Amtrak FY 2015 Budget Request

[jis]

And praytell what in heaven's name does all this silliness about Tunnel Box and Gateway Project have to do with the Amtrak 2015 budget request? Next to absolutely nothing in and of itself. Yes it does have implications about how generally funding will be sourced for NEC development work, but that has a much broader scope and imact, almost of national scale, than just the Gateway.

Are we going to derail every discussion that has remotely got anything to do with Amtrak, Penn Station or the NEC and have them devolve into this annoying session of unanswerable questions on Gateway? Let us please refrain from doing that if we can control pur urges in that direction.

Getting back to the budget request - the business about removing cross subsidizing LD from NEC cashflow is going to have interesting consequences. It might break the long standing truce that has existed propping up support for Amtrak as a single entity spanning the NEC and the national system. But given PRIIA 2008 Section 212, such was almost a foregone conclusion, since that section implicitly requires NEC to become self-funding and self-suffcient. Given that mission it would seem logical that NEC budgets would get clearly separated from LD ones, and that is what we see unfolding in the 2015 request, the way it is structured. Afterall the NEC Commission charged to come up with the true cost of NEC maintenance and a chargeback scheme to fund it would want to know why NEC sourced income is leaking away somewhere else. Also given the crunch on capital funding, Amtrak is left with little choice but to internally fund capital for maintaining and growing the part of the business that brings in huge amounts of revenue.

So this is going to be very interesting to see how it unfolds.

 

[fulham]

With the general consensus being that the NEC is profitable and is generating excess revenue that can be used for capitol projects, would Congress still have the ability to "privatize" this railroad? Best case scenario, the state of good repair is achieved, the tunnel/bridge replacements get done, new Acela's come on board, and new equipment replaces the Amfleets. Granted I know all this would have to be accomplished with federal and multi-state help, but it probably will happen. Then the stand-alone NEC could truly become a cash cow. I know this is going out a ways, but what then? Would Amtrak/NEC still be a quasi-government entity or could they become a private enterprise similar to what happened with Conrail? And for those of you, who think this is a stretch, who in 1968/69 would ever have dreamed the freight railroading would be profitable in the Northeast in 2014.

 

[jis]

Experience elsewhere shows that for any such privatization to have a prayer of success, the entity has to be guaranteed considerable amount of public support (often significantly more than what the support level was prior to starting such a process) for many years in the startup process. A Conrail like exercise may be possible, specially in spinning off train operating companies. I am not so sure about the infrastructure. If such could be worked out, the Highways would have been privatized a long time back. Indeed the trend in roadways was for them to have started as private turnpikes and then having been moved to the public sector because the public was unwilling to put up with the shenanigans of the private outfits, and then never to go back successfully. The few attempts at private toll roads have only had very mixed performance, several failing spectacularly. So on the infrastructure side I would not hold my breath.

Mind you this is my wild eyed idle speculation, and if you asked me to justify all of it in a scholarly manner, I'd probably not have the time to do justice to such a request.

 

[Andrew]

And praytell what in heaven's name does all this silliness about Tunnel Box and Gateway Project have to do with the Amtrak 2015 budget request? Next to absolutely nothing in and of itself. Yes it does have implications about how generally funding will be sourced for NEC development work, but that has a much broader scope and imact, almost of national scale, than just the Gateway.

Are we going to derail every discussion that has remotely got anything to do with Amtrak, Penn Station or the NEC and have them devolve into this annoying session of unanswerable questions on Gateway? Let us please refrain from doing that if we can control pur urges in that direction.

Getting back to the budget request - the business about removing cross subsidizing LD from NEC cashflow is going to have interesting consequences. It might break the long standing truce that has existed propping up support for Amtrak as a single entity spanning the NEC and the national system. But given PRIIA 2008 Section 212, such was almost a foregone conclusion, since that section implicitly requires NEC to become self-funding and self-suffcient. Given that mission it would seem logical that NEC budgets would get clearly separated from LD ones, and that is what we see unfolding in the 2015 request, the way it is structured. Afterall the NEC Commission charged to come up with the true cost of NEC maintenance and a chargeback scheme to fund it would want to know why NEC sourced income is leaking away somewhere else. Also given the crunch on capital funding, Amtrak is left with little choice but to internally fund capital for maintaining and growing the part of the business that brings in huge amounts of revenue.

So this is going to be very interesting to see how it unfolds.

Suppose Amtrak really does decide not fund the LD Trains in 2015, and Congress doesn't get a budget passed on time, then what?!

 

[neroden]

Experience elsewhere shows that for any such privatization to have a prayer of success, the entity has to be guaranteed considerable amount of public support (often significantly more than what the support level was prior to starting such a process) for many years in the startup process.

This is usually, actually, the motivation for "privatization" -- some rent-seeker wants to loot the public purse. They often get away with it.

 

[neroden]

Suppose Amtrak really does decide not fund the LD Trains in 2015, and Congress doesn't get a budget passed on time, then what?!

