February 25, 1997 Fiscal Year 1998 Transportation Appropriations

I appreciate this opportunity to appear before your subcommittee. 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 strongly support Amtrak's budget request.

  
  

• Amtrak has made important economic progress. It is poised to make more if the whole operation is not brought to a complete standstill, which would be the practical effect of President Clinton's budget request, particularly regarding operations.

  
  

• The public at large favors retention and improvement of the nation's intercity rail passenger network.

  
  

• We strongly support the President's mass transit request as the minimum that makes sense, though we are disappointed that no allowance for inflation was made.

1. Amtrak's Economic Record and Prospects Amtrak's first-quarter (October-December) operating loss was 12% less than the same period two years earlier. This reflects an employee headcount reduction of about 2,000, the retirement of almost all unrebuilt Heritage cars, increased contributions from states and selective service reductions--such as escaping very high charges from Canadian National by replacing the overnight Washington-Montreal Montrealer with a state-supported Washington-St. Albans daytime train and Thruway bus connection to Montreal.

Recent travel trends on Amtrak have been positive. We understand, for example, that passenger-miles for the Intercity Business Unit (most of the long-distance trains; all the Chicago-based corridors) are up 5% from a year ago for the October-January period, 7% for January alone. [A passenger-mile is one passenger transported one mile.]

Amtrak has intensified its mail-and-express traffic development efforts. President Thomas Downs has indicated his interest in working jointly with the freight railroads where possible. We see great potential here. We note the strong role that non-passenger revenues played historically in contributing to the economic viability of long-distance passenger trains.

We also are seeing unprecedented joint efforts between Amtrak on the one hand and Greyhound and other bus companies on the other, increasing the number of destinations rail passengers can reach using a single ticket. Beneficiaries of recent Amtrak-Greyhound agreements include: Key West, Cocoa and Melbourne, Florida; Louisville, Kentucky; and Laredo, Texas.

The high speed project promises a dramatic increase in Amtrak's share of the New York-Boston market, boosting rail to the level it already enjoys between New York and Washington. We are encouraged that New Jersey Transit has agreed to pay $125 million on capital investment in the New Jersey portion of the Northeast Corridor over the next five years -- to be matched by an equal amount from Amtrak -- and look forward to similar agreements with other Northeast Corridor states.

We foresee significant improvements in Amtrak's equipment utilization practices. We continue to advocate improved crew-consist and other labor agreements, liability reforms such as those the House approved in late 1995, and electric power policy changes that could benefit Amtrak significantly.

All of this means that prospects are excellent for further, major improvements in Amtrak's economic performance.

2. Amtrak's Route Structure

Amtrak's operations request -- $245 million plus $142 million "mandatory payments" -- is truly "barebones" just to operate the routes in Amtrak's business plan.

Our Board of Directors regards the existing system as "already-skeletal;" there already are major service opportunities that cannot be addressed. We are appalled by the prospect that -- under Amtrak's business plan -- Dallas-Fort Worth, the nation's ninth-largest metro area, the entire states of Arkansas and Wyoming, plus eastern Oregon and all but the northern tip of Idaho may lose service May 10, 1997. We are encouraged that special mail-and-express initiatives may permit long-term operation of the Texas Eagle (St. Louis - Little Rock - Dallas - Fort Worth - San Antonio) and Pioneer (Denver - Wyoming - Boise - Portland) routes, and that a State of Texas loan may permit Eagle service to continue between May 10 and the time when significant non-passenger revenue is developed.

Even supporters of Amtrak's business plan must recognize that President Clinton's request would effectively destroy the entire Amtrak system. As we understand it, Amtrak would be left with a choice between shutting everything down October 1 or running the system for as many months as funding allows.

3. Public Support

In May, 1995, we commissioned Bruskin Goldring Research of Edison, New Jersey, an independent market research firm, to include two Amtrak questions in their weekly "OmniTel" telephone poll of 1,000 U.S. adults nationwide. This poll found 63% favorable responses to questions about whether to earmark a penny of the federal fuel tax "for long-term Amtrak improvements" and whether states should get the right to spend part of their federal transportation trust fund money "for intercity rail passenger service."

Just last week, on the evening of February 20, CBS Radio's nationwide Gil Gross Show featured a debate about Amtrak. Mr. Gross commented that, whereas at least half the callers to his previous shows about federally-funded programs normally oppose such programs, the calls the show received about Amtrak were three-to-one in favor of Amtrak. (He was referring to all callers, as well as to the six or so who got on the air.)

Another indicator of Americans' great interest in rail travel is the response of readers of the Minneapolis Star-Tribune which, on Sunday, September 8, 1996, indicated availability of our association's free flier, "Amtrak Travel Tips." By 1:00 pm the next day, we had received 100 requests by telephone. We don't have a toll-free number, and the Twin Cities doesn't have much Amtrak service: one departure a day to Chicago and four departures a week to Seattle and Portland via North Dakota and Montana.

In general, Americans have responded positively whenever presented with decent rail passenger service, even though Amtrak and transit agency advertising is minuscule when compared with airline and automobile company advertising. From 1982 to 1994, travel on Amtrak rose 40% (from 4.2 billion passenger-miles to 5.9 billion) even though fare increases outpaced inflation.

4. Federal Transportation Policy has an Air/Highway Bias

The root causes of Amtrak's problems are: (a) the high level of public investment in aviation and highways vs. the low level of rail passenger investment; and (b) our nation's mode-specific trust-fund system, which excludes intercity passenger rail but treats every gasoline and airline-ticket purchase as a customer "vote" for more investment in highways or aviation. In fact, many of those trips would be taken by rail if rail was available; many of those "user-tax" dollars would be earmarked for rail if the individual travelers (user-taxpayers!) could determine how their user taxes would be spent.

The problem is exacerbated because railroads, as closed systems, easily lend themselves to having their full costs captured on a single balance sheet whereas highway and aviation costs are spread across the books of many public and private entities. Rail also is disadvantaged because hard-to-measure and often-ignored external costs (such as environmental costs) tend to be much higher for the other modes than for rail. Fuel consumption is a good proxy for air pollution; Amtrak is 45% less energy-intensive than the domestic airlines (2,503 BTU's per passenger-mile vs. 4,567; Transportation Energy Data Book: Edition 14, May 1994, Oak Ridge National Laboratory).

From a good-government standpoint, a consolidated transportation trust fund, such as some states have, would be better than a mode-specific system. The latter simply guarantees ever-increasing road and aviation investments, even where rail could do the job better, and -- as evidenced by Amtrak's proposed cuts -- ever-decreasing opportunities for people who prefer rail to use it. Even today, rail travel is not possible between Dallas-Houston or Cleveland-Cincinnati, although all four cities have some Amtrak service.

Moreover, highways and aviation enjoy subsidies beyond those inherent in the trust fund process, since government spends more on those modes than it collects in user fees, even before considering the environmental and energy-consumption costs of highways and aviation. A special U.S. DOT study of 1990 data showed that motor vehicle accident costs that year totaled $137.5 billion. Amtrak is far safer than auto travel at all times and, during inclement weather, safer and usually more reliable than airplanes and buses.

A study released in April, 1995, indicates that New Jersey drivers enjoy a $733 million a year subsidy, which -- if reflected in the gasoline tax -- would boost that tax 25 cents a gallon.

Thank you again for the opportunity to testify. I would be pleased to answer any questions.