Amtrak Asks For $2 Billion Grant For FY2016

[insert Witty Link Name Here]

Grant breakdown as follows:

$732.2 million for operating grants as Amtrak wants to take the $366.8 million expected profit of the NEC and put it into the NEC. State supported trains will lose $93.1 million and the long distance trains $639.2 million.

$543.7 million general capital out of a total of $1,803.9 million. NEC will cost $1,015.2 million ($35.5 million charged to LD capital line, $57.6 million to state supported trains). About a third of the state supported trains' capital budget will come from state contributions to equipment capital ($76.9 million).

$558.8 million from a technically separate Federal grant as the Federal share of the NEC under the new PRIIA 212 guidelines.

The math doesn't add up on my end so I'm not entirely sure what's going on.

There's also the FY15 Budget, Business Plan, FY16 Budget Justification and FY15-19 Five-Year Financial Plan which I haven't looked at yet.

Seat assignment is coming...

Baby accounting Jesus is pleased with us. Exhibit 2-5 on page 55 of the 5 Year Budget & Business Plan shows the expected first class transfer to F&B. For 2015 it's $60.5 million which would be 32% of FY14's total sleeper revenue.

There is a LOT of information on near & medium term plans and capital projects in the FY15 budget, FY16 wish list budget request, and Five year financial plan document. I have only done a quick skim, so will post comments later. The funding request to Congress is now far more complicated with the separation of subsidy and capital funding and budgets into 3 discrete business lines than before. Sorting out what the numbers really mean may take a while.

Getting the capital funding to keep the NEC running and expand its capacity is now really the front and center issue Amtrak has to deal with and it shows in the capital grant requests and the accompanying discussions/justifications in the budget document.

Paulus said:

Baby accounting Jesus is pleased with us. Exhibit 2-5 on page 55 of the 5 Year Budget & Business Plan shows the expected first class transfer to F&B. For 2015 it's $60.5 million which would be 32% of FY14's total sleeper revenue.

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I think the "total sleeper revenue" in FY14 has already had that amount subtracted. If you can prove me wrong... please do. If I'm right, the sleepers are gushing cash, and the diners are eating (ha ha) it. (If I'm wrong, the sleepers are *still* quite profitable in the east.)

Incidentally, the F&B plan for "profits" is basically a fantasy. (Or, arguably, a fraud.)

It fantasizes larger and larger transfers from the sleeper ticket account. Which is certainly not going to happen naturally if they continue on their current brain-damaged course of cuts to food selection and quality. And if the menu prices go up to allow increased "transfers", then the cash sales will drop to compensate.

On the Viewliner trains, when the Viewliner IIs eventually go into service, the volume of sleeper passengers may go up and allow increased transfers to the dining car budget, but I don't see how that gets them an increase of 50%.

It seems, looking at the plan, that the plan is just to loot the sleeper account, with no real justification, stealing $10 million in 2017, $20 million in 2018, and $30 million in 2019.

Make sure those of you who like to analyze Amtrak's numbers remember that: if the sleepers appear "unprofitable", it's a complete fraud; they're being looted to make the dining cars look like they break even.

OK, now for my main analysis.

The transfers between business lines make a complete nonsense of the numbers. I would refuse to audit this if I were an auditor.

The IT budget is being allocated 37% NEC, 37% LD, 24% state. This is insane; I can't come up with any way this makes sense.

The rest of the business line allocation seems to be equally stupid. The direct costs numbers are moderately reasonable until you get to the "transfers", which swamp the rest of the numbers. There are large transfers which benefit the bottom line of LD and worsen State, and which benefit State and worsen LD.... as well as transfers which benefit NEC and worsen LD, and transfers which benefit NEC and worsen State. (But no significant transfers which worsen NEC.) This gives ammunition to those who claim that the NEC numbers are being juiced.

The corporate costs allocations make no sense whatsoever on any level.

The biggest line items are consistently the most poorly allocated. The treatment of "ancillary revenue" and "ancillary expenses" is particularly interesting: this isn't broken down at all, and is hundreds of millions each. Apparently Amtrak is losing $48 million / year on "reimbursable". This doesn't appear to be reimbursed!

