Hotline #232 - March 1, 2002

The NARP February newsletter -- which has been delayed in part by the many events of the past month -- is nearly ready, and will include a copy of an action leaflet that members may copy and distribute. NARP will also print up a quantity of the leaflets, which will be similar to the one now on our web site, but with wording changed to reflect recent events. As before, however, the main message will be the need to keep a nationwide network of passenger trains. NARP will ask members who volunteer to keep their local stations stocked with the leaflets to let the office know that.

The House Transportation Appropriations Subcommittee had a hearing February 27 about funding for Amtrak in fiscal 2003. The four witnesses were Amtrak President George Warrington, Federal Railroad Administrator Allan Rutter, DOT Inspector General Ken Mead, and Amtrak Reform Council Chairman Gil Carmichael. The Subcommittee is chaired by Harold Rogers (D.-Ky.) and the Ranking Democrat is Martin Olav Sabo (Minn.).

Mead said it would be "impossible" for Amtrak to operate in 2003 with the $521 million "placeholder" funding level that the Administration has proposed (while the Administration weighs its options for passenger rail reauthorization). He said, "Amtrak has mortgaged and sold all it can, and has no further options." He stressed that while Amtrak's cash losses have not improved during the time of the operational self-sufficiency mandate, much of what is reported as "operating loss" includes non-cash items like depreciation and interest, which have increased. [Depreciation was about $476 million in fiscal 2001; the portion attributable to right-of-way property was $250 million, up a whopping $55 million (28%) from the 2000 level of $196 million. This is important because airlines and bus companies don't carry comparable items on their books.]

Mead added that the "focus on operating subsidy has detracted attention from the more critical issue, which is how much capital investment will be needed to sustain" intercity passenger rail. "The long-distance trains, which account for most of Amtrak's cash losses, actually constitute a relatively small subset of Amtrak's capital needs. The annual net operating subsidy required to continue operating Amtrak's most unprofitable long-distance trains is about 30 percent of the annual capital subsidy required to continue operating Amtrak's most profitable trains in the Northeast Corridor ... When you add up the shortfall on the long-distance trains and compare it to how much the Northeast Corridor needs [in capital]," Mead said, "they are like chump change."

"About the restructuring proposals," Mead said, "don't be fooled into thinking they will solve the problem. You need to address capital ... Any system of passenger rail -- profitable or not -- will require substantial and continuing capital funding."

Chairman Rogers said Amtrak "has not been able to control its expenses" and "did not request adequate funding." At one point, he appeared critical of the fact that Amtrak continues to need funding after 31 years' existence, but then added that he couldn't see how trains could be profitable if the freight railroads couldn't make them so -- "We deluded ourselves and used the phrase 'operational self-sufficiency' to tell ourselves that the subsidy would be short-lived."

Rogers complained that Amtrak had not cut long-distance routes since the 1997 operational self-sufficiency mandate and that some have a "high subsidy per passenger" (which NARP understands is largely a function of individual riders traveling long distances on long-distance trains). He said, "There is not a significant number of people using those trains and there probably never will be." "We need to go back to the base-closing commission concept," he said. "Any time you try to eliminate a route, all the local people come out and protest, according to some purpose of civic pride."

Rogers was critical of the Bush Administration for being late in delivering its own plans for passenger-rail authorization. "That's what we have the DOT for, to make plans," he concluded. "We need a plan. I've an idea there won't be an authorization [bill] this year. If so, we need to have more information [about the funding requests]. There will be another hearing, no later than late April."

Representative Sabo said, "I don't know how the Amtrak Reform Council, by reshuffling boxes, solves our funding dilemma ... We have to know what would happen if we simply fund at $521 million, and what the options are by increment." He went on to point out the ways other modes are subsidized as well. Carolyn Kilpatrick (D.-Mich.) said, "I knew four years ago that operational self-sufficiency would not happen," and pointed out that while there have been "critiques," it's still not known where anyone should go from here.

There will be passenger-rail hearings in the coming week before the Railroads Subcommittee of the House Transportation and Infrastructure Committee (March 6), and before the Transportation Subcommittee of the Senate Appropriations Committee (March 7).

Amtrak service to the new Fort Worth Intermodal Transportation Center began February 27. The new station opened for service to local bus and TRE commuter trains on January 12, at which point track and platform work to accommodate Amtrak was not yet complete. Amtrak gives up its home of 31 years in Fort Worth, Union (a.k.a. Santa Fe) Depot, which opened in 1899, six blocks south of the new location.

The Amtrak board voted February 22 to name John Robert Smith its new chairman. Smith is a longtime board member and mayor of Meridian, Miss. He replaces Tommy Thompson as chairman, who resigned in 2000. Thompson had been governor of Wisconsin, but became President Bush's Secretary of Health and Human Services last year.

The acting board chairman after Thompson's resignation had been Michael Dukakis, former governor of Massachusetts. Dukakis remains on the board and will go back to being vice chairman of the board, as he was earlier. There still is a vacancy on the Amtrak board (Thompson's seat).

Smith said in a statement, "I believe very strongly that our country's economic competitiveness and the mobility of all Americans depends upon a vital national passenger rail system." Senate Minority Leader Trent Lott (R.-Miss.) said in a wire story, "I am especially pleased that a Mississippian has been elected to this very important post. He certainly has the strength and commitment to lead Amtrak through the challenges before it."

NARP Executive Director Ross Capon will address a session of the American Chamber of Commerce Executives in Orlando, Fla., on March 7. The meeting will have officials from chambers of commerce from across the country, and Capon will impress upon them the importance of a nationwide system of passenger trains, both in terms of the role long-distance trains service (and can serve better), and in terms of building support for corridor development.

The National Transportation Safety Board will meet in Washington on March 5 to issue its decision as to the cause of the derailment of Amtrak's California Zephyr at Nodaway, Ia., on March 17, 2001, according to the Des Moines Register. NTSB findings obtained by the paper indicate that a primary cause was a fault in the steel in a temporary replacement "patch" of rail, though the NTSB will consider other factors at their hearing. The track is owned by Burlington Northern Santa Fe. One passenger was killed in the accident.

New York Gov. George Pataki (R.) proposes, once again, to reduce local property taxes on railroads. The railroad tax burden in New York is among the highest in the nation -- for example, CSX says that 7% of its track system is in New York, but that New York gets 31% of CSX's total tax bill. This deters railroads from making important infrastructure and capacity improvements, including those that would help passenger trains (like the years-old proposal for additional double track on the Albany-Schenectady bottleneck). Pataki's proposal is to cut the rates by 45% over seven years, with state money going to municipalities to help make up for the reduced local tax revenues.

NARP Regional membership meeting season is beginning; tomorrow Region 2 meets in Schenectady, N.Y., and Region 12 meets in Oakland, Cal. Region 1 meets in Haverhill, Mass., March 9.