Republican Cost-Cutters Track Amtrak
The nation's passenger-rail system could land on Congress's chopping block
AMTRAK is headed for a bumpy ride. Drastic cuts, started last month, will continue through September, eliminating nearly one-fifth of Amtrak's service nationwide and laying off several thousand workers. The belt-tightening is supposed to save the passenger-rail system $430 million. More cuts will be announced in April.
But it may not be enough.
The Republican-controlled Congress is now questioning Amtrak's existence as a federally funded national system.
''There has been a lot of talk about reducing government spending.... Amtrak is one area where we can take immediate action,'' writes Rep. Joel Hefley (R) of Colorado in a ''Dear Colleague'' letter.
Representative Hefley has introduced legislation that would phase out Amtrak's federal subsidies over four years and reduce costly severance packages for employees laid off from a maximum of up to six years under present union contracts to six months, among other provisions. The legislation is scheduled for markup in the House Subcommittee on Railroads on March 24.
Amtrak has not turned a profit in the 25 years since Congress created a passenger rail system, even while receiving more than $15 billion in federal subsidies. Like every other national passenger rail system in the world, Amtrak operates at a loss and receives government subsidies to meet costs. This year it will receive nearly $1 billion.
A General Accounting Office report released last month adds fuel to the critics' fire. Amtrak has been on a downhill slide since 1990, according to the report, and its finances have now reached a ''critical stage.'' The GAO recommends that Congress consider whether ''providing nationwide inter-city passenger service at the present level is still appropriate.''
Even with cutbacks, Amtrak still must deal with an aging fleet of cars and locomotives (the average age is 22 years), and deteriorating stations and repair facilities. Amtrak's capital needs -- estimated at several billion dollars -- are too great and its routes too unprofitable to consider privatization.
But other members of Congress have testified that eliminating or reducing service would wreak havoc on rural towns that don't have access to other modes of mass transportation.
''I have ... heard from hundreds of senior citizens and retired persons who will be devastated by this service reduction,'' Rep. Richard Neal (D) of Massachusetts recently told the House Subcommittee on Railroads.
Some states have agreed to subsidize routes -- and that may be a trend in Amtrak funding.
When the Hiawatha route between Chicago and Milwaukee was axed in December, Wisconsin agreed to fund service on a reduced scale. Vermont is working on an agreement that would pay Amtrak $581,000 to continue running trains to St. Alban's for at least another year. Amtrak service to Vermont loses about $1 million a year.
Missouri has also reached an agreement with Amtrak to reduce service but continue current subsidy levels. Other deals are under negotiation with Alabama, Michigan, California, Pennsylvania, and Massachusetts.
On Capital Hill there is ''serious intent to help us find a way [to] improve our service in the long term and survive in the short term,'' says Sue Martin, spokeswoman for Amtrak.
''It is a dinosaur,'' says Steven Morrison, professor of economics at Northeastern University in Boston. ''I won't say that we weren't a train country [at Amtrak's inception], but we aren't a train country now.''
Unlike other countries, such as Japan, which are more densely populated and national rail systems are more successful, many areas of the US are too sparsely populated to provide a good return on investment in rail, Professor Morrison says. Recently, Amtrak has faced competition from airlines such as Southwest, which offer cheap fares.
Only in areas like the Northeast, where population density is high, does Amtrak provide benefits great enough to justify its costs.
Today, even with Amtrak's most profitable route, the Northeast Corridor linking Washington, New York, and Boston, passenger receipts cover 65 percent of costs for those routes, if capital costs are included. An average of 50 percent of costs are covered by fares on other routes. And since 1990, passenger revenues have declined, pushing Amtrak's deficit to a forecasted $76 million in 1996.
At a recent hearing, Amtrak President Thomas Downs testified that tort reform, fuel tax exemptions, and removal of restrictions on the collective bargaining process, could help Amtrak eliminate ''nonservice related costs'' and assist Amtrak to become less dependent on federal subsidies.