No, me neither!

Having ALREADY wasted hundreds of millions of YOUR TAX DOLLARS in trying to prop up the soon-to-be-bankrupt anyway AMTRAK, the Washington State DOT wants $53 million more of YOUR TAX DOLLAR for the next biennium in post I-695 backfill. Lets see..$32 million STATE subsidy for a half million annual riders gives a state subsidy of only $64 per rider or roughly $1 per mile (http://www.wsdot.wa.gov/pubtran/cascades/wsdotrail/0001release.htm). Federal subsidy is about $100 per rider on this route. Except the federal dollars are scheduled to go away in 2002, unless AMTRAK is self-sufficiebt by then, something the GAO says has about the chance of a snowball in Hell. And how much are we CHARGING these passengers, to lure them into taking these train rides? Heres the fares: Regular one-way adult fares between Seattle and Portland start as low as $21; Seattle and Vancouver, BC, $21; Eugene and Portland, $14; and Eugene and Seattle, $29. A one-way Business Class upgrade is a low as $15. Passengers are encouraged to purchase tickets early to obtain lowest fares. Reservations are required.

Gee, that makes subsidies about 80%. What a good deal. Why are we continuing this stupidity?

What Impact Does I-695 Have on the WSDOT Budget? Passage of the "$30 car tabs" Initiative 695 reduces the entire Washington State Department of Transportation (WSDOT) budget by more than one-third. The Washington State Transportation Commission (Transportation Commission) has approved a WSDOT budget proposal detailing how the agency will adjust to this revenue shortfall through June 30, 2002. The proposal has been submitted to Governor Locke and the Washington State Legislature for consideration. The transportation budget will not be finalized until it is signed into law, likely in Spring 2000. The primary source of state funding for the development of Amtrak Cascades service was eliminated with the passage of I-695. The Transportation Commission recognizes the benefits of rail passenger service as an integral part of our state's transportation system. The WSDOT budget proposal attempts to maintain operational partnerships and leveraged financial partnerships where possible. What is WSDOT's New Budget Proposal for Amtrak Cascades? For the current 1999-2001 biennium, the WSDOT budget proposal provides $53 million to maintain operational partnerships and fulfill limited commitments on work already in progress. This is a 65% reduction from the previously approved biennium budget. The proposed budget consists of $32.2 million for operations, and $20.8 million for limited capital investment. Will Amtrak Cascades Trains Keep Operating? Both the WSDOT/Transportation Commission budget proposal and the governor's budget proposal provide $32.2 million in operating funds, which would keep all existing Amtrak Cascades service operating. These proposals have been sent to the state legislature for consideration. What Will it Cost the State if Amtrak Cascades are Not Funded? The state can choose to fund Amtrak Cascades operations, or lose 80% or more of local Amtrak service. If Amtrak Cascades are not funded by Washington State, it is not likely that Amtrak could support service on its own due to their need to meet national business goals. As a result, all Amtrak service between Seattle - Vancouver, BC/Bellingham would be eliminated. Seattle-Portland service would be reduced from the current four round trips daily (Coast Starlight and three Amtrak Cascades) to a maximum of two (Coast Starlight and one Amtrak Cascades). Amtrak Cascades Talgo trains would likely be sold, leased and/or moved to other states. In addition, state and Amtrak-funded track and safety improvements were required before railroads would allow Amtrak Cascades trains on their tracks. If these trains are removed from service, the benefits of more than $125 million in state investments and $325 million in partnership investments made since 1993 would be lost. http://www.wsdot.wa.gov/pubtran/cascades/wsdotrail/i695acservice.htm

-- Craig Carson (craigcar@crosswinds.net), January 12, 2000

Answers

"Lets see..$32 million STATE subsidy for a half million annual riders gives a state subsidy of only $64 per rider or roughly $1 per mile "

Correction: Dang biennium. Why can't the state use a fiscal year like everyone else. ..$32 million STATE subsidy for a half million annual riders times two years gives a state subsidy of only $32 per rider or roughly $0.50 per mile .

Course you gotta add back another $20 million in capital investment (and note that in the last 6 years they averaged $21 million each year in capital investments already.

Still time to pull the plug on the choo-choos.

-- (craigcar@crosswinds.net), January 12, 2000.

last time i thought of using the train, was from L.A. to Wash. St. when a flight was canceled due to excessive snow at SeaTac..price...$750 dollars for 2, no sleeper, one way, great thanks but no thanks...I'd rather take the bus...