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Perhaps the most notable point is that Amtrak seems to have given up completely on implementing the Performance Improvement Plans. Which is a pity, because they were good plans. And this is a pile of junk -- some of the exhibits even seem to be missing, or at least improperly referenced.

Amtrak also seems to be planning to finish spending money to develop its fleet strategy plan, and then spend no money at all implementing it. Riiiight. I think we can consider the capital allocation plans for the out-years (after FY16) to be placeholders, not representing actual plans.

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I think this is just another attempt to present the numbers differently in order to try to get money out of Congress. They tried saying "We need capital funds, not operating funds" (which was true), and Congress paid no attention. Now they're slicing it a different way (poorly) and hoping that will get more money from Congress.

Prediction: Congress will pay no attention and provide roughly the same budget as last year. In two years Amtrak will try slicing the numbers a third way in *another* attempt to get Congress's attention.

I forgot that Acela also has a first class transfer to F&B so baby accounting Jesus doesn't love as much as I'd initially thought. Still that should mostly be LD trains.

What I find interesting is that the bottom line numbers align surprisingly well with what came out of the House Committee. This suggests that they have been working together to put a story together and there is apparent bipartisan support for the story at least at the Committee level. So this thing might actually fly - er run on rail, and actually be enacted. If the Senate can improve the numbers a little that'd be even better. Or at least they could separately handle some reasonable level of funding for things like the Portal bridge etc.

As for what is said about the out years past '16, well we know how that goes....

Here we are 9 months later since the previous post, almost 2 months into Fiscal Year 2016, and the House and Senate conference committee is reportedly close to finalizing the transportation funding appropriation amounts for FY2016. The good news Amtrak will get funded at the same levels as FY2015, apparently with a slight bump up. The bad news is that the operating subsidy is no where adequate to cover the losses for the LD trains without Amtrak using NEC surplus to make up for the system operating loss. Nor is the $1.1 billion in capital grants sufficient to place orders for any new rolling stock for the LD system. Basically keep the lights on funding levels, but not enough to keep them on indefinitely.

The other good news is that, provided there are no last minute cuts, the TIGER grant program will get $600 million. That will provide the opportunity in 2016 to land a few $10 to $20 million grants combined with matching state funds for small improvement projects such as new or upgraded stations, track upgrades, grade crossing separations, congestion relief.

Streetsblog site: TIGER Restored, Transit Expansion Funds Cut in 2016 Spending Bill, Excerpts:

Good news: the new bill proposes no changes to what kinds of projects can apply for TIGER funding, and increases funding for the program by $100 million this year.

The Senate’s initial bill introduced this summer provided $500 million for TIGER — the same amount as the just-ended fiscal year — and the House version of this bill provided far less at $100 million. It’s encouraging to see the Senate appropriators increase funding for this important program in the newest draft proposal, and that there are no changes to what kinds of projects can apply. This is a hopeful sign that for future House-Senate negotiations on the final transportation spending bill for 2016.

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Amtrak funding was unchanged: $289 million for operating and $1.1B for capital projects, which is slightly more ($39 million) than this year.

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Transit funding. on the other hand, will take a small hit.

afigg said:

Here we are 9 months later since the previous post, almost 2 months into Fiscal Year 2016, and the House and Senate conference committee is reportedly close to finalizing the transportation funding appropriation amounts for FY2016. The good news Amtrak will get funded at the same levels as FY2015, apparently with a slight bump up. The bad news is that the operating subsidy is no where adequate to cover the losses for the LD trains without Amtrak using NEC surplus to make up for the system operating loss. Nor is the $1.1 billion in capital grants sufficient to place orders for any new rolling stock for the LD system. Basically keep the lights on funding levels, but not enough to keep them on indefinitely.

The other good news is that, provided there are no last minute cuts, the TIGER grant program will get $600 million. That will provide the opportunity in 2016 to land a few $10 to $20 million grants combined with matching state funds for small improvement projects such as new or upgraded stations, track upgrades, grade crossing separations, congestion relief.

