Amtrak funding

[Anonymous]

Many of us have been talking about Amtrak recently, particularly because it has been in the news.

It is no secret that Amtrak needs more money. My question is, 'Where should this money come from?'

The first dimension in this discussion is, "Should it come from the public or from the government?"

The second dimension is, "How should the money be collected?"

I think the money should come from the users. The people who ride Amtrak should bear the cost. This doesn't answer either of the particulars though.

The best mechanism I can think of is to charge more for the tickets. I know this is quite unpopular but it is the best. The reason is two part. First, if the money comes from a government entity, then we pay for it anyway. That's where they get the money; FROM US. The second reason is that if Amtrak gets the money directly from the users then they can invest it wherever they think it will do the most good; the best 'bang for the buck.' Also, if the money comes from the government, Amtrak only gets a portion of each dollar collected from us. The government spends a portion collecting and distributing the money.

I hope to convince some that this is the right way. I know that some will not be convinced, for one reason or another. Talk to you later. - Ed

[Anonymous]

Why Ed, are you trying to cause trouble, or something?

Define what the money is to be used for first. If you mean the infrastructure costs ie track, signals, etc... well the Gov. paid for the highway construction. Still does, tho usu. at the state level and not Fed any more.

Course highway construction is paid for now days by the Trust Fund (he he can that really be true? Can you say "government" and "trust fund" in the same sentence and keep a straight face?)

However, let us assume that the Trust Fund does indeed pay for all modern road construction. That trust fund comes from amongst other things gas taxes.

RRs do pay a fuel tax- towards deficit reduction, (agh!) and this could be diverted. But it would take decades to build it up.

I would suggest bonding the first construction, and then establishing a trust fund to pay for future construction in say 10 - 20 years.

As for operational expenses. Operational costs for the trains SHOULD come from tickets as you say.

Another thing to keep in mind tho is that the ticket costs should reflect actual service costs. A person riding LA- Chicago should not have to pay an additional $30 to offset the bleeding losses of a train from Lincoln Nebraska to Omaha.

So I think the highway model is best. Why? Because, largely, it works. After all, go ask JB Hunt, or Greyhound.

[Anonymous]

Alexander

You are missing several big points. I will note only one.

With the exception of the NEC Amtrak does NOT pay for the infrastructure it uses. The freight railroads must maintain track to passenger standards and absorb the cost of freight train delays and give Amtrak preference in dispatching, for which they are paid nothing!

If Amtrak is to continue, and I hope it does not but expect it will, it should pay for the use of the freight railroad's tracks. Only in America does a for profit rail system subsidize the Government's make work toy.

Mac

[Anonymous]

Mac:

True. However, most "modern" rail systems envisioned by those who wi***o expand the system will require at the least a capacity increase i.e. double tracking some freight road's lines, or at most, a completely new R-O-W and track structure.

Hmm... pay the freight roads for using their tracks? I am laughing. Not because it is unreasonable, but because the liklihood of getting the gov to pay the RRs is slim.

MAYBE a deal could be swung with tax credits in exchange tho.

Alexander

[Anonymous]

Alexander,

No, I'm not trying to start trouble, but I can see why you would say that. LOL. Actually, I'm trying to end the trouble.

If you and others think the highway user tax model is a winner then consider this parallel model for passenger rail. The U.S. government imposes a one cent per mile (negotiable, but stick with me) user tax on passenger rail tickets. All the money is sent to the FRA or other U.S. government transportation agency. The FRA is charged with defining the national passenger rail route network and determining what radius of curvature, superelevation, grade, easement, ... geometric standards must be accommodated in the design and construction of this network. If Amtrak prepares construction plans for a given segment and comes up with ten percent of the construction cost, the FRA will release enough funds to cover the other 90 percent. Amtrak will oversee the construction of the segment, and the FRA will oversee Amtrak.

This is a simple version of how the gasoline tax is used by the government to build roads. It is much more complicated than that and the Government uses the matching funds (the 90 percent) as a way to force the states to do a lot more than just build roads. For example, a state may be told that unless they acheive certain numbers for affirmative action employment in the school system, they will not receive their matching highway construction funds.