-- no chance (kingoffools_99@yahoo.com), January 12, 2000.

"last time i thought of using the train, was from L.A. to Wash. St. when a flight was canceled due to excessive snow at SeaTac..price...$750 dollars for 2, no sleeper, one way, great thanks but no thanks...I'd rather take the bus."

Yeah, but the jokes on YOU because YOUR state DOT has been slipping them money to subsidize this "service" (Most of the AMTRAK trains turn into a bus from Seattle to Vancouver BC). So you HAVE been paying for it, just not getting anything for your payment.

-- (craigcar@crosswinds.net), January 12, 2000.

Having ALREADY wasted hundreds of millions of YOUR TAX DOLLARS in trying to prop up a HIGHWAY and ROAD system that would be bankrupt without YOUR public subsidies (i.e., your wallet), the State (and Tim Eyman) wants $200 million more of YOUR TAX DOLLARS to fix old roads and build NEW ones that YOU'LL NEVER EVEN USE because they aren't anywhere near where you work or live.

And even though King County residents have VOTED to tax THEMSELVES and ONLY themselves for the purpose of a public transit system, TIM EYMMAN and his blind followers want to take AWAY your RIGHT to govern yourself. He wants the WHOLE STATE to decide how YOU should spend YOUR hard-earned money, even though residents in the rest of the state aren't contributing any money at all.

Ever hear of TAXATION without REPRESENTATION? Well gee, this is like REPRESENTATION without TAXATION, isn't it?

-- Common Sense (1@hotmail.com), January 13, 2000.

Common sense (?)-

I see you spamming the threads with this, but it really doesn't address the question. Can YOU justify the support to AMTRAK. The issue here isn't the transportation improvement initiative, although I'll be glad to discuss that on a more appropriate thread. The issue is CAN YOU JUSTIFY CONTINUING SUBSIDIES FOR INTER-CITY PASSENGER RAIL BY WASHINGTON STATE. Is this a valid expenditure of tax dollars, and if you believe it is, for gosh sakes why??

So, got anything to say relevant to the issue at hand, or just having a bad day and needed to ventilate?

.

-- (craigcar@crosswinds.net), January 13, 2000.

Current operating losses per passenger on AMTRAK trains operated in the state of Washington:

Pacific Northwest corridor $26 Empire Builder $136

Losses would have been worse without state suport provided by Washington and Oregon.

Load factors were:

Pac NW corridor 41.1% Empire Builder 61.7%

Source: GAO report GAO-RCED-98-151 dated May 1998 pages 6-7 page 40

Kind of like transit. They built it, nobody came, but they are continuing to put washington state transportation dollars into it. Despite the fact that the GAO is predicting Amtrak will go bankrupt in 2002, WA DOT would like to put a LOT of money into it.

-- (craigcar@crosswinds.net), January 16, 2000.

to Craig: Who takes the train from Seattle to Portland, and why? It must be pretty cheap to fly from Seattle to Portland, so why take a train. I can maybe understand Bellingham needing train service, but why Seattle to Portland?

-- Matthew M. Warren (mattinsky@msn.com), April 19, 2000.

Amtrak continues to flounder, and I understand from my own experience in government that they will never voluntarily say that they can't make the 2003 deadline, despite GAO reports and lack of any meaningful progress so far. I could live with that, but what galls me is that WA-DOT and our legislature continue to pour money into this albatross locally. The safety improvements are probably worth doing in their own right, and I really don't have any problem with them. The ultimate beneficiary of the track improvements will be BNSF when AMTRAK goes away in 2003. There stockholders will benefit at Washington taxpayer expense. Left high and dry will be the passenger cars and engines that we are buying. They'll be sold for pennies on the dollar.

-- (craigcar@crosswinds.net), April 19, 2000.

