By Michael Milligan
WASHINGTON -- Amtrak said a plan to split the rail line up "side
steps...underlying policy and funding issues" despite the fact it
underscores the need for increasing capital investment in rail
service.
Under the plan proposed to Congress by the Amtrak Reform Council
on Feb. 7, Amtrak would be split into three divisions including a
federal oversight agency; a government-owned and -operated
corporation to control the Northeast Corridor's infrastructure; and
a train operating company that, after a transition period, would be
shifted to the private sector.
The council, an independent body that oversees Amtrak, contends
the Northeast Corridor, encompassing Washington, New York and
Boston, has been expensive to maintain, costing at least $800
million to $1 billion a year.
"Amtrak has proven that it cannot focus effectively on its core
mission of running trains and running them well," said Gil
Carmichael, chairman of the council. "Amtrak has too much to do,
does little of it well."
While Amtrak agreed with the council that "the current policy
model for passenger rail does not work, cannot work, and must be
fixed," it said mission of rail line has to first be determined
before any of the council's proposals can work.
It is up to Congress whether or not to accept the council's
recommendations.
In a statement, Amtrak said "a federal commitment to define,
develop and invest in the passenger rail system," must first be
decided before "the nation determine the system's scope and nature,
level of necessary funding, and source of funding."
Amtrak said "No council or commission can make these decisions
-- the ARC hasn't -- and until these issues are resolved, the
nation's passenger rail system will continue to be torn by
conflicting policy mandates and inadequate capital, whether
operated by Amtrak or anyone else."
While the debate over Amtrak has raged in Congress since the
rail line's inception 30 years ago, it is expected to take on a new
urgency this year. Under a law passed in 1997, Amtrak is supposed
to become operationally self-sufficient by 2003.
"This report recognizes the unfortunate realities of Amtrak's
continued management and operating problems," said Rep. Don Young
(R.-Alaska), chairman of the House Transportation Committee, which
will conduct an oversight hearing on Amtrak on Feb. 14.
"Its costs are too high and it runs a system that is designed to
win funding support in Congress rather than a system based on sound
financial and economic decisions," Young said.
Young has sponsored legislation that would provide $71 billion
in railroad infrastructure expansion and improvements.
Funding Amtrak remains one of the key aspects of the ongoing
debate.
The Bush administration only has requested $521 million for
Amtrak in the budget it sent to Congress.
It said, "Amtrak has utterly failed" to turn a profit despite
receiving "$24.2 billion since its creation."
By comparison, the budget calls for spending $28.5 billion on
the highways next year.
The administration said, "has accumulated about $20.4 billion in
operating losses over [its 31-year history], for an average annual
operating loss of approximately $660 million."
Indeed, the losses are high.
According to report issued by the inspector general for the
Transportation Department, Amtrak lost $1 billion last year, the
most ever in its history, and is unlikely to reach that
self-sufficiency goal without significant cuts in service.
Amtrak, last week, announced plans to cut its spending by $285
million this year, 23% less that the $770 million it intended to
spend, eliminating 1,000 management and labor positions, and
possibly end its long-distance train service by October.
But it also said it would ask Congress for $1.2 billion to
operate next year.
Rather than pour more money into Amtrak, the Cato Institute, a
Washington think tank, suggests the government allow it to fall
into bankruptcy.
A paper prepared by Joseph Vranich, a former Amtrak Reform
Council member; Cornelius Chapman, a lawyer; and Edward L. Hudgins,
former director of regulatory studies at the Cato Institute said,
"Amtrak's passenger rail operations constitute a very small part of
transportation today; thus bankruptcy would produce very little
disruption of travel."
A bankruptcy would allow a judge to sort out Amtrak's valuable
assets, which would be acquired by a private sector rail
company.
The paper argued the "reforms currently being discussed by the
Amtrak Reform Council are too little, too late."
But Scott Leonard, assistant director of the National
Association of Railroad Passengers, a lobbying group, said Amtrak
is getting a bad rap.
"People go around and say it is all Amtrak's fault and we have
wasted the $25 billion we have spent on it in 30 years" and that
that high-speed trains have been so far limited to the Northeast
Corridor, he said.
"But to say that is to be totally ignorant to what it would have
cost to have [high-speed trains] running all over the place" during
the last 30 years.
But Leonard did agree with the Amtrak Reform Council's report in
one respect.
"The thing that has not been discussed by the ARC until now
addresses what we see as the core problem with passenger rail in
this country, which is the low amount of funding it has
traditionally gotten for the mission people want to put on to it,"
Leonard said.