Amtrak funding

[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!

[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]

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

[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]

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]

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]

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]

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]

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]

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

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]

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]

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