"to Craig: Who takes the train from Seattle to Portland, and why? " Interesting you should ask. The demographics are largely those of tourists who want the (highly subsidized) experience once, find out how slow and expensive it is (even with the subsidy), and never do it again. Here's a great quote from someone who's PRO Amtrak:

Testimony of Thomas A. Till Executive Director, Amtrak Reform Council before the Subcommittee on Ground Transportation Transportation & Infrastructure Committee U.S. House of Representatives Washington, DC October 28, 1999

Service Quality Thus far on an anecdotal basis, but, nonetheless, very clearly, the Council is beginning to get reports from dissatisfied customers of Amtrak. While it is important to note that these fragmentary reports the Council is receiving do not represent by any definition a representative sample, they are serious enough on their own to warrant a comment and downstream attention by the Council. They speak of poor and sometimes unpleasant service, equipment in poor repair, enroute breakdowns, and major delays in arrival. A significant part of Amtraks on-time performance problem is due not to Amtrak, but to the freight railroads over which Amtrak operates outside of the Northeast Corridor, particularly in the regions affected by the mergers of the Union Pacific-Southern Pacific and the CSX and Norfolk Southern acquisitions of the Conrail system. Nonetheless, Amtraks must make further efforts to improve on-time performance within the scope of its own operations, and this applies particularly to its long-haul operations. A FURTHER INDICATION OF THE PROBLEM OF CUSTOMER DISSATISFACTION WITH AMTRAKS QUALITY OF SERVICE IS INFORMATION, PROVIDED BY AMTRAK TO THE COUNCIL, INDICATING THAT 50 PERCENT OF THE RIDERS ON AMTRAKS LONG- HAUL INTERCITY TRAINS ARE FIRST-TIME RIDERS. GIVEN THAT THE RIDERSHIP LEVEL ON THESE TRAINS HAS BEEN ESSENTIALLY STATIC FOR YEARS, THIS SUGGESTS THAT HALF OF THE PEOPLE WHO RIDE THESE TRAINS NEVER RIDE THEM AGAIN.

-- (craigcar@crosswinds.net), April 19, 2000.

I am kind of afraid to post this, it's kind of a "War and Peace" size posting that may or may not format worth a darn. I'm ATTEMPTING it because the URL doesn't really get you directly to the testimony, and I think it's worth people seeing. It's testimony to Congress by the GAO concerning the Amtrak performance. As you may be aware, they are under Congressional mandate to at least break even (well, almost, Congress will still fund employee pensions) for operating expenses (Congress will still fund capital expenses) by the end of 2002. They have a LONG way to go and no good plan to get there. So far their best results have come about from selling Real Estate (which they can't keep up forever) and paying for operations out of capital funds (which GAO gently takes them to task for). But if you can get to the URL and find the testimony of all the witnesses, it's a real eye- opener. Huge money, going down a rat-hole. But what's WORSE, WA-DOT and the legislature are putting additional WA state tax dollars in there too.

Ms. Phyllis Scheinberg Associate Director for Transportation and Telecommunications Issues General Accounting Office http://www.house.gov/transportation/ctisub6.html