Streetsblog site: TIGER Restored, Transit Expansion Funds Cut in 2016 Spending Bill, Excerpts:

Good news: the new bill proposes no changes to what kinds of projects can apply for TIGER funding, and increases funding for the program by $100 million this year.

The Senate’s initial bill introduced this summer provided $500 million for TIGER — the same amount as the just-ended fiscal year — and the House version of this bill provided far less at $100 million. It’s encouraging to see the Senate appropriators increase funding for this important program in the newest draft proposal, and that there are no changes to what kinds of projects can apply. This is a hopeful sign that for future House-Senate negotiations on the final transportation spending bill for 2016.

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Amtrak funding was unchanged: $289 million for operating and $1.1B for capital projects, which is slightly more ($39 million) than this year.

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Transit funding. on the other hand, will take a small hit.

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Is FY 2016 the year when Amtrak will begin to be able to use NEC Surplus for NEC improvements, or will they have to continue to subsidize unprofitable long-distance trains with the NEC surplus just like in previous years?

You can figure out the answer by looking at the breakdown of the final Amtrak appropriation for 2016. If appropriation for non NEC operations is anything less than $600 million or so, you can pretty much take it as a given that money from NEC revenues will be used to maintain LD services at their current level. Neither the House version nor the Senate version appropriate enough for LD trains for them to not require cross-sibsidy, so it is more or less a foregone conclusion that NEC revenue surpluses will not be available for use on the NEC.

jis said:

You can figure out the answer by looking at the breakdown of the final Amtrak appropriation for 2016. If appropriation for non NEC operations is anything less than $600 million or so, you can pretty much take it as a given that money from NEC revenues will be used to maintain LD services at their current level. Neither the House version nor the Senate version appropriate enough for LD trains for them to not require cross-sibsidy, so it is more or less a foregone conclusion that NEC revenue surpluses will not be available for use on the NEC.

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That sucks.

Amtrak has stated that they planned to use NEC revenue surpluses for the Hudson Tunnel Project and other NEC infrastructure improvements. If Amtrak can not do this--because of Congress being too unwilling to do the right thing and let Amtrak to reinvest their NEC surpluses back onto the Northeast Corridor--then how is Amtrak going to contribute to the Hudson Tunnel Project and replace old catenary, etc?

http://www.nytimes.com/2015/11/12/nyregion/corporation-to-oversee-new-hudson-rail-tunnel-with-us-and-amtrak-financing-half.html?_r=0

...don't worry about it, Andrew. Most of the supposed operating costs of the long-distance trains are actually overhead costs which would exist regardless of what happens to the LD trains. So Amtrak basically has to pay for them if Amtrak runs any trains at all. Avoidable losses on the LD trains are more like $21 million.

It is unfortunate that the feds didn't see fit to provide more funding total. But unsurprising.

Other sources of funding:

TIGER. It'll probably go to support some smaller projects which aren't eligible for other funding.

If profits based on direct costs resume their trend of improvement (they got worse this year), then Amtrak will have more internally generated money to spend on capital improvement.

It may be possible to get an RRIF loan for some sorts of improvements, based on improved operating numbers. The RRIF loan for the Sprinters was justified by the NEC profits which would be made possible with them.

There may also be additional rounds of state funding for various projects.

The big financial improvements will come in 2018, when:

-- the many ARRA projects will finish and pay off with improved ridership & revenue

-- the Penn Station mortgage and old high-interest leases will almost all be paid off, meaning more internally generated revenue

-- the corridor bilevels should start to go into service (despite the year-long delay), freeing up Horizons and some Amfleets for the east

-- the Chargers should be in service as well, freeing up some P42s for other operations

-- if we're really really lucky, the super-expensive IT project to replace ARROW one piece at a time will be close to finished.

This will also be around the time when many of the current large state-funded projects will be done, so the states may be willing to put in significantly more money at that time.

