Hotline #298 - June 6, 2003

"Amtrak Privatization: The Route to Failure" is a report released June 4 by the Economic Policy Institute (EPI), written by Elliott D. Sclar, Professor of Urban Planning and Public Affairs at Columbia University. EPI is "a nonprofit, nonpartisan think tank that seeks to broaden the public debate about strategies to achieve a prosperous and fair economy."

The report says that debate over what to do about passenger rail has "gotten off track," and should focus on modernization, not privatization. It says that the Bush Administration's approach to Amtrak is based on a search for "the correct answer to the wrong question. Let's instead get an approximate answer to the right question: How is America going to have an overall transportation system that is safe, convenient, time-competitive, minimizes environmental damage and oil dependence, helps make the nation more competitive, and-in light of national security needs-redundant?"

For a release about the new report, go to the EPI web site. For NARP's release on the report, click here. The report's executive summary and introduction and a note about the author are also at the EPI web site. The report is available for $8.95 from EPI at 1660 L St., NW, Suite 1200, Washington, DC 20036, or by calling them at (202) 775-8810.

Passenger rail financing was the topic of a Senate hearing on June 5, chaired by Kay Bailey Hutchison (R.-Tex.). She chairs the Subcommittee on Surface Transportation and Merchant Marine (Committee on Commerce, Science, and Transportation).

Hutchison discussed aspects of a bill she plans to introduce in the near future. It would include reauthorization of Amtrak through fiscal 2008 (with $2 billion in support authorized annually); authorize $50 billion in 30-year bonds ($10 billion for the Northeast Corridor and $40 billion for "freight railroad lines on the national system"); establish a "National Rail Transportation Finance Corporation" to administer the bond program; divert the current 4.3-cent rail fuel tax to a Railway Account of the Highway Trust Fund to back bonds issued by the Corporation; and create an 80% on-time performance mandate for all Amtrak routes. Failure of a route to achieve that would result in its being put out to bid for operations by other parties.

Hutchison said she was disappointed that Amtrak's request for $1.8 billion does not have more capital for Amtrak's nationwide service, but was focused on the Northeast Corridor (NEC, where most of Amtrak's infrastructure assets are located). However, Hutchison's bill would appear to address that by providing rail infrastructure funding for both NEC and non-NEC sectors, outside of the traditional appropriations process. At the full committee's April 29 hearing, she appeared very attentive when Amtrak President David Gunn -- responding to her questions -- explained that the practical way to improve on-time performance of long-distance trains was by addressing freight railroad "bottle-necks," rather than by trying to build passenger-only lines.

The top priority of the rail industry, represented at the hearing by the Association of American Railroads, is repeal of the 4.3-cent tax. That repeal has already been approved by the full House and by the Senate Finance Committee.

Another witness, James Query of Lehman Brothers, said that the 2001 terror attacks demonstrated "the importance of maintaining a national system -- just corridors are not adequate." He said that intercity passenger rail should benefit from tax-exempt funding (free of cap restrictions), as airports and ports do. He said that the federal government's previous experience with school-related tax-credit bonds has been encouraging and said, "I believe the market -- and investors' interest in such bonds -- will continue to grow."

Amtrak has begun selling eight Standard Bedrooms in the transition dorm car on the Texas Eagle, for trips starting June 8, daily through September 2. The prices and services are the same as in other cars. The rooms are sold as numbers 17 through 24 (numbers that don't occur in regular Superliner sleeping cars). The Superliner II dorm cars that Amtrak bought ten years ago included some with restroom and shower facilities for revenue passengers -- and a door separating the passenger and crew areas -- but never sold the revenue rooms for their original, intended purpose. NARP has told Amtrak for ten years that it was missing out on revenue, as a result.

If the Texas Eagle test is successful, the concept could be spread to other trains. The test began on the Eagle after one of its sleepers on some trips (three trips a week when there is also a Los Angeles sleeper) was transferred to the California Zephyr for the summer. That means there is a net reduction of about ten sleeping car rooms per week for the Eagle, but presumably a net increase in sleeping car rooms, systemwide. One coach was removed from the Eagle a week ago, apparently in error, and quickly restored.

The Amtrak board is drifting towards a vacancy situation, the impact of which on Amtrak is unclear.  Later in June, the five-year terms of two members -- Mayor John Robert Smith (R.-Meridian, Miss.) and former Massachusetts Gov. Michael Dukakis (D.) -- expire. They are, respectively, the board's chairman and vice-chairman. The board can choose a new chairman, but in September two more terms expire -- those of former Virginia Gov. Linwood Holton (R.) and Amy Rosen (a Democrat from New Jersey).

The station at Ardmore, Okla., will be rededicated on June 14, 10:30 am, upon completion of its renovation. The date coincides with the 4th anniversary of the Heartland Flyer. Speakers will include Gov. Brad Henry.

Amtrak has announced the appointment of three new members of the Amtrak Mayors' Advisory Council. They are R. Michael Kasperzak (Mountain View, Cal.), Beverly O'Neill (Long Beach, Cal.), and Charles W. Scholz (Quincy, Ill.). The 19-member council meets twice a year during the U.S. Conference of Mayors' annual and winter meetings. The next meeting is June 9 at Denver.