Mr. Chairman and Members of the Subcommittee: We appreciate the opportunity to testify today on Amtraks overall financial condition; its progress in becoming free of operating subsidies; its use of Taxpayer Relief Act of 1997 (TRA) funds; and its need for capital investment to improve quality of service. Our statement is based on our July 1999 report on Amtraks financial condition and our ongoing work for this Committee. In summary:  Amtraks overall financial condition improved in fiscal year 1999. Its net lossrevenues less expenseswas $907 million in fiscal year 1999. This loss is $23 million less than Amtraks net loss of $930 million in fiscal year 1998. Amtrak estimates that its net loss for fiscal year 2000 will decrease to $828 million.  The administration and the Congress have directed Amtrak to be free of federal operating subsidies by the end of 2002. Amtrak reduced its "budget gap"the gap that it needs to close to be free of federal operating subsidies by $18 million in fiscal year 1999. However, it must reduce the gap by an additional $291 million in the next 3 years. This needed reduction is nearly four times greater than the reduction Amtrak has been able to achieve in the previous 5 years. Finally, Amtrak faces many challenges in meeting its business plan goals to achieve operational self-sufficiency.  The Taxpayer Relief Act of 1997 provided Amtrak with about $2.2 billion to acquire capital improvements and maintain existing equipment in intercity passenger rail service, among other things. Amtrak reports spending over $1.2 billion of these funds, as of May 31, 1999. Amtrak has spent over half of this money--or $756 million-- on capital improvements such as track signals and improvements to bridges and electric catenary systems. Amtrak has also applied $427 million, or about one-third of its Taxpayer Relief Act expenditures, to a pool of expenses for maintenance of equipment through May 1999. However, because of the way that Amtrak applies Taxpayer Relief Act funds to maintenance of equipment expenses, it has not identified specific expenses that the Taxpayer Relief Act funds were used to cover.  Capital investments are critical to supporting Amtraks business plans and maintaining its viability. Such investments are needed to help Amtrak improve its quality of service and attract revenues. However, Amtrak does not have a current comprehensive 5-year plan. Further, it has significant unmet capital needs over the next 20 years. As a result, it is unclear at this time what Amtraks total capital needs are and how Amtrak plans to fund these needs. Background The Rail Passenger Service Act of 1970 created Amtrak as the nations intercity passenger railroad. The act, as amended, gave Amtrak a number of goals, including providing modern, efficient intercity passenger rail service; giving Americans an alternative to automobiles and airplanes to meet their transportation needs; and minimizing federal operating subsidies. Today, Amtrak provides intercity passenger service along 42 routes in 45 states. Like all major national intercity rail services in the world, Amtrak receives substantial government support. From 1971 through October 1999, the federal government has provided Amtrak with over $23 billion in financial assistance. This includes (1) about $2.2 billion in fiscal years 1998 and 1999 through the TRA for capital improvements and the maintenance of existing equipment in intercity passenger rail service, among other things, and (2) a $571 million fiscal year 2000 capital appropriation. In December 1994, at the direction of the administration, Amtrak established the goal of eliminating its need for federal operating subsidies by 2002. In addition, the Amtrak Reform and Accountability Act of 1997 (Amtrak reform act) prohibited Amtrak from using federal funds for operating expenses, except for an amount equal to excess Railroad Retirement Tax Act payments, after 2002. This statutory provision is the test for "operational self-sufficiency" that Amtrak must meet. Finally, the act requires that the Amtrak Reform Council (an independent oversight body created by the act) submit an action plan to the Congress for a restructured national intercity passenger rail system if, at any time more than 2 years after the enactment of the act and the implementation of a financial plan for operating within authorized funding levels, it finds that Amtrak is not meeting its financial goals or that it will require federal operating funds after December 2002. In addition, if the above events occur, Amtrak is required to develop and submit an action plan for its liquidation. Amtraks Overall Losses Decreased in Fiscal Year 1999 Amtrak made some progress in improving its overall financial condition: it reduced its net loss from about $930 million in fiscal year 1998 to about $907 million in fiscal year 1999. (See fig. 1.) In calculating net loss amounts for fiscal years 1998 and 1999, we excluded federal financial assistance from Amtraks revenues. This exclusion provides a clearer portrayal of Amtraks ability to meet its expenses from revenues generated by its own activities. This improvement in overall financial condition exceeded Amtraks expectation by $23 million. Amtrak estimates that its net loss for fiscal year 2000 will fall to $828 million. Figure 1: Amtraks Net Loss, Fiscal Years 1998 Through 2000

Note: Net loss amounts do not include federal financial assistance. Source: GAOs analysis of Amtraks data. Amtrak Faces Challenges in Meeting Its Business Plan Goals to Achieve Operational Self-Sufficiency Using Amtraks approach for measuring its budget gap, the railroad made some progress in moving toward operational self-sufficiency by the end of 2002. However, even this progress has been modest in comparison to the total improvement needed. To meet the goal of operational self-sufficiency, Amtrak has developed a series of strategic business plans. Amtraks latest strategic business plan, approved by its Board of Directors in October 1998, anticipates that the corporation will not use any federal subsidies for operating expenses (other than for excess railroad retirement expenses) in fiscal year 20021 year earlier than requested by the administration and specified in the Amtrak reform act. However, it will not be easy for Amtrak to achieve its targets for revenues and expenses for several of the business plans key actions. Amtrak Cites a Narrowing Budget Gap Amtraks efforts are pointed toward achieving operating self- sufficiency by fiscal year 2002. To achieve this goal, Amtraks strategic business plan focuses on reducing what it calls its "budget gap." Amtrak defines its budget gap as the corporations net loss less capital-related expenses, including depreciation of its physical plant, other noncash expenses, and expenses from its program to progressively overhaul railcars (i.e., to conduct a limited overhaul of cars each year rather than a single comprehensive overhaul every several years). In essence, the budget gap represents expenses not funded by Amtraks revenues or its capital program. In Amtraks view, if it reduces its budget gap to an amount equal to excess Railroad Retirement Tax Act payments, it will have met the statutory requirement for operational self-sufficiency. According to Amtrak, its budget gap fell by $18 million in fiscal year 1999from $494 million in fiscal year 1998 (after an adjustment for the cost of retroactive labor payments was made) to $476 million in fiscal year 1999. (See fig. 2.) Amtrak estimates that the budget gap will be reduced by another $114 million in fiscal year 2000 to $362 million. Figure 2: Amtraks Budget Gap and Progressive Overhaul Expenses, Fiscal Years 1994 Through 2000

