(The Atlanta Journal-Constitution posted the following on its website on May 20.)
ATLANTA — Deputy U.S. Transportation Secretary Michael P. Jackson testified before the Senate Commerce Committee late last month on Amtrak’s future. Here are excerpts:
I begin with the obvious: Amtrak is an organization with profound financial difficulties. Amtrak was created with the illusory expectation that it would soon achieve profitability. Instead, it became dependent upon ever-increasing and now unsustainably large federal appropriations.
This dependency on federal funds is pegged by Amtrak to be up to $2 billion annually for the foreseeable future. On a per-passenger basis, the loss for long-distance trains ranges from $131 per passenger to $551 per passenger.
Amtrak’s core business design suffers from structural rot. To look at Amtrak’s dilemma more sympathetically, one could say that from the beginning Amtrak has tried to balance an ill-defined public service mandate with a clear statutory requirement to operate as a for-profit enterprise, never satisfying either.
More money alone is not the answer. What to do? In short: embrace a new business model for passenger rail.
Intercity passenger rail would become an economically viable and strategically effective mode of transportation supporting numerous successful rail corridors nationwide. The federal role in passenger rail would, however, be reformed and strengthened to mirror much more closely the current federal program supporting mass transit.
The federal government would continue to define rail safety standards and enforce them. The Department of Transportation would provide capital grants directly to states and interstate consortia of states operating passenger rail. State government agencies would determine the level of passenger services needed and the price for such services, and they would contract with third-party operators to provide long-distance and corridor trains.
For a period of years, the federal government would continue disproportionately to fund the capital backlog for certain passenger rail projects. By the end of the authorization cycle, however, state governments would provide at least 50 percent of needed capital investment for all intercity passenger rail service.
Amtrak would be required to form a pure operating company — one that does indeed make a profit by providing excellent service for its government customers.
When this model is embraced, the nation will likely see more rather than less passenger rail service. The Bush administration does not propose a quick fix. Indeed, not even a simple fix. But securing true structural reform is the only worthy solution for addressing such a persistent and important public policy dilemma.