According to PB's November 13th Washington Update, both the House and Senate are in reconciliation regarding their versions of the federal transportation bill. Both bills include passenger rails--and last time I read both passenger rail titles, they included allowing Amtrak to reinvest their NEC surplus revenues back onto the Northeast Corridor. So, maybe at some point Amtrak will be allowed to do this.

Here is the PB Washington Link from November 13th (and scroll down to view it): http://www.federalbriefing.com

Another interesting article on Amtrak's plans: http://www.bloomberg.com/news/articles/2015-11-12/amtrak-s-gateway-may-not-need-money-from-congress-booker-says

Of course anything could happen. But right now nothing has happened except for Booker hoping for the best. The first article is about Authorization. Authorization bills have always said wonderful things. But Congress has traditionally never appropriated what their own Authorization allows them to appropriate. They have always appropriated much less.

The concrete draft appropriations bills that exist at present all freeze Amtrak at around last year's level basically on all aspects.Bookers proposal has raised major consternation in the LD train supporters circles. He cannot just wish away the real costs of Amtrak organizational infrastructure that gets allocated to wherever. As Neroden says that is a major source of the LD "losses". This business about routing money back to NEC without increasing the overall top line is basically rearranging chairs on the deck of the Titanic.

If Congress is able to irrevocably allocate something like $300 million from above rail revenue surplus from NEC to Gateway then it will take some 33 years to pay off the $10 billion if financed by a 0% loan. So clearly Booker is thinking of a larger amount. But we have to remember that at least in the earlier years there is a chunk of money from the same surplus that is going towards paying for Acela IIs etc. too. Maybe he is thinking but not speaking about channeling some federal funds via FTA, CMAQ and TIGER too. Would be interesting to see what Booker's assumptions are. Maybe he is thinking of additional revenues from ticket surcharges on already exorbitant fares. I think at the end of the day it is unfair for rail passengers having to carry the entire burden of funding a critical piece of infrastructure while the road projects around the same infrastructure routinely get 80% federal matching grants, an ever growing proportion of which comes from general revenues..

jis said:

Of course anything could happen. But right now nothing has happened except for Booker hoping for the best. The first article is about Authorization. Authorization bills have always said wonderful things. But Congress has traditionally never appropriated what their own Authorization allows them to appropriate. They have always appropriated much less.

The concrete draft appropriations bills that exist at present all freeze Amtrak at around last year's level basically on all aspects.Bookers proposal has raised major consternation in the LD train supporters circles. He cannot just wish away the real costs of Amtrak organizational infrastructure that gets allocated to wherever. As Neroden says that is a major source of the LD "losses". This business about routing money back to NEC without increasing the overall top line is basically rearranging chairs on the deck of the Titanic.

If Congress is able to irrevocably allocate something like $300 million from above rail revenue surplus from NEC to Gateway then it will take some 33 years to pay off the $10 billion if financed by a 0% loan. So clearly Booker is thinking of a larger amount. But we have to remember that at least in the earlier years there is a chunk of money from the same surplus that is going towards paying for Acela IIs etc. too. Maybe he is thinking but not speaking about channeling some federal funds via FTA, CMAQ and TIGER too. Would be interesting to see what Booker's assumptions are. Maybe he is thinking of additional revenues from ticket surcharges on already exorbitant fares. I think at the end of the day it is unfair for rail passengers having to carry the entire burden of funding a critical piece of infrastructure while the road projects around the same infrastructure routinely get 80% federal matching grants, an ever growing proportion of which comes from general revenues..

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It is my understanding that Gateway would receive a lot of New Starts funding (from the FTA), and Amtrak revenue--but how much we don't know. It is also possible that CMAQ funds would also help fund Gateway, since they were supposed to go to the ARC Project as well. I have heard of $14 Billion estimates for the new tunnels, and $20 Billion when associated infrastructure improvements are taken into account in Northern New Jersey. If Amtrak can't reinvest their surplus revenues back into the NEC, then how would a proposed surplus held fund Gateway?!

And maybe some future Acela revenue can go into Gateway? After all, the new train-sets should enable about a 40% increase in seating capacity after all-which should increase revenue.

