WASHINGTON – Amtrak President and Chief Executive Officer David L. Gunn has sent the railroad’s FY ’05 federal grant request of $1.798 billion to Congress.
Continuing Amtrak’s comprehensive effort to return the railroad to a state-of-good-repair, the request would fund $791 million in capital projects, provide $570 million for operations and repay a $100 million federal loan obtained in 2002. The balance of the request is for debt service and working capital.
“As we enter the second year of our five-year strategic plan, this request should come as no surprise to anyone. When we announced our plan last February, we said we’d need about $1.7 billion in FY ‘05, and that is what we have proposed,” Gunn said.
The $1.8 billion request amounts to a roughly $300 million increase over the current year’s federal funding and relief, comprised of an appropriation of $1.2 billion, carry-over of more than $150 million from FY ’03 and deferral of the $100 million loan repayment.
“The nearly $1.4 billion in real dollars and $100 million in loan repayment relief will be adequate for this year, but we will need a full appropriation in FY ‘05 if we are to continue stabilizing the railroad according to our strategic plan and eventually return our plant and equipment to a state-of-good-repair,” Gunn said.
Strategic Plan focuses on State-of-good-repair
After years of deferred maintenance and investment that diminished operating reliability and on-time performance, Gunn last February announced a five-year, $4.5 billion capital plan supported by federal, state and other sources.
In the first year of that plan, 2003, Amtrak rebuilt or overhauled 124 locomotives and passenger cars, installed nearly 200,000 ties, converted or upgraded 36 bridges, replaced 33 miles of signal cable and renewed catenary (electric power lines) hardware along 37 miles of line.
Gunn has also instituted management reforms since becoming Amtrak’s president in 2002 that returned the company to a traditional railroad organizational structure, eliminated duplicate layers of management and reduced total number of employees by 3,417, from 23,393 in May 2002 to 19,976 at the end of 2003.
These fiscal and management reforms have enabled Amtrak to better control its costs, and, for the first time since 1995, Amtrak in FY ‘03 did not have to borrow cash to make payroll. Amtrak also set a record for ridership in FY ’03, carrying 24 million passengers.
A Time for Reform?
The Amtrak Reform Council, a federal commission created to oversee Amtrak’s performance, today is submitting its recommendations to the Congress that it implement a fundamental reorganization of our nation’s rail passenger program.
In 1997, Congress debated de-funding Amtrak, and instead Congress gave it one more chance. The Amtrak Reform and Accountability of 1997 stated that Amtrak needed to be operationally self-sufficient by December 2002. In addition, it created the Amtrak Reform Council to monitor Amtrak’s progress.
In November 2001, the Amtrak Reform Council made a Finding that Amtrak had not made any progress. In January 2002, the Council met and decided on the basic elements of a restructuring plan.
In February, the Council released its final recommendation, which calls for a new business model for Amtrak and the introduction of competition in train operations.
The current corporation, National Rail Passenger Corporation (Amtrak), would be restructured into three entities: a federal oversight agency; a government-owned and operated corporation to control the infrastructure between Washington and Boston, the Northeast Corridor, that Amtrak currently owns; and a train operating company. In addition, the Council is proposing that the federal oversight agency, after a transition period, have the ability to allow private companies to bid to operate some of the train routes that Amtrak currently runs.
The idea is to allow the train operating company Amtrak to focus on its core business of running trains and not be forced to focus on maintaining the Northeast Corridor with its 1200 trains a day – only 100 of those are Amtrak’s – as well as its government functions. The Northeast Corridor infrastructure was given to Amtrak in 1976 and the Council believes that it is not a good fit.
The Northeast Corridor is costly to maintain, costing between $800 million and $1 billion a year. And, in the last three years, Amtrak has invested only $71 million in the infrastructure due to Amtrak’s financial constraints.
“Amtrak has proven that it cannot focus effectively on its core mission of running trains and running them well and under current law there is no one who can hold the railroad accountable,” said Council Chairmen Gil Carmichael.
“Amtrak has too much to do, and does little of it well,” Carmichael added. “In addition, the Council believes separating the Northeast Corridor infrastructure from Amtrak’s trains operating company is a must. Owning the Northeast Corridor is not good for Amtrak’s financial statements and the Northeast Corridor is not benefiting by being owned by Amtrak.”
— On the Web: As this story unfolds, updates will be available at Railfanning.org/news
Published in the May 2004 edition of The Cross-Tie.
Click here to view the FY05 Grant and Legislative Request
Amtrak Reform Council Final Report
COMPARISON OF AMTRAK FUNDING NEEDS FY ’04 / FY ‘05
|
FY04 |
FY05 |
||
| Amtrak Funding Needs |
Revised Budget |
Strategic Plan |
Grant Request |
| Capital | |||
| Infrastructure |
252 |
418 |
352 |
| Fleet |
194 |
410 |
349 |
| Other (a) |
86 |
67 |
90 |
| Subtotal, Capital |
532 |
894 |
791 |
| Operating |
581 |
565 |
570 |
| Debt Service |
262 |
266 |
262 |
| Working Capital |
0 |
0 |
75 |
| Subtotal |
1,375 |
1,725 |
1,698 |
| DOT Loan Repayment |
0 |
0 |
100 |
| Total, with Loan Repayment |
1,375 |
1,725 |
1,798 |
| (a) Environmental compliance, information technology, real estate, procurement and safety | |||
