WASHINGTON, D.C. — The successes and failures of Amtrak’s passenger rail system and the law that required Amtrak achieve operating self-sufficiency by the end of 2002 — a deadline it failed to meet — will be the focus of a Congressional oversight hearing Wednesday morning.
The hearing by the U.S. House Subcommittee on Railroads, chaired by U.S. Rep. Jack Quinn (R-NY), is scheduled to begin at 10 a.m. on Wednesday, March 6th, in 2167 Rayburn House Office Building. Live audio and video broadcasts of the hearing will be available at the Committee’s website:
Tentative Witness List
Panel I
— Allan Rutter, Administrator for the Federal Railroad Administration
Panel II
— George Warrington, CEO, Amtrak
Panel III
— Ed Wytkind, Transportation Trades Department (AFL-CIO)
— Byron Boyd, President, United Transportation Union
— Joseph Boardman, Commissioner, New York DOT
— Jeff Morales, Director, California DOT
— Frank Goldstein, Representative of American Premier Underwriters, an Amtrak Shareholder
Amtrak Background Information
Amtrak began service on May 1, 1971, over an initial basic system of 21,000 miles — a significant reduction from the 49,500 route miles operated by the railroads on April 30, 1971. The number of daily trains was reduced from 290 to 180.
The number of passengers Amtrak carried increased from 16.2 million in 1972 to 21.2 million in 1980. Nevertheless, Amtrak’s ridership in 2000 remains around that level with 22.5 million passengers riding Amtrak annually.
Amtrak always has had financial problems. Amtrak has run a deficit every year since its creation and has received over $33 billion (or about $1 billion per year in constant 1999 dollars) in assistance from the federal government in both operating and capital support during that period.
Amtrak undertook a major restructuring of its system in 1979 in an attempt to get losses under control. Studies by the General Accounting Office (GAO) and others regularly documented that Congress needed to appropriate more funds for Amtrak if Amtrak were to do anything more than survive. In 1995, GAO reported that Amtrak’s programs continued to be under funded and “it is unlikely that Amtrak can overcome its problems in financing, capital investments and service quality – and continue to operate the present nationwide system -without significant increases in revenues and /or subsidies from federal, state, and local governments.” By the late 1990’s it was clear that Amtrak’s situation was critical and it could not survive without an infusion of public funds in addition to the appropriations it received.
The Amtrak Reform & Accountability Act Of 1997
The 1997 reform law required Amtrak to achieve operating self-sufficiency by the end of 2002. Amtrak was also given additional freedom to alter its route network and undertake other cost savings changes to meet the self-sufficiency mandate. The self-sufficiency test did not require that depreciation, preventative maintenance, or excess railroad retirement payments be included in the cost calculations.
Amtrak believed it could achieve self-sufficiency by growing revenues, rather than reducing expenses and did not use certain provisions of the Act, including the following:
Amtrak did not terminate routes. The 1997 reform law repealed a requirement that Amtrak serve a statutorily mandated “basic system” of routes established in 1971 and permitted Amtrak to terminate routes after providing 180-days notice.
Amtrak did not adopt the detailed, compressed Railway Labor Act bargaining procedure for addressing labor protection.
Amtrak did not use its authority to contract out work. The 1997 reform law deleted a law that prohibited Amtrak to contract out work other than food services and made the issue of whether Amtrak could contract out services a subject for contract negotiations pursuant to the Railway Labor Act.
Instead, Amtrak relied on new high-speed Acela trains in the Northeast Corridor and new revenue initiatives including expanded mail and express operations. Since the 1997 reform law, Amtrak’s revenues grew, but its expenses grew faster.
The 1997 Reform Act also created the Amtrak Reform Council, a body that was to monitor Amtrak’s progress toward meeting a requirement that Amtrak operate without operating subsidies by December 2002. If at any point two years after the passage of the reform Act the Council found that Amtrak was not going to reach the self-sufficiency target, the Council was to make that finding known to the Congress and prepare and submit to Congress a restructuring plan. Amtrak was also required to prepare a plan for its liquidation. The Council made its finding in November 2001 and submitted it restructuring plan to Congress on February 7, 2002. This Subcommittee examined the Amtrak Reform Council’s restructuring plan in a hearing on February 14, 2002.
The Future of Amtrak
Congress must now make some fundamental decisions regarding the future of Amtrak and intercity rail passenger service in the United States. Amtrak now claims that it will require a minimum of $1.2 billion in FY 2003 simply to maintain the existing service. If it does not receive this amount, Amtrak says it will have to eliminate virtually all long-distance passenger trains by October 2002 or will have to take other actions including deferring some expenditures. Moreover, both the Inspector General at the DOT and the General Accounting Office have identified billions of dollars in unmet capital needs that must be funded if Amtrak is to operate safely and securely.