Public outcry will restore most of the long-distance trains, whether by Congressional order or by state support. The trains east of the Mississippi really don't cost very much to run -- it wouldn't save Amtrak much to cancel any of them. (Total direct-cost losses for them are about $25 million, and that will be reduced by the new Viewliners.) I could see the always-threatened Cardinal being cancelled, but nothing else.

I think Amtrak's presentation is really more of a tactical move to try to wake up the US Senators west of the Mississippi than anything else, and it probably won't really change anything.

But if Amtrak does decide to stop funding the system as-is, the routes I'd expect to be at risk of closure are the west-of-the-Mississippi routes where no US Senators and no state governments will go to bat for them. You can do your own political analysis, but I think most of the routes would have US Senators and state governments going to bat for them. The biggest exception is the Sunset Limited, which simply doesn't seem to have political support.

 

[Crescent ATN & TCL]

I think it just means there won't be any new Superliners and that as the current ones wear out we will start losing the western trains one by one. However if congress funds them they will stay.

 

[Andrew]

What will be Amtrak's infrastructure priorities next year regarding the NEC?

 

[Crescent ATN & TCL]

Bridge and catenary replacement and working toward gateway. New acelas as far as equipment goes.

 

[Andrew]

Bridge and catenary replacement and working toward gateway. New acelas as far as equipment goes.

What does "working toward Gateway" mean?

 

[fulham]

Under Amtrak's FY 15 proposal, the amount of "profit" from the NEC Amtrak is planning on putting back into the NEC, is this a Congressional mandate? The reason I ask is that I could see one of the anti-Amtrak Senators (Mica, Flake, Coburn, etc), fighting this idea just to be difficult, i.e. demanding that this $ goes towards the LD trains.

Since this excess revenue is Amtrak's, do they have the ultimate say over what is done with this?

 

[afigg]

Under Amtrak's FY 15 proposal, the amount of "profit" from the NEC Amtrak is planning on putting back into the NEC, is this a Congressional mandate? The reason I ask is that I could see one of the anti-Amtrak Senators (Mica, Flake, Coburn, etc), fighting this idea just to be difficult, i.e. demanding that this $ goes towards the LD trains.

Since this excess revenue is Amtrak's, do they have the ultimate say over what is done with this?

No, there is no "Congressional mandate" to put the operating surplus from the Acelas and NE Regionals back into the NEC. The NEC revenue including the surplus has been going into the system wide revenue account, in effect helping to cover part of the net operating shortfall on the LD and non-NEC corridor trains. The NEC operating surplus has been a fairly recent development since the 2008 PRIIA act with the NE Regionals changing from a operating loss to a surplus in recent years. So Congress has not put any constraints on what Amtrak can do with any NEC surplus as far I know.

I find it unlikely that one of the anti-Amtrak Senators or Congressman, or at least those who are in a position to have something to say about it, would require that the NEC surplus be used to reduce the losses on the LD trains. They generally favor keeping the NEC running, although they favor turning the NEC over to a private operator of some kind, while ignoring or hand waiving over the issue of what private company would be willing to pay for the huge state of good repair backlog and capacity expansion projects along with the complexity of operations on the NEC.

Boardman is proposing that Congress fully cover the operating shortfall on the LD trains so the NEC operating surplus can be plowed back into the NEC to help pay for things such as an Acela II order. There are calculated risks in Amtrak's budget requests for FY15.

 

[Crescent ATN & TCL]

Amtrak knows that the NEC is profitable and they are using that as ammunition. They are saying if it weren't for these pesky cross country trains we'd be profitable, so fund them or lose them. I don't think Amtrak plans to dump them they are just saying we know how to run a railroad we made $300 mil plus in the NEC. We are perfectly competent at running a railroad but running a train for two nights 3 days cross country once a day isn't profitable.

 

[CHamilton]

Amtrak knows that the NEC is profitable and they are using that as ammunition. They are saying if it weren't for these pesky cross country trains we'd be profitable, so fund them or lose them. I don't think Amtrak plans to dump them they are just saying we know how to run a railroad we made $300 mil plus in the NEC. We are perfectly competent at running a railroad but running a train for two nights 3 days cross country once a day isn't profitable.

The "profitability" question is, and has always been, a red herring. The NEC looks reasonably good on the balance sheet ONLY because:

• It benefits from the network effects of the long-distance trains that feed into it.
• It benefits from state-supported corridors adjacent to it in VA, PA, NY, VT and elsewhere.
• It has billions of dollars of deferred maintenance that aren't being paid for.

Let's suppose that Amtrak discontinued all services outside the NEC. When Amtrak asked for support, if they got every Senator served by the NEC to vote in favor, that's only 18 votes. The numbers in the House would be worse. Amtrak can count. They know perfectly well that they need to run a robust national system in order to survive.

 

[WICT106]

Concur with CHamilton, above. Amtrak knows that when it comes to the budget, the math is 251 + 51 + 1. If they want money for the NEC, then they have to run trains nationwide and make sure that enough congressional districts have train service.