Hotline #228 - February 1, 2002

Amtrak President George Warrington today said he would defer certain capital investments and further reduce operating costs by a combined total of $285 million to get Amtrak through the current fiscal year "and manage financial uncertainties in FY02-03." He said these actions were in addition to $258 million in expense reductions affecting those years already under way.

Amtrak entered fiscal 2002 with a budget shortfall, which was worsened by recent events, including the recession ($120 million impact) and added post-September 11 security costs ($16.5 million to date). Warrington said the Amtrak Reform Council's November decision had a negative cash impact of $52 million because of reactions from the financial community.

Warrington commented on Amtrak's cost increases. He said $488 million of Amtrak's $1.1 billion operating loss in 2001 was depreciation, a non-cash expense. Also, interest (mainly on new equipment) is expected to jump from $85 million in 2001 to $187 million this year. Basic wages are rising 3% a year, which he called "reasonable and appropriate," noting that Amtrak wages are still "below market across this industry."

Warrington plans actions that will not reduce train service in the current fiscal year. The actions include $110 million in operating cost reductions, of which a major part is cutting 10% of management positions (about 300, in addition to 167 who took buy-outs or early retirement in 2001) and 3% of non-management positions (about 700). Those include about 400 shop workers and 140 station workers. Hours and staff will be reduced (but not eliminated) at the 73 "lowest-performing" stations. Spending freezes on an array of activities will go into effect. Another $175 million -- 23% of the entire capital program -- comes from deferring capital expenditures, including car maintenance, technology investment, station work, and more.

Finally, Warrington announced a fiscal 2003 budget request of $1.2 billion -- $850 million for capital, $200 million for operations, and $160 million for excess railroad retirement expenses. He said this was needed to maintain the current level of service (but would not address a capital backlog of $5.8 billion). Warrington has said that Congress is not funding Amtrak at a rate sufficient to run the existing system -- about $520 million -- and that this cannot continue. He called $521 million a "non-starter."

Therefore, on March 29, Warrington will post 180-day discontinuation notices for all long-distance trains, which Warrington says require $200 million in federal operating support. This protects Amtrak's ability to discontinue trains October 1 if funding is not provided, but also gives the public an early warning about what is at stake. Clearly, public reaction to the announcement will influence Congress' response. Click here for our release on the announcement.

This is a sobering message at an important time in the development of passenger rail in this country. NARP supports keeping (and expanding) passenger rail in both major sectors -- corridors and long-distance -- and will work to see that Congress does what it takes to keep passenger rail a viable alternative to the massively funded aviation and highway modes.

As Warrington told one Congressional panel last year, Amtrak struggles to get 1% of transportation funding, but gets 99% of the attention and criticism. It's time for Congress to evaluate and state its priorities, without eliminating a nationwide network of train services.

President Bush is expected to release a proposed budget for fiscal 2003 on February 4. Details for individual cabinet departments (such as Transportation) won't be released until the next day. As reported here last week, the budget is likely to include a placeholder amount of funding for Amtrak, probably the current level of $521 million, while the Administration continues its process of deciding what sort of passenger rail service it thinks this country needs. There also are indications that dramatic cuts in other domestic programs, such as job training, will make our overall budget fight tougher.

Even before facing federal cuts, states have had an average 7-8% in revenue declines. Most states expect a 10% shortfall within the year, according to the National Governors Association. The latest state budget problem to hit Amtrak (and transit) is in Missouri. Gov. Bob Holden said last week he'd like to use a "rainy day" reserve fund maintained by the state for these and other programs, but that requires a two-thirds vote in the legislature. The governor is proposing $4.8 million for the two daily Amtrak round-trips between St. Louis and Kansas City. Normally, Amtrak and transit are funded out of the state Department of Transportation budget.

The Amtrak Reform Council will release its final report on February 7. The report likely will be a refinement of what the Council voted January 11. That included an admission that passenger trains need both operating and capital support. But until such funding is confirmed, the Council's reshuffling activities will not lead to better rail service in this country, and quite possibly could lead to less service.

Amtrak began running all its trains at 90 mph, over a 40-mile segment between Niles and Kalamazoo, Mich., on January 14. This uses an "Incremental Train Control System" that was installed by Amtrak, Michigan DOT, and the Federal Railroad Administration in 1999. Trains had been operating at 79 mph using the new system; the FRA approved running at the higher speed early last month.

The National Transportation Safety Board is closer to issuing a final report on the March 1999 City of New Orleans accident. A steel truck drove in front of the train at Bourbonnais, Ill., causing it to derail and catch fire, killing 11 passengers -- Amtrak's only passenger fatalities at a grade crossing.

At a February 5 hearing in Washington, NTSB will vote on a probable cause for the accident, and on recommendations for improvements. The investigation has taken far longer than usual, and has been hampered by conflicting testimony at fact-gathering hearings in 1999, and the death of a lead investigator in 2000. The Chicago Tribune reported that some discussion will focus on testimony that a malfunction caused the crossing's lights and gates to begin operating after they should have.

Amtrak will run a special race train on February 24, from Raleigh to Rockingham, N.C. (just north of Hamlet), for the Carolina 400 NASCAR race. The train departs Raleigh 8:00 am, returns 7:40 pm. Special fares are available; see the North Carolina DOT web site for details.

A fire on a wooden railroad trestle, just north of San Diego, disrupted Pacific Surfliner service the evening of January 26. Buses replaced train service until the line reopened the next day. The fire began as a grass fire nearby, and damaged some ties.

Amtrak's Capitol Corridor has a well regarded Transit Transfer Program, which began in May 2001. Under the program, conductors may issue transit passes good on AC Transit buses at Richmond, Berkely, Emeryville, Oakland, Hayward, and Fremont (except trans-bay buses), and Sacramento RT buses and light rail. Effective today, the program is expanded to Central Contra Costa Transit Authority County Connection buses at Martinez. Transfers issued to passengers have two parts -- one for immediate use, and one with longer-term validity that may be used for a return trip to the train station. Passengers interested in using BART trains at Richmond don't get free transfers, but may buy BART tickets in the lounge car at a 20% discount.

Texas Gov. Rick Perry (R.) this week unveiled an ambitious, $175-billion, 4,000-mile network of new transportation corridors that would include superhighways, high-speed railroads, freight railroads, and utility corridors. It would take 25-50 years to build. An exact network has not been proposed, but a preliminary map showed corridors sweeping wide arcs around major metropolitan areas, which limits their appeal as high-speed rail routes.

New York City Transit reopened its E subway line January 28, from Canal St. south to the World Trade Center station. This station had been a stub-end stop for the E trains before the September 11 attacks. Plans are under consideration to change the station's name. It was not damaged, but its street entrances had been in a closed-off area -- they are now near a public viewing area. Other subways remaining closed are the 1 line south of Chambers St., the N-R station at Cortlandt St., and the PATH line at Exchange Place and World Trade Center.

The Surface Transportation Board approved on January 30 a proposal submitted by the Dakota, Minnesota & Eastern Railroad to improve an 880-mile rail corridor from the Wyoming coal fields to Winona, Minn. The $1.4-billion proposal, which include 280 miles of new route in Wyoming and South Dakota, would be one of the largest rail construction projects in modern times in the U.S. Several types of building permits are still needed and there likely will be legal challenges, but the railroad hopes to start operation in 2007.