Amtrak is enjoying a slightly better than expected 1999 but still faces serious obstacles to becoming financially self-sufficient by 2003 as required by law, two recent government reports conclude.
The reports, by the General Accounting Office and the inspector general for the Department of Transportation, credit Amtrak with being between $10 million and $14 million ahead of budget estimates for fiscal 1999.
But both reports raise serious questions about whether the revenue expected from several new ventures, such as high-speed rail in the Northeast Corridor and express delivery service, will materialize in time to wean the rail service from federal operating dollars.
A 1997 law requires that Amtrak become self-sufficient by the end of fiscal 2002. If it appears Amtrak will not meet that goal, the Amtrak Reform Council, an independent board created by the 1997 law, must submit plans for a new national passenger rail system, and Amtrak would be required to submit a plan for its own liquidation.
The GAO report says Amtrak's net operating loss for 1998 was $930 million, the largest in the past 10 years. The inspector general reports a similar loss figure. Both reports note that the dramatic loss was due in part to the purchase of capital equipment and the labor costs that resulted from newly signed collective bargaining agreements that are part of Amtrak's long-term strategic plan.
Essentially, the reports say that the investments in new train cars and better training for employees and the start-up costs for the express delivery service are fattening current loss totals, but could result in significant revenue gains by 2003.
Nonetheless, both reports conclude that Amtrak's plan to operate without operating subsidies a year ahead of schedule, as envisioned in its 1999 business plan, is overly optimistic.
"Each of the six major items in Amtrak's strategic business plan have some pretty large uncertainties," said Jim Ratzenberger, one of the authors of the GAO report. "High-speed rail has not come to pass and express mail still has a long way to go."
The IG report estimates that Amtrak will incur $695 million more in cash losses than the railroad estimates. Close to $200 million of that is attributed to what the IG considers unrealistic revenue projections for the planned high-speed Acela trains in the Northeast.
Amtrak's ridership continues to improve, up 4 percent in the first six months of the fiscal year, while total rider revenue is up 8 percent through March, according to the IG report.
Amtrak officials said they are pleased that the reports recognize the railroad's improved performance.
"Any business plan that any corporation puts in place has risks until the plans are actually implemented," said Amtrak spokesman John Wolf. "We think that both reports are quite positive."