March 31, 1998 Fiscal Year 1999 Transportation Appropriations

Thank you for the opportunity to file this statement. Our non-partisan Association -- whose members are individuals -- has worked since 1967 towards development of a modern rail passenger network in the U.S.

Summary

• We join the Office of Management and Budget and the Department of Transportation in strongly supporting the Amtrak budget request. This is the first time I can remember those three organizations supporting an identical position.

• Usage of Amtrak trains is growing for the second straight year; the turn-around is well over a year old and reflects growing confidence in train travel and, in many cases, growing problems with other modes of transportation. Intercity passenger revenues are growing for the third straight year.

• The public at large favors retention and improvement of the nation's intercity rail passenger network, as reflected in new nationwide and State of New York polls.

1. The "OMB/DOT/Amtrak"-supported Budget Request

The Administration and Amtrak are supporting an approach to Amtrak's appropriations which eliminates operating grants as a separate category. However, they propose to use appropriated capital funds for any type of "maintenance" -- including some categories heretofore considered operating expenses. Amtrak believes that with the annual appropriations proposed by the Administration (including $621 million in FY 1999), the right to spend 40% the first year and 60% the second, and the broader definition of "capital," it can survive and ultimately prosper.

The broader definition of "capital" currently applies to federal transit funds, where the justification apparently is to remove any incentive to do wasteful, unnecessary equipment rebuilds (or otherwise spend more money than necessary) because capital grants are more readily available than operating grants. A similar rationale presumably applies here to Amtrak, although our support for this concept equally stems from the remarkable consensus that now exists among OMB, DOT and Amtrak.

The Administration also proposes to fund Amtrak out of the Highway Trust Fund. While we have no problem with that in principle, we fear that -- as in years past -- this aspect of the Administration's budget proposal is not viable. We certainly do not want to see Amtrak fall apart because of disagreement over this.

High speed rail: We of course strongly support full funding of the grade crossing program for high speed corridors. The Senate-passed ISTEA bill has $5 million a year in contract authority but $15 million a year in authorizations for appropriations; the House-passed companion bill may include corridor development funds. At the same time, we are concerned that the vast expansion in highway infrastructure funding now being contemplated not come at the expense of intercity passenger rail. As discussed below, ticket purchases and polls both show the American people would not favor this.

2. Amtrak in the Marketplace

FY 1997 passenger-miles (5.2 billion) were up 2.3% over the FY 1996 level. For the first five months of FY 1998 (October-February) passenger-miles are 5.0% above the level for the year-earlier months.

FY 1997 passenger-related revenues -- a record $1.034 billion -- were 7.2% above the FY 1996 level, which in turn was 6.0% above the FY 1995 level. The 1997 level was 6.7% above the previous record ($969 million in FY 1993), even though Amtrak operated about 8.6% fewer train-miles in the more recent year (32 million vs. 35 million in FY 1993).

Figures in the above paragraph include state payments. This seems reasonable because the significant increase in state payments is one reflection of the value Americans put on Amtrak services. State payments rose in FY 1997 for the eighth consecutive year; the $70 million level was up 9.3% from the FY 1996 level and up 775% from $8 million in FY 1989.

However, it may be informative to restate the passenger-related-revenue paragraph excluding state payments. The FY 1997 level -- $ 964 million -- was 7.0% above the FY 1996 level, which in turn was 3.1% above the FY 1995 level.

Here are the percentage changes (in each case, from the same period a year earlier) in total Amtrak revenues and expenses:

(Note 1 "alternate" figures exclude a $244 million "one-time charge" from FY 1994 expenses.)

These figures show a favorable relationship between revenue and expense trends in each year since FY 1994, that is, revenues grew more than expenses and in some cases expenses actually declined. We expect the Congress ultimately to agree that whether Amtrak literally reaches self-sufficiency in 2003 or not is less important than reasonable assurances that Amtrak is efficiently managed and is meeting a real need.

We remind the committee about the heavy use of long-distance trains by lower-income individuals and the prospects for further improving the economic performance of these trains through Amtrak's express initiative. In addition, of course, the Taxpayer Relief Act capital investment funds should enhance the economic performance of all services, as well as help leverage more non-federal capital investment in passenger rail by allowing Amtrak to match contributions from states and other parties.

We believe Amtrak cannot and should not try to abandon more routes. We look forward to Amtrak's planned return to Las Vegas, Nevada, next year. We expect to see other service additions, particularly in connection with Amtrak's express initiative.

3. Amtrak in the Polls

An October 27, 1997, nationwide Gallup Poll sponsored by CNN and USA Today asked whether "the federal government should continue to provide funding for the cost of running Amtrak, in order to ensure that the US has a national train service, or the federal government should stop funding Amtrak, even if that means the train service could go out of business if it doesn't operate profitably on their own." Favoring continued funding were 69% of respondents, with 26% against (and 6% other responses).

A poll conducted between September 29 and October 5, 1997, by the Marist College Institute for Public Opinion (Poughkeepsie), found strong support throughout New York State for passenger rail. The poll was commissioned by the Empire State Passengers Association and the Empire Corridor Rail Task Force. The poll found that 97% of the 644 registered voters interviewed felt intercity train service ("such as Amtrak which is mostly used for trips of 75 miles or more") should be "improved and modernized" rather than eliminated. Also, 82% felt "improved and modernized intercity passenger train service throughout New York State" was just as important as (70%) or more important than (12%) "having good highways and airports." The poll found that 89% of those who made a train trip over 75 miles in the previous 12 months (or a member of their household) would consider the train for their next trip.

Thank you for considering our views.