This is why I would like to see Amtrak do it without government involvement. It will not be so political, and Amtrak gets to use all the money without paying the government overhead. The users still pay all the cost anyway, why not let Amtrak avoid the overhead cost? - Ed

[Anonymous]

Amtrtak does pay the railroads to use their tracks on their right of way, however, at a bargain rate. Keep in mind that the government subsidized the railroads to build most of the track in the first place with large land grants, either federal, state, and local.

As far as I am concerned, Amtrak should build its own high speed rail tracks, and get off the freight tracks. A lot of right of way has been abandoned by the railroads, surely Amtrak should be able to purchase these abanonded right of ways for a dime on the dollar. The sooner Amtrak gets off the freight tracks, the more express freight they will be able to move. If Amtrak cannot make a profit with passengers, maybe Amtrak can make a profit moving express freight.....

[Anonymous]

In our Constitution, Article 1, Section 8, paragraph 7: to build Post offices and post roads. Since Amtrak moves mail like the trucking industry and the airline business, obviously, this means the government can fund railroad tracks as much as airports, and highways. We donot need to genrate a tax, the Constitution already provides the necessary path through the general fund....

[Anonymous]

Don,

I am not disputing the government's authority to allocate funds for Amtrak. I am trying to explain how we can have a successful passenger rail system by using the free market method to find the solution.

However, I do consider it immoral for the government to spend the general fund on a program which benifits a select group of citizens. I conceed the constitution does not require the government to spend money with any regard to morality.

Ed

[Anonymous]

Actually, Ed, I think Fed Matching Funds tend to be 80/20, not 90/10. At least, on a local rail project this is what our county Land Use Dept are saying.

I understand your qualms about "the strings". And these should be reduced. But it IS a system that, by and large, does work. I can be pragmatic and live with the 10% of ridiculousness that comes along with it.

Besides there is something to be said for a central coordination for rail, as few systems would be wholly contained within one state. Better that Fed does it than that we create a new suprastate organization and another layer of gov.

Actually a more accurate way of phrasing your example would be that Amtrak (or any other carrier) would pay a Diesel Fuel Tax (or a kilowatt tax for electric systems) which would go to the Fed. This would, of course, be passed on to the consumer in his ticket.

Does the FRA not provide some construction standards as it is? Or is this voluntary through AAR? Or can you, as a RR, build anything you want, and if it doesn't work, it's your problem?

Alexander

[Anonymous]

Whoa, Don!

Not all RRs got grants.... and even those that did lived to regret it!

However, your point about the role of government in rail construction is taken. Just remember we don't want another Credit Mobiler!

As for moving express..... careful. This is not going to receive much support from the AAR & Co.

Alexander

[Anonymous]

Ed: You can't equate morality to Congressional spending. It just isn't done!

Anyway, I thought all Libertarians were amoral.

Okay, nuff of that. I do agree it's wrong to spend large money on small interests. Whether I would use the term moral or not is irrelevant.

Alexander
Happy Fourth

[BRAKIE]

The real question still remains.Why are they still throwing money away on Amtrak? Amtrak has lost money since 1971.Surely they still don't believe the big lie of 1971! In 31 years Amtark has noting but lose money hand over fist,why keep throwing good money after bad? Why should we spend ANY money on a system that will never make a profit.
Kind of silly isn't it? But,then we are talking about capitol hill and their foolish spending habits.

[Anonymous]

Happy Fourth, Larry!

Well that depends on your definition of Profit.

If we put Amtrak on par with, say, Greyhound, then we have to take the infrastructure costs out of the equation, and figure only maintenance and operational expenses.

Operationally, it is *alleged* that the NEC trains are mostly profitable or break-even.

There is some question on how the Acela books are, and whether or not they've been "cooked". My instinct would be that they have been, as it is a new program and invariable the accounting on a new program is skewed towards "optimistic". However, it is not unreasonable to say that it may be approaching break-even status.

In this case, teh scenario would be for the state governments to fund those trains which do not meet the operational costs. Note that

Gunn recently conceded the idea that "there needs to be some cost recovery formula" (para) equating that there would be a level of cost recovery which would be fixed, so that any train below that would go, and any above would keep operating.

