Administration Proposes $900 million for Amtrak

Release #06-01—February 6, 2006 (updated)

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Washington, D.C.—The Administration’s proposal of $900 million for Amtrak in Fiscal 2007 brings President Bush back to the levels he proposed two years ago and three years ago, except of course that inflation has eroded the value of $900 million. Hopefully, the Administration recognized that Congress soundly rejected last year’s proposed zero, substituting $1.3 billion in its place, and the Administration is now expressing some flexibility to negotiate a more realistic budget.

In any event, Amtrak cannot survive at $900 million. The Administration says it is designating $500 million for “capital needs and maintenance”. The budget request shows zero for operating grants, evidently because the remaining $400 million will instead be called, in the words of DOT Secretary Norman Mineta, “‘Efficiency Incentive Grants’ to encourage reform…”

But to actually support a $500 million federal grant for capital, Amtrak needs $1.3 billion in all. The Administration in effect is saying, “We’re going to cut Amtrak’s total funding by $400 million while cutting zero from capital.” That is unrealistic. Here’s the math:

Fiscal 2006 appropriation :

• $ 490.05 million for operations
• $ 772.2 million for capital and debt service
• $  31.38 million for efficiency incentive grants
• $1293.63 million total

Fiscal 2007 Administration request :

• $ 500 million for capital
• $400 million for efficiency incentive grants and debt service
• $900 million total

NARP Executive Director Ross B. Capon said, “It will also be important to see what the Administration means when it says ‘Amtrak will need to better manage all its resources, including Federal and state contributions, ticket revenue, and other sources. To help ensure this occurs, the Budget proposes allowing DOT to target Federal subsidies based on Amtrak’s progress making reforms.’”

Capon noted, “It is generally recognized that Amtrak has been working to ‘better manage all its resources’ at least since the middle of 2002 when David Gunn arrived. Amtrak is under a mandate to achieve a certification from the DOT Inspector General by July 1, 2006, that Amtrak has achieved ‘operational savings.’

“Amtrak is working on a number of fronts to assure that it will get that certification—most conspicuously, reducing personnel requirements on many dining cars. If the Administration is determined to expand the amount of outside micromanaging Amtrak must contend with, that is more of a Trojan horse than an olive branch.

“Ending the interminable debate over intercity passenger rail, and resolving to develop a stronger system, would be consistent with President Bush’s expressed concern over America’s addiction to oil. A key ingredient in any fight to beat that addiction must be development of a more robust rail passenger system.

“Moreover, the budget does not contain any request to fund a federal/state partnership to develop new routes and services – a program that the Administration, Congress and states all have said they support. It is critical that funding for the partnership be in addition to and not in place of funding needed to carry out Amtrak’s strategic plan.”

Mineta said in a statement today, “In last year’s budget, we demanded reform, and over the past year, both Amtrak and the Congress have responded. In recognition of this progress, and with the expectation that we will see much more by the end of the fiscal year, the President requests funds to help Amtrak make the transition to a new and better model of intercity passenger rail.”

Amtrak Acting President and CEO David Hughes issued a statement which avoided criticizing the Administration request. Hughes said, in part, “This is the first step in a nine-month process. Last year, Congress voted and the President signed an appropriation for Amtrak of $1.3 billion for FY06. This year, we again look forward to working with Congress and the Administration as we make the case for federal support.”

Capon said, “We urge the Administration to begin constructive negotiations with the Congress that will ultimately lead to a FY07 appropriation that will provide Amtrak with the resources it needs to maintain and improve its current services and that also provides new resources to fund the federal state partnership program for intercity rail development.”