From New York Senator Schumer's press release: Senators Schumer and Booker worked closely with Secretary Foxx of the United States Department of Transportation and Chairman Coscia of Amtrak, and secured a commitment from both that their respective agencies would cover half of the total project costs. The federal share of funding for the project is likely to come from a combination of New Starts Grant dollars, Amtrak Northeast Corridor profits, Amtrak capital funds, annual appropriations, and other similar federal sources. In addition, the federal partners may utilize a low interest federal loan to lower the cost of capital for their share, for which Amtrak and/or their federal partners or federal designees take responsibility for debt service payments. The local share may include, among other financing strategies and options, the use of federal loan programs for which the states, the Port Authority and/or their partners or designees take responsibility for debt service payments. Establishing a special purpose development entity allows the authority to direct multiple federal sources of funding to the project.

In addition, the federal and state partners agreed, due to the nature of this project and to make it a reality in a timely manner, to work together to expedite all environmental and planning approvals needed to bring this project online as soon as possible.

http://www.schumer.senate.gov/newsroom/press-releases/governors-senators-announce-agreement-that-paves-the-way-for-gateway-tunnel-project-to-proceed-full-steam-ahead

There's only so much "increased NEC revenue" to go around. Even if it can all be sequestered and kept in the NEC (a big "if" given both practical considerations that Neroden mentioned and political considerations Jis mentioned), you can't count on it to fund Acela IIs, and Gateway, and other NEC-related projects.

I don't even know that it's all that likely that there will be a satisfying answer to where all the funds will come from - whether today, tomorrow, next year, or whenever - just that it'll be cobbled together, piece by piece, year by year. Pay attention to appropriations bills and keep pushing your elected representatives. But don't assume anyone here has all the answers as to how or when Gateway, and Gateway-related projects, will be funded and constructed.

cannot link but there is a report breaking down persons traveling between main cities on the NEC. A quick glance would seem to indicate that with unlimited capacity today Amtrak rider ship would only increase by 20 %. There just isn't enough persons in auto, bus, & plane that can be served by the limited destinations of the NEC.. Might be wrong but -------------a

Eric S said:

There's only so much "increased NEC revenue" to go around. Even if it can all be sequestered and kept in the NEC (a big "if" given both practical considerations that Neroden mentioned and political considerations Jis mentioned), you can't count on it to fund Acela IIs, and Gateway, and other NEC-related projects.

I don't even know that it's all that likely that there will be a satisfying answer to where all the funds will come from - whether today, tomorrow, next year, or whenever - just that it'll be cobbled together, piece by piece, year by year. Pay attention to appropriations bills and keep pushing your elected representatives. But don't assume anyone here has all the answers as to how or when Gateway, and Gateway-related projects, will be funded and constructed.

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I previously posted because with Amtrak and US DOT committed to funding half of Gateway, how would Amtrak pay if they are not allowed to reinvest their NEC profits back onto the Northeast Corridor?

Also, speaking of Gateway, does anyone know if the $20 Billion estimate is for just new tunnels or the additional segments of track in Northern New Jersey?

Andrew said:

I previously posted because with Amtrak and US DOT committed to funding half of Gateway, how would Amtrak pay if they are not allowed to reinvest their NEC profits back onto the Northeast Corridor?

Also, speaking of Gateway, does anyone know if the $20 Billion estimate is for just new tunnels or the additional segments of track in Northern New Jersey?

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Andrew, tbis thread is about Amtrak's FY2016 funding request, what it will actually get from Congress, and arguably can be extended to discuss what the provided insufficient operating subsidy means in the near term and the NEC & LD trains in general. But if you want to post about NEC Gateway and how that gets funded, there is a thread on it. Please, PLEASE, confine your questions about Gateway to that thread.

Amtrak's commitment to fund Gateway is NOT short-term. Amtrak can dribble a little bit of funding towards it each year. Andrew, you may be confused: Amtrak is currently allowed to put NEC surplus into NEC capital projects. Amtrak does use some of it for that purpose -- but most of it (not all of it) has to go to cover overhead, overhead which is misleadingly "allocated" to the LD trains.