March 19, 2004 - House Appropriations

March 19, 2004 - House Appropriations written record, fiscal 2005 passenger rail funding

Statement of
Ross B. Capon, Executive Director
National Association of Railroad Passengers
Submitted to the Subcommittee on Transportation, Treasury, Postal Service and General Government
Committee on Appropriations
U. S. House of Representatives
The Honorable Ernest Istook Jr., Chairman


Department of Transportation Fiscal Year 2005 Appropriations
March 19, 2004


Thank you for the opportunity to submit this statement. We support the Amtrak request for $1.798 billion. We also support efforts to make the federal government a true funding partner with states to permit development of high speed rail corridors, for which many states already have well-advanced plans.

I. $900 MILLION IS A SHUTDOWN BUDGET FOR AMTRAK

Secretary of Transportation Norman Y. Mineta has made clear his agreement that $900 million would be a shutdown budget. At his interest-group budget briefing on February 2, I asked him about a seeming disconnect between the Administration’s budget recommendation and Amtrak President and CEO David L. Gunn's statement last fall that $900 million is a shutdown budget that "won't work." Mineta responded, “Gunn is right on the numbers” but we are sending a message about the importance of our reforms.  The following table illustrates the problem with $900 million:
 


($ millions)
Operating
570
Debt service
262
Environmental
22
Total
854

Notes to table: Amtrak has taken on no new commercial debt since David Gunn’s May, 2002, arrival, and has no plans to. The cost of debt service peaks in Fiscal 2005 and declines thereafter. Most of the environmental portion of Amtrak’s capital budget involves work that Amtrak is legally obligated to undertake, so could not be set aside in favor of fleet or infrastructure work that otherwise would be considered more vital to the system’s continued, viable operation.

Gunn in February said Amtrak has "a strategy of moving resources from emergency repairs to programmed maintenance." This obviously makes for more reliable service, while maximizing revenues (fewer en-route problems means satisfied customers) and reducing maintenance costs. However, much of the programmed maintenance is considered capital, so a maintenance budget at or close to zero forces either an immediate shutdown or an immediate downward spiral in service quality.

But this means the system would collapse on zero capital, and 2,000 employees would be let go. That's essentially what the administration's $900 million would require.

II. PASSENGER RAIL SECURITY

We agree that rail security has been underfunded but we believe that great care must be given before deciding what security investments would be appropriate. The most obvious categories from our viewpoint are infrastructure -- especially bridges, tunnels, stations and yards -- and training for front-line personnel.

Infrastructure: Issues in the Northeast Corridor are well-known. At stations nationwide, especially major ones, items for consideration include: an increased police presence with K-9 units, video surveillance at key points of entry and exit, vapor detectors, coordinated plans for first responders in case of an event.

There is also a federal interest in the security level of the nation's vast, privately-owned railroad system which is important both to Amtrak’s national network and to freight transportation.  For example, loss of major Mississippi River bridges, especially south of Memphis where the number of crossings is small, could wreak havoc with freight commerce.

Personnel: Our understanding is that Israel, the U.K., and Germany are nations where training front line staff has actually deterred bombers and saved lives. This has been a sensitive issue in the U.S. Their approach needs to be studied to see what aspects of this work could usefully be transferred. This does not mean "pre-boarding" interviews; that is not feasible for reasons discussed below. But Amtrak's on-board employees in many cases have several hours or more of intermittent contact with passengers and thus the possibility -- with the right training -- of identifying potential wrongdoers.

What is not realistic: Many Americans begin their thinking about rail passenger security by citing baggage (and shoe!) X-ray procedures they experience at airports but obviously not at train stations.  Amtrak (and most commuter railroads) have two extremes:  places like New York's Pennsylvania Station where passenger volumes and proximity to commuter trains would make anything approaching airline-style security both impractical and largely ineffective. Conversely, many small stations have such small passenger volumes as to make any security equipment seem wasteful. As Mesa Airlines CEO Jonathan Ornstein recently noted (in a March 9 Washington Post report about holes in security at small airports), "When there are more TSA people than passengers, you have to ask yourself, does that make sense?"

III. THE PUBLIC WANTS THE RAIL CHOICE

Amtrak's ridership reports starting around May show strong increases -- a further sign both that Gunn is succeeding in stabilizing the railroad, and that people want the service. For the first five months of FY05 (October-February), ridership increases on the long-distance trains ranged from 6% to 34%, with only two routes below 10%. Short-distance route changes ranged from -3% to +22%, with seven of 16 routes showing double-digit percentage increases. (Actually, the New York-Pittsburgh route was up 104% but this is not exactly an apples-to-apples comparison.) Two routes showed slight declines.

IV. THE NATIONAL NETWORK

We reiterate our strong belief that funding Amtrak's national network is a federal responsibility, and that implementation of any "reform" which requires a multiplicity of states to provide operating grants is tantamount to shutting down the system. The suggestion that a train could run "closed door" through non-paying states is not workable because, almost without exception, revenues lost from skipping any state would far exceed the negligible cost savings. The Empire Builder in crossing the thin northern tip of Idaho might conceivably skip Sandpoint, Idaho, with minimal damage but it's hard to think of any other benign example.

Similarly, we do not believe a "route closing commission" could shed any significant new light. The system is already so skeletal that deletion of any surviving route would mean wholesale elimination of service to major cities and states. Indeed, as we have testified previously, we favor an expansion of the network.

Amtrak's Sunset Limited is often cited by Amtrak's critics as wasteful because it would be cheaper to fly passengers from Orlando to Los Angeles. However, relatively few passengers travel that entire distance.  Other city-pairs the route serves do not have direct flights, or affordable flights, or in some cases any flights. In addition, some passengers are physically unable to fly. And elimination of the Sunset Limited would create a domino effect as the loss of connecting passengers and ability to share facility costs with the Sunset would unravel the economics of the Texas Eagle, City of New Orleans, and Crescent.

The large subsidy-per-passenger figures sometimes cited for given Amtrak long-distance routes include "fully allocated" costs. These are misleading because they often are interpreted to mean that discontinuance of a given route would reduce Amtrak's operating grant requirement by the product of the number of passengers times the fully allocated loss per passenger. Using the Silver Star FY02 figures at page 471 of the subcommittee's April 10, 2003, hearing record, the math would be $189 times 252,240.

The product does not produce an avoidable cost, since many allocated costs will not disappear but simply get re-allocated to surviving routes. Obvious example: a share of the Amtrak president's salary. Also, a high proportion of long-distance-train passengers make connections with other trains, so discontinuing one train negatively impacts revenues on other trains.

This helps explain why "FRA-defined train contribution" figures were developed, by Federal Railroad Administration working with Amtrak when they were implementing the agreements under which DOT approves funds before Amtrak gets them. In the case of the Silver Star, the FRA defined contribution is actually positive: $12 per passenger or 2 cents per passenger-mile. (Measures stated in terms of passenger-mile are normally used in intercity travel statistics because they take into account the dramatic variations in trip lengths.)

Thank you for considering our views. Please let us know if we can provide further information that would be helpful to the committee’s work.