Note: Amtraks progressive overhaul program started in fiscal year 1995 and affected its expenses starting in fiscal year 1996. Source: GAOs analysis of Amtraks data. However, Amtraks budget gap would be larger if expenses for progressive overhauls were included. Amtrak does not include these expenses in its calculation of the budget gap even though they are considered to be operating expenses under generally accepted accounting principles. According to Amtrak officials, while generally accepted accounting principles require the recording of such spending as operating expenses, Amtrak funds progressive overhauls through its capital program and therefore believes that the costs for them should be counted as capital costs. If progressive overhauls are included in the calculation of the budget gap, the gap would have decreased by $3 million in fiscal year 1999 (rather than by $18 million)from $561 million in fiscal year 1998 to $558 million in fiscal year 1999. In fiscal year 2000, the estimated gap would be $442 million if the costs of progressive overhauls are included, rather than $362 million. This issue will be important when the Amtrak Reform Council assesses Amtraks need for federal funds for operating self- sufficiency. However, even if Amtraks definition of its budget gap is used, the railroad must still reduce its losses substantially if it is to become operationally self-sufficient by the end of fiscal year 2002. In the next 3 fiscal years, Amtrak must reduce its budget gap by $291 millionfrom $476 million in fiscal year 1999 to an estimated $185 million in fiscal year 2002an amount equivalent to excess railroad retirement payments. This needed reduction is nearly four times the $78 million improvement that Amtrak was able to achieve in the previous 5 fiscal years1995 through 1999. Achieving Amtraks Strategic Business Plan Goals Will Be Difficult Under its October 1998 strategic business plan, Amtrak plans to reach operational self-sufficiency by emphasizing business growth through a number of initiatives focusing on increasing revenues. However, it will be difficult for Amtrak to successfully carry out its plan, raising the question about whether Amtrak will be able to achieve operational self-sufficiency by the end of fiscal year 2002. As shown in table 1, Amtrak estimates that its business plan initiatives will result in net cash improvements of $1.6 billion for fiscal years 1999 through 2002. Table 1 also shows that the expected cash impact from six key initiatives will account for nearly 60 percent of the expected financial improvement--$917 million. The remaining benefits come from hundreds of individual actions outlined in Amtraks business plan. Overall, Amtrak projects that if it achieves the financial benefits associated with these initiatives, it will gradually reduce its reliance on federal operating assistance, and reach operating self-sufficiency by 2002. Table 1: Estimated Financial Results of Amtraks Initiatives From Fiscal Year 1999 Through Fiscal Year 2002 Dollars in millions Initiative Change in revenues Change in expenses Net cash improvement Basis for estimate Begin high-speed service in late 1999 $822 $414a $408 Ridership forecast Expand express service 248 188a 60 Analyses of market potential Align intercity route network to meet customer demand 60 (45) 105 Officials professional judgment Implement service standards 85 (20) 105 Officials professional judgment Purchase electricity at wholesale rates (5) (34) 29 Negotiations with a utility company Implement cost-saving initiatives 56 (154) 210 Placeholders to balance annual budgets Subtotal $1,266 $349 $917 Implement hundreds of other initiativesb 840 148 692 Strategic business units forecasts Total $2,106 $497 $1,609 aThe expenses for high-speed rail service and express service exclude $179 million and $8 million for depreciation, respectively. bWe did not review the bases for these estimates. Source: GAOs analysis of Amtraks October 1998 strategic business plan. Amtrak expects its largest revenue increases to come from implementing new high-speed rail service between Boston and Washington, D.C., (known as Acela service) and expanding its express package service (the delivery of higher-value time sensitive goods). Amtrak also plans to increase its revenues and control costs by developing a market-based intercity route network that aligns its passenger service more closely with customer demand (adding trains to certain routes or starting new service where appropriate, for instance). In addition, by implementing service standards (such as improving service to passengers), Amtrak expects to increase ridership (and revenues) through higher-quality and more consistent service. Amtrak plans to contain costs by reducing the costs of electric power in the Northeast Corridor and implementing cost-saving initiatives, such as enhancing productivity in a number of ways throughout its system. Among the challenges that Amtrak must surmount are achieving dollar savings specified in its plan for which it had not identified any specific action. In this regard, Amtraks plan contains broad categories of cost-saving initiatives referred to as "undefined initiatives" and "planned management actions to be developed." These categories represent $210 million in net financial improvements for which Amtrak had not identified specific initiatives or developed any plan of action when the plan was approved. The amounts were placeholders to balance the yearly budgets. Amtrak intends to achieve these net financial improvements primarily through cost savings that