. passenger rail industry, debt cut in half, increased efficiency, better cost controls, improved on-time performance and being the nation's only high-speed rail operator are strong indicators that Amtrak is putting our portion of the federal investment to good and effective use."
Also, Boardman will explain that according to the U.S. Department of Transportation, the numbers of Americans in smaller cities and rural communities who no longer have access to intercity bus or air service, and are served only by Amtrak, tripled in just five years. Ridership on Amtrak long-distance trains is up 18.4 percent from FY 2007 to FY 2011.
Finally, Boardman will remind the committee that throughout Amtrak's 41-year existence, passenger rail has been only a small portion of the annual federal transportation budget. In contrast, in just the past four years, the Congress appropriated $53.3 billion from general revenues to bail out the Highway Trust Fund as federal gas tax receipts prove insufficient - that's almost 30 percent more than the $39.3 billion in total federal expenditure Amtrak has received since it was created in 1971.
Amtrak is America's Railroad(r), the nation's intercity passenger rail service and its high-speed rail operator. A record 30.2 million passengers traveled on Amtrak in FY 2011 on more than 300 daily trains - at speeds up to 150 mph (241 kph) - that connect 46 states, the District of Columbia and three Canadian Provinces. Amtrak operates intercity trains in partnership with 15 states and contracts with 13 commuter rail agencies to provide a variety of services. Enjoy the journey(r) at Amtrak.com or call 800-USA-RAIL for schedules, fares and more information. Join us on facebook.com/Amtrak and follow us at twitter.com/Amtrak.
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