Amtrak Faces Serious Cash Crunch, Senators Told
Friday, May 13, 2005
Amtrak would run out of money within two weeks of the end of its fiscal year if Congress does not continue to fund the cash-strapped railroad, according to the Transportation Department's inspector general.
The bleak picture painted by Kenneth M. Mead yesterday morning before a Senate subcommittee does not take into account the losses Amtrak is incurring as a result of shutting down its Acela Express line, the most profitable train it operates, as a result of a brake problem discovered last month. Amtrak has said it is losing $1 million every week the high-speed service is not operational.
Mead recommended that Amtrak receive all of the $1.82 billion it requested for 2006, a significant increase from this year's allocation of $1.2 billion. He said that the money is needed to fund critical infrastructure improvements.
He testified that keeping Amtrak at its current level of funding is "not sufficient to make progress toward achieving a state of good repair." The railroad has a $5 billion backlog of "state-of-good-repair" investments, Mead said.
"We have a system that limps along, never in a state of good repair, awash in dept and perpetually on the edge of collapse," he said.
The Bush administration has proposed forcing Amtrak into bankruptcy as a way to prompt a major reform of the railroad. Its 2006 budget proposal included no subsidies for Amtrak, save for $360 million to fund operations in the railroad's Northeast Corridor, between Washington, New York and Boston.
Sen. Christopher S. Bond (R-Mo.), chairman of the Senate Appropriations subcommittee that allocates Amtrak's funding, said he opposed the administration's bankruptcy proposal.
"The costs [are] potentially too great and the result too uncertain" for the U.S. government to allow the railroad to fall into bankruptcy, Bond said.
But Bond also said that he did not see how his subcommittee could grant the railroad such a large funding increase and called for an overhaul of the service.
"There must be fundamental structural reform if passenger rail service is going to continue in the United States," he said. "This subcommittee has too many other priority funding needs to keep Amtrak on life support."
Losses on some long-distance trains exceed $400 per passenger, according to Mead. Amtrak's annual debt service payments are about $300 million, the same amount that the Acela line brings in for the railroad per year.
Joseph Vranich, a former Amtrak spokesman who has written books critical of the railroad, said that talk of Amtrak shutting down if Congress does not meet its budget requests is a form of "blackmail" and "hostage-taking" because of the importance of Amtrak's Northeast corridor rail network.
"Would we permit a small, badly run airline on the brink of bankruptcy to somehow have the power to shut down the entire commercial aviation system if Congress wouldn't give it more money?" he said. "No, of course we wouldn't."