it will identify on an ongoing basis. As of June 1999, Amtrak officials had identified actions to be taken representing a net financial improvement of about $49 million, reducing the dollar amount of actions yet to be defined to about $161 million. An Amtrak official told us that since June 1999, Amtrak has not updated its identification of these actions. As mentioned earlier, Amtrak plans to align its service to better meet customer demand, referred to as implementing a market-based network. Although Amtrak had not completed its network analysis when it adopted its latest strategic business plan, the corporation estimated that its realigned network will generate $105 million in net financial improvements over the period by such actions as serving currently unserved markets that have good demand potential. According to Amtrak officials, for the most part, this estimate was based on senior officials judgment of changes in revenues and expenses resulting from an analysis of the potential for partnerships with states and local governments in certain transportation corridors. Amtrak did not supply us with information on how it derived the estimated financial improvement. As we reported last year, the business decisions that Amtrak makes regarding the structure of its route system will play a crucial role in determining its long-term viability. We reported that, during fiscal year 1997, a number of Amtraks routes lost large sums of money: 13 routes each lost more than $30 million. Further, for 14 of its routes, Amtrak lost more than $100 per passenger. Finally, in fiscal year 1997, fewer than 100 passengers, on average, boarded Amtrak intercity trains and connecting buses per day in 13 states. Other major initiatives portrayed in table 1 face similar uncertainties and are discussed in our July 1999 report. In addition, in September 1999, Amtrak announced the delay of the start of its Acela Express high-speed rail service. According to Amtrak, it is working on a combination of cost avoidance and revenue enhancements that will offset the expected loss in Acela Express passenger revenue in fiscal year 2000. Finally, our ongoing work for this committee suggests that Amtrak may continue to have difficulty in controlling certain costs, including labor costs. In fiscal year 1999, labor costs represented about 52 percent of Amtraks operating expenses. In fiscal year 1999, Amtrak exceeded its budget for wage and overtime expenses for labor agreement-covered employees, and over $24 million more was spent on wages than was planned. It will be important for Amtrak to implement productivity improvements to help offset cost increases. Amtrak is currently finishing the last round of collective bargaining with its unions and estimates that the total amount of wages and benefits paid will have increased by $248 million over the 5-year period ending in fiscal year 2000. Amtrak has been and plans to continue partially offsetting these wage and benefit increases through such productivity improvements as increasing from 4 hours to 6 hours the threshold for a second engineer in locomotives. Starting in fiscal year 2000, Amtrak must begin renegotiating contracts with the 13 labor unions and 2 councils that represent about 90 percent of its workforce. Amtrak has a goal to achieve a 0.2-percent decrease in labor costs from fiscal year 2000 through fiscal year 2002. We plan to report more fully on this and other information to this Committee in spring 2000. Amtrak Has Used Taxpayer Relief Act Funds to Finance a Variety of Activities The Taxpayer Relief Act of 1997 provided Amtrak with about $2.2 billion to acquire capital improvements, upgrade maintenance facilities, and maintain existing equipment in intercity passenger rail service; and pay interest and principal on obligations incurred for these uses. Amtrak had reported spending over $1.2 billion of these funds for these uses through May 31, 1999. Amtrak reports spending over half of the $1.2 billion--or $756 million--of TRA funds for capital improvement projects related to intercity passenger rail through May 1999. This includes $527 million in infrastructure-related improvements, such as track signals and improvements to bridges and electric catenary toward completion of Amtraks Acela high-speed rail service between Washington, D.C. and Boston. The $756 million also includes about $201 million for capital projects related to the acquisition of and improvement to rolling stock used in intercity passenger service. Amtrak has also reported spending $427 millionabout one-third of all TRA expendituresfor maintenance of equipment expenses through May 1999. Even though maintenance of equipment is an allowable expense under TRA, Amtrak plans to ultimately use most TRA funds for high- rate-of-return capital improvement projects. Amtrak therefore intends to "repay itself" for the TRA funds that have been used to pay for maintenance of equipment expenses. According to Amtraks October 1998 strategic business plan, these repayments will begin this fiscal year, and, according to Amtrak, $100 million was repaid on October 1, 1999. Amtrak does not identify the specific equipment maintenance expenses that TRA funds were used for. TRA funds are not used to pay for equipment maintenance expenses at the time they are incurred. Rather, Amtrak has used TRA funds to reimburse itself for equipment maintenance expenses after these expenses have already been paid from other sources. Amtrak applies TRA funds to a pool of allowable equipment maintenance expenses as a whole, rather than individual invoices. According