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Struggling Amtrak on life support - and many just want to let it die:
Are trains a 'luxury' - or a worthy part of the national transportation system?

May 28, 1997

Matt Mossman; Knight-Ridder Newspapers

Are trains a 'luxury' - or a worthy part of the national transportation system?

WASHINGTON - The United States soon could lose its national passenger rail system.

Amtrak has been in financial trouble almost since it was founded in 1971, but this time the crisis is real for the railroad, which carries 20 million passengers to 510 cities in 44 states every year.

Amtrak executives expect to run out of money in less than a year.

"We'll continue to borrow money until the line of credit runs out and we go bankrupt," said Amtrak's vice president for government affairs, Tim Gillespie.

The ultimate fate of the service could be decided in a matter of months or even weeks, as Congress weighs Amtrak's place in a new five-year national transportation plan.

President Clinton has proposed rescuing the national railroad by diverting $4.8 billion over the next five years from the federal Highway Trust Fund, but many members of Congress favor using that money to build highways.

Rep. Bud Shuster, a Pennsylvania Republican who is chairman of the House Transportation Committee, has been cooking up a compromise that would pump more money into highways while setting aside a little to help Amtrak.

But Shuster fell two votes short in an effort to divert an extra $12 billion for highways in a House budget vote last week, and that failure makes an alliance between Amtrak's supporters and the highway builders less likely.

Shuster also has appointed a blue-ribbon committee of transportation experts to offer recommendations on Amtrak's fate. That group could report to Congress within a few days.

Some critics say the government ought to walk away and let the failing railroad die. Amtrak is an expensive anachronism in an era of cars and air transportation, they say. Subsidies are as high as $500 per passenger on some routes.

"It would be cheaper for the American taxpayer if we just bought Amtrak passengers airline tickets," said Steven Moore of the Cato Institute, a Libertarian research group headquartered in Washington, D.C.

States can subsidize the costs of regional pieces of the national system they believe are necessary, critics say.

"We do not think that any highway funds should go to Amtrak," said Taylor Burton, the chief lobbyist for the Highway Users Federation. "The needs in improving roads and bridges are far in excess of the money we have."

Sen. Christopher Bond (R-Mo.) has called Amtrak an "East Coast luxury," and suggests states that want rail service should pay for it from their own highway funds, instead of from the federal highway trust fund.

"I will continue to oppose ... asides out of revenues deposited into the Highway Trust Fund for Amtrak," Bond said.

But advocates argue that Amtrak makes economic sense in dense urban corridors - particularly the Northeast - and modest government subsidies are a logical alternative to 12-lane interstate extensions.

Amtrak needs a certain source of money like the Highway Trust Fund's income from gas, tire and diesel taxes, they say.

"If we had a trust fund when we started (in 1971) that was a dedicated source of funding, we wouldn't be in this position," Gillespie said.

"You don't run a railroad without funding. If you don't have funding, you don't have a business, and that's a major part of the Amtrak problem," said Paul Karas, an Illinois businessman and a member of Shuster's Amtrak advisory panel.

As now organized, Amtrak is struggling under an array of burdens:

• Persistent cash shortages mean it has been forced to borrow money to stay afloat, and is now facing annual interest rates of 17 percent on the money it borrows to operate.
• A tangled mess of federal, state and local regulations block changes in staffing levels and other aspects of operations that could sharply cut the railroad's operating costs.
• A lack of capital to buy new trains and make track improvements has made it increasingly difficult to compete for travelers' dollars.
• Amtrak's unionized workers can't strike, but the unions are making it difficult for Amtrak to reduce the size of its work force.
• Congressional decisions have contributed to the problems.

In October, Amtrak announced it was cutting five costly routes. Congress mandated that they be continued for another five months and gave Amtrak $22.5 million to keep them up. But running the routes cost $35.5 million, heaping $13 million more on the debt pile.

All this has created an underfunded, inefficient and unpopular service hurtling toward insolvency.

Shuster's expert panel is likely to recommend that Congress find some cash to help Amtrak hobble forward with the promise of a fundamental restructuring to follow. But whether Congress will agree to any further help is an open question.

Train travel has been declining steadily since 1944. The last year Americans chose trains over planes was 1956, when rails recorded 28.2 billion passenger-miles, while airlines netted 23.2 billion.

In 1994, the most recent year for which such statistics are available, airline travel in the United States totalled 388.4 billion passenger-miles compared to a paltry 13.4 billion for the trains. Amtrak was responsible for only 5.2 billion, less than 4 percent of commercial travel nationwide.

Everyone else drove their cars - a breathtaking 2,537 billion passenger-miles.

Transportation funding in recent years followed the decline of inter-city rail travel. In 1982, Amtrak got $905 million in federal aid, 7.3 percent of total transportation spending. This year it is receiving $867 million, about 2.9 percent of federal transportation aid.

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