Not the same as profitable or even break-even, but a step forward all the same.

Can't wait till October!

Alexander
who did not start THIS thread- blame Ed!

[Anonymous]

Did you read the poll? Some 70 percent of the American people want Amtrak! Under your argument people in Texas should oppose the construction of federally funded highways in Hawaii.

It was the same in Highland Park, the richest inner suburb of Dallas. DART elections passed easily in Highland Park. Why? While the people of Highland Park do not ride a bus, or light rail, they are usually driving around in their Jaguars, Mercedes, and Rolls, their household help do. Since most of their household help have chunkers of automobiles, no one in Highland Park wants their household help to drive and park their chunkers in their neighborhoods. Better, they ridea nice new bus....preferrably burnin liguidified gas than diesel.....

[Anonymous]

Why do we spend money on defense, hospitals, schools, police, the forest service, and roads? None of these earn a profit either.

Could they be providing a service. Some 70 percent of the American people in a recent poll support subsidizing Amtrak......

[Anonymous]

Alexander,

Yes I know that the current match is 80/20 but I believe it was 90/10 in the beginning and later scaled back to 80/20. Even now the 90/10 ratio is used on some projects. The problem I have is that it is a massive leverage from the Federal Government, but they are only giving us our own money back. If the ratio were changed to 50/50, it wouldn't cost the consumer any more because they would only have to change who gets the tax revenues at the pump. It all comes from gas taxes. The exact ratio of Fed/State appropriations is only a detail which may be negotiated.

The reason I used a tax per mile in my example is because if you tax the fuel per gallon you will either have to charge a super high rate per gallon by comparrison to the highway gas tax, or you will only raise a tiny sum of money and won't be able to build enough R/W to make progress.

I am pretty sure there are required standards for geometric design of railroads already, but I think new standards would be needed for the new Amtrak system since there is such support for the new highspeed corridors.

I would expect that a railroad could build anything they wanted but if they don't adhear to the standards the engineer would be liable for injuries to the public. No engineer is going to accept that liability so they are going to design to the standard.

You do realize that acceptance of the highway model I have outlined would mean the user accepts the full cost of the system? - Ed

[Anonymous]

Don,

I try to overlook grammer errors in order to figure out what somebody is proposing in their posts, but in this case, I need clarification. Could you restate this thought?

"While the people of Highland Park do not ride a bus, or light rail, they are usually driving around in their Jaguars, Mercedes, and Rolls, their household help do."

Please understand that my thesis is simply that we can do more on the local level than the federal government can do on the national level. Under my proposal, Hawaii would get to keep all the taxes collected at the pump and they could use it all to build roads in Hawaii. Texas would get to keep all the taxes collected at the pump and they could use it all to build roads in Texas. Both Hawaii and Texas would have more money to build roads (or charge lower taxes) because they would not be paying federal government overhead.

Ed

[Anonymous]

Don,

Your question is almost beneath a response. As you are aware, the Federal government is required to provide defense and police. The others are negotiable. If a poll indicated that 55 percent of Americans were in favor of rape, would that be sufficient grounds to remove the legal barriers?

Ed

[Anonymous]

Larry,

I'm with you concerning the federal government throwing away my money. I believe the best way to illustrate the folly is to have the users accept the full cost. Then they would be outraged at Amtrak throwing away their money.

This would in turn inspire Amtrak to real reforms or they would fold. This is as it should be. - Ed

[Anonymous]

Do you honestly believe AMT can run at a profit?Think about the commuter trains,which are run with reduced crews,no amenities,packed to capacity.They are subsidized through taxes because they can't run at a profit.The decison this country has to make is either to give AMT the funds it needs,and not just enough to keep it running year to year,or put it out of its misery.

[Anonymous]

The truth is that I think Amtrak could run a profit if it gave up the relationship with federal government. - Ed

[Anonymous]

What else would you do to make AMT profitable besides make it a privitly run RR?Do away with union contract labor?Make the tickets so expensive that no one could afford to buy one? Just curious.Even the European passenger RR's are subsidized by thier countries,and we're talking about countries the size of most western states.