to Amtrak, there is always a sizable pool of allowable equipment maintenance expenses and it has used TRA funds for an amount smaller than the allowable pool. Therefore, Amtrak believes that it has used TRA funds only for purposes that are allowable under the act. Finally, Amtrak has used nearly $48 million in TRA funding to make principal payments on its long-term debt. According to Amtraks data, the debt that TRA has serviced has been used to acquire rolling stock (locomotives, passenger cars, etc.) and to rebuild facilities. Amtrak Will Continue to Have Significant Unmet Capital Investment Needs Capital investments are critical to supporting Amtraks business plans and maintaining its viability. Such investments are needed to help Amtrak improve its quality of service and attract revenues. However, Amtrak continues to have significant unmet capital needs. In addition, Amtrak currently does not have a comprehensive 5-year capital plan to identify all its needs and how they will be financed. To date, from discussions with Amtrak, we have identified about $1.5 billion in short-term (up to 5 years) capital needs. These include: $800 million to complete the Acela high-speed rail program in the Northeast; $425 million for capital debt payments; $194 million for life safety investments in the Northeast Corridor; and $94 million for maintenance facility improvements. In addition, Amtrak will require capital funding to conduct mandated environmental remediation projects; expand high speed rail service to other corridors; make track improvements in the Northeast Corridor; and buy new equipment for its planned mail and express service expansion and other possible refleeting actions. For example, Amtrak estimates that it will need an additional 1,500 pieces of equipment to meet current and expected mail and express service projections. Federal funding expected to be available from 2001 through 2003 could meet some of these short-term capital investment needs. As a result, Amtrak may be required to rely heavily on state, local, and private financing. Amtrak will also face significant capital funding needs over the long term (5- to 20-years). In discussions with Amtrak and the Federal Railroad Administration, we have identified some of these needs. These long-term needs consist mainly of bringing the Northeast Corridor up to a state of good repair. In May 1996, the Federal Railroad Administration and Amtrak estimated that up to $6.7 billion might be needed to recapitalize the corridor and make improvements targeted to respond to high-priority growth opportunities over the next 20 years. (As of fiscal year 1999, there has been no significant recapitalization of the south end of the Northeast Corridor.) If the identified state of good repair needs are not adequately addressed, Amtraks trip times, including those for high-speed rail, and operational reliability could be adversely affected. Amtrak is currently finalizing a study of the costs associated with state of good repair needs on the south end of the Northeast Corridor (New York City to Washington, D.C.). Significant capital investment will also be required for other projects. These include (1) life safety work in the New York City area (such as improving the ability of passengers to leave a rail tunnel in an emergency), (2) capacity improvements and replacement of the electric catenary system on the south end of the Northeast Corridor, and (3) continued high-speed rail improvements on the Northeast Corridor. Amtrak has not yet identified sources of funds for its long-term needs. Although Amtrak has significant capital investment needs, it does not have a 5-year capital plan, making it unclear at this time what Amtraks total current capital needs are and how it plans to fund these needs. In addition, because Amtrak does not have a comprehensive capital plan, it has not made decisions about the relative priority of capital improvements should anticipated funding sources--such as federal appropriations, assistance from states, and private financing--be insufficient to meet the railroads capital investment needs. Observations The Congress gave Amtrak until the end of fiscal year 2002 to reach operational self-sufficiency. Amtrak has focused its ambitious strategic business plan to meet this goal 1 year earlier than required by the Congress. Yet, Amtrak has made relatively little progress over the past 5 years toward achieving this goal: In the next 3 years, Amtrak must achieve nearly four times as much in financial improvements as it was able to achieve through its business plans over the previous 5 years. In addition, Amtrak has substantial capital needs that, if met, could help it improve service, attract and retain passengers, and improve its financial condition. However, Amtrak does not have a comprehensive capital plan; nor has it identified funding sources to cover all its capital needs. The stakes are high: if Amtrak does not become operationally self-sufficient by the end of 2002, the Amtrak Reform Council must submit to the Congress plans for restructuring the railroad and Amtrak must prepare a plan for its own liquidation. - - - - - Mr. Chairman, this concludes our testimony. We would be pleased to answer to any questions that you or Members of the Subcommittee may have. Contact and Acknowledgements For information regarding this testimony, please contact Phyllis F. Scheinberg at (202) 512-3650. Individuals making key contributions to this testimony were Angela Clowers, Catherine Colwell, Richard Jorgenson, Debra Prescott, and James Ratzenberger. (348185)

