Though Congress approved a $1.2 billion subsidy for Amtrak, the money-losing passenger railroad still is careening toward a major disruption in service.
To save it, the Transportation Department’s inspector general says, Congress must do more. Considering current Amtrak policies, says Inspector General Kenneth Mead, it’s up to lawmakers to determine what must go and what may stay to restructure Amtrak and stop the hemorrhaging.
“Without clear direction from the Congress, Amtrak has taken the position that it should essentially maintain the status quo,” Mead wrote in an assessment being released Monday.
“However, given the level of income from passengers, state contributions and federal subsidies, that decision has resulted in a form of Russian roulette, spreading capital much too thinly.”
Mead said it’s impossible to tell when the railroad will experience a major failure.
Tracks need to be repaired, locomotives and cars need overhauls and three bridges over rivers in Connecticut must be replaced before they fail. The railroad simply lacks the money to make the repairs.
Losing $500 million a year
“Amtrak cannot save its way to financial health,” Mead wrote in the periodic report that Congress required in a 1997 law that was to have ended automatic operating subsidies for the railroad by 2002. It now must request any federal money it needs.
David Gunn, who took over as Amtrak president 2½ years ago, has cut costs but not enough to stem the railroad’s annual loss of more than $500 million.
Gunn has staunchly defended the need for a national passenger railroad system, although some long-distance lines lose more than $100 per rider. He has asked for bigger subsidies — $1.8 billion this year — than Congress has been willing to approve.
Mead, the Bush administration and some members of Congress want to eliminate unprofitable routes and to invest instead in corridors between cities fewer than 500 miles apart.
Enough members of Congress serve in districts that don’t want to lose Amtrak service, however, that such proposals always have failed.
The Bush administration proposed this year cutting Amtrak’s federal subsidy to $900 million, with a promise of more money if the railroad can restructure itself.
Gunn said it’s up to Congress and the administration to make the restructuring decisions.
The $1.2 billion that Amtrak ended up with in the huge spending bill passed Saturday is less than it needs to maintain the railroad in a state of good repair, according to Mead’s report.
President Bush will get the new spending bill to sign into law late this week.
Mead argued that Amtrak can’t continue to defer spending on repairs with the hope that Congress will eventually give it enough money to run an efficient, well-maintained national system.
In a letter that responded to the inspector general’s report, Gunn defended his $1.8 billion request. “It is management’s responsibility to inform the board and others of the minimum federal funding required for a safe, reliable operation,” he wrote.
Mead concluded that Amtrak management’s commitment to the status quo leaves it up to Congress to set a direction for the railroad, which it has been unable to do.
He also urged Amtrak’s board, which is appointed by the president and the transportation secretary, to work with Congress and the administration to plan for the railroad’s future.
The report also said:
- Ridership increased to a record 24 million in 2003, but revenue fell from 2002, partly because of fare reductions.
- Between Oct. 1, 2003, and June 30, 2004, ridership was up 5.7 percent and passenger revenue was up 5.6 percent, better than forecast.
- The persistent unreliability of service could depress revenue. Trains were on time only 71.8 percent during the October-June period, a decline from 74.1 percent for the previous year. The Acela Express was on schedule only 74.7 percent of the time, short of Amtrak’s target of 94 percent.