[Modelcar]

If our people want the trains to run....it should be funded and quit ringing our hands about spending a little money for having the service.
Making a profit is as we all know a pipe dream....Running Amtrak passenger trains is not the end of the world....First revamp the wrongs and I believe we have a Gen. Mgr. now who knows how to do so....and get on with the program. Maybe in the near future High Speed Rail will start to get a foot hold and we can start to morph the system into something to really do the job....

QM

[Anonymous]

QM Exactly!!! Either give it the money it needs and not band-aide approaches like has gone on for 32 yrs,or we shoot it and put it out of its misery.Running a nation-wide rail passenger system at a profit is a pipe dream that will never happen.

[Anonymous]

Yes, i understand that the consequence of the "Highway Model" means user pays. Fine by me!

But i beleive that the early system would probably have to be bonded, as there is no "nest egg" to start with, and an IPO just aint gonna happen.

Boy, you sure have started another killer thread with this one. What, trying to beat my record with the "Passenger Trains" thread? I think it was the all time record holder for longest thread.

I wish you luck!

[Anonymous]

Yet, in the US Constitution, Article 1, section 8, paragragh 7: To build Post offices and post roads.

So anything which might move the mail could be considered a federal responsibility. Airports, roads, and yes, we do move the mail by rails......

[Anonymous]

Surely the next sentence would clear up the matter: Since most of their household help have chunkers for automobiles, no one in Highland Park wants their household help to drive and park their chunkers in their neighborhoods.

The average Highland Park home lists for over one million dollars. It is not a place where you would see any car of 1977 vintage rusting away....parked in front of any mansion or any mansion's drive way.....

As for government overhead, the increased burden to the states of collecting and counting the federal gasoline tax would be the same as it is for the federal government.

Under your proposal Texas and Hawaii would probably do well, however, some states would not do so well, such as Montana, Wyoming, South Dakota, and North Dakota. I am sure this list is longer, but it is painfully obvious that these 4 large states with very small population would be hurt . Truckers traveling on I-94, I-90, and I-80 might have a dirt road to get to the west coast instead of a paved interstate....

[Anonymous]

Maybe.
But that's a big maybe!
Remember that Amtrak derives some benefit from it's Federal stature, namely the right to run over freight roads with little cost to themselves. And of course the right to be bailed out frequently!

However. I do agree that the Fed relationship does create a drain, in that there is greater beauracracy involved, more red tape, etc...

Theoretically a non-fed Amtrak would no longer have political trains, and could choose it's routes based on needs and demands first.

Likewise, a non-fed Amtrak would be able to (perhaps) get out from under many onerous labor contracts and perhaps subcontract much work.

But even so, to make a profit? no, not impossible. But very far from likely at this stage.

Course, no one has really tried it since, what? Ralph Budd in 1936? And no one has suceeded since him either, tho he did manage to pull if off for a while.

[Anonymous]

Don,

Thanks for clearing that up for me. I don't have household help so the whole idea was a bit foreign to me.

Yes, I agree that some states get a good deal from the federal program. In the industry, we call those states 'benificiary states' and some states are called 'donner states.'

Yea, this is one area where the trucks get a major leg up. Trucks benefit most from the interstates out west in the 'big rectangles'. This is another reason I think the federal program needs to be scaled back to a maintanence role. In my opinion the states should take over the lead in new construction. But I digress . . .

If a locality like Highland park wants to buy a program to bring their hired help to the house, I guess that is OK. But I don't want a federal program to take domestics to work. I am still having trouble with the incredible elitest nature of that issue.

Nice talking to you. - Ed

[Anonymous]

Alexander,

I think you will always be the king! I am only 'cutting to the chase.' Lets face it, the money is the real issue.

I am glad to hear we agree on user pays all. The only difference between us now is that I think the money goes further without the federal government taking a piece. But if that is the only way to get the public to buy into investment in the passenger rail system, I guess it isn't all bad.

I couldn't agree more that "an IPO just aint gonna happen." So who is going to be responsible for paying off the bonds you think are needed?

Later on - Ed