-- (craigcar@crosswinds.net), April 19, 2000.

" According to Amtrak officials, while generally accepted accounting principles require the recording of such spending as operating expenses, Amtrak funds progressive overhauls through its capital program and therefore believes that the costs for them should be counted as capital costs. "

YGBSM!

zowie

-- (zowie@hotmail.com), April 19, 2000.

to Craig: How hard can it be to come up with a plan to liquidate Amtrak? Lease the system to the employees for $1, and they can choose whether to shut parts (or all) of the system down or take a pay cut.

In the current climate of strong economic growth and government surpluses, now is the time to privatize pieces of the government and eliminate subsidies. When unemployment is high, that's when we need government financing. Not now.

If the government is going to throw money away on rail, it should be for subway systems.

-- Matthew M. Warren (mattinsky@msn.com), April 19, 2000.

"to Craig: How hard can it be to come up with a plan to liquidate Amtrak? Lease the system to the employees for $1, and they can choose whether to shut parts (or all) of the system down or take a pay cut. "

Would you spend a dollar of YOUR money to buy something that has LOST $22 billion dollars over the last 29 years, that has been selling assets and using irregular accounting principles to not lose even more, that has high labor costs (and long term contracts that won't let them cut these costs), that MUST use property owned by others (freight railroad tracks), that loses money in 39 of 40 markets but MUST keep the inefficient runs open to keep the political clout necessary to get the subsidies that have let it survive? Let's ALSO not forget the unfunded pension liabilities that the new owners woud inherit.

No, neither would I.

The New York/Boston/DC corridor routes are potentially viable. The rest is just spreading the pork to keep the pork coming.

-- Craig Carson (craigcar@crosswinds.net), April 20, 2000.

"If the government is going to throw money away on rail, it should be for subway systems. "

Ever the gullible straight man, I can't stop myself from asking.

Why?

-- (craigcar@crosswinds.net), April 20, 2000.

to Craig: Why should the government prefer subways over surface rail? Well, surface rail does not appear to provide added capacity. Surface rail appears to replace buses and still take up space which could be used by cars. However, a subway system replaces buses without taking up space away from cars. And, like rail, it reduces our dependency on imported oil, assuming the subway is electrically driven.

I've used a variety of subway system, and I find them to be an intelligent way to traverse across a congested metropolis. I would point to Washington, D.C., Mexico City, Paris, and London.

There are downsides to subways, just as there are to any form of transit. Security concerns are always an issue. In general, every time a bus or subway stops, it's an opportunity for a thug to board. Of course, if you're driving across town, every time you stop at a red light, it's an opportunity for a thug to throw a brick thru your window!

In summation, subways increase capacity while reducing our dependency on imported oil.

-- Matthew M. Warren (mattinsky@msn.com), April 21, 2000.

Matthew,

If all we really wanted to do with our tax subsidy was to move commuters from point A to point B (in a fashionable way), then logically a subway might be our best option IF we had the population of Washington, D.C., Mexico City, Paris, and London. We don't. If the demographics are wrong for transit and light/heavy rail, they are equally wrong for a subway.

There is no good reason I can see, to replace busses. Busses have the flexibility to change routes over time, to suit the demographics. The Sound Transit Choo Choo is merely adding a very expensive option to transportation. It will look great in the visitor guides, but it will never have the flexibility that bus service has. Sound Transit is on the wrong track!

I would prefer to subsidize 10,000 vanpools and the park and ride lots....

-- Marsha (acorn_nut@hotmail.com), April 21, 2000.

to Marsha: Yes, I'm not a big fan of surface rail, either. It does ever so slightly reduce our dependency on imported oil, but how much should society be willing to spend for such a noble initiative? And, as you say, rail offers no flexibility in the routes.

-- Matthew M. Warren (mattinsky@msn.com), April 24, 2000.