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Amtrak's federal

ness plan for FY01, that it has used Taxpayer

Amtrak's Fiscal Failures

Relief Act capital funds for operating pur-

subsidies in cur-

poses, and that it has tripled its debt in the

rent-year dollars

past five years to about $3 billion.6 In a report

Amtrak's persistent financial debacles,

exceed $44

repeated federal bailouts, and loss of $1.1 bil-

dated January 24, 2002, the Transportation

lion in 2001, the most in its history, lead to

Department's inspector general announced

billion.

the inescapable conclusion that liquidation

that "Amtrak has not succeeded in imple-

of the railroad is in the public interest.

menting enduring financial improvements

When Congress established the National

of the magnitude necessary to attain and sus-

Railroad Passenger Corporation, commonly

tain self-sufficiency in and beyond 2003. . . .

known as Amtrak, in 1970, it anticipated

For every $1 Amtrak realized in additional

providing subsidies for only a limited time,

revenue [since December 1997], cash expens-

until Amtrak could become self-supporting.1

es increased by $1.05. . . . Amtrak's operating

In fact, Amtrak has an unbroken record of

loss in 2001 of $1.1 billion was $129 million

fiscal failure resulting in federal subsidies

higher than the 2000 loss and the largest in

exceeding $25.3 billion.2 Adjusting for infla-

Amtrak's history."7

tion, and to put this figure in perspective,

In 1998 the U.S. General Accounting

Amtrak's federal subsidies in current-year

Office reported, "Amtrak officials told us

dollars exceed $44 billion.3

that using a portion of the federal capital

Subsidies to Amtrak are at record highs.

appropriation for maintenance will provide

Infusions of $4.43 billion in federal subsidies

stability for Amtrak over the next several

years, thus averting a possible bankruptcy."8

from 1998 through 2001 provided Amtrak

with more taxpayer funding than in any other

That has not turned out to be the case. If

four-year period in its history. The figure would

Amtrak had followed generally accepted

be higher if it included Amtrak subsidies that

accounting principles and had been subject

are attributed to the budgets of other public

to the traditional tests and oversight found

agencies such as the Federal Transit

in the investment community, the railroad

Administration and the Federal Railroad

would have been declared insolvent several

Administration. Moreover, Amtrak mortgaged

years ago.

New York's Penn Station for a $300 million

loan to stave off insolvency in fiscal year 20014

The ARC's Flawed Plan

and has received an FY02 federal appropriation

of more than a half billion dollars. Still, its

financial condition is worsening, which leads to

The ARC has notified the president and

the inevitable conclusion that Amtrak's finan-

Congress that Amtrak will fail to become

operationally self-sufficient.9  Under the

cial hemorrhaging is irreversible.

The Amtrak Reform and Accountability Act

Reform Act, within 90 days of that finding, the

of 1997 established the Amtrak Reform

ARC is required to submit to Congress a plan

Council, which is authorized to evaluate

for a restructured and rationalized intercity

Amtrak's financial performance. The ARC

rail passenger system. The ARC's February 7,

made a finding on November 9, 2001, that

2002, plan includes reorganizing Amtrak by

Amtrak would not achieve operational self-suf-

putting its train operations into one sub-

ficiency by the statutory deadline of December

sidiary and its real estate, tracks, and facilities

2, 2002, or by any reasonable later date.5

into another and permitting Amtrak to con-

trol a future rail-franchising system.10

The ARC found that Amtrak is in a weak-

er financial position today than it was before

Unfortunately, the ARC's recommenda-

passage of the Reform Act, that the railroad

tions ignore fundamental problems and rep-

will likely report an operating performance

resent a too-little, too-late departure from

$185 million worse than projected in its busi-

Amtrak's present structure. For example,

2