Come on Sam, you know well that Amtrak pays for track and signal improvements in order to gain and maintain a route a route. I gave the example of how Amtrak paid for D&H improvements to Montreal for I think 55 mph passenger speeds and the railroad got 45-50 mph freight speeds instead of 35mph. And part of the railroad agreements is to maintain track for passenger speeds which are usually 10mph higher than freight speeds. Amtrak pays for that level of track either outright or through lease agreement. Some of these agreements go back to the beginning of Amtrak and the participating host railroads just as use of the Corridor agreements are based on Conrail's ownership and use before it was turned over to Amtrak. Yes, too much of Amtrak is stuck in tradition and "the way we've always done it" mentality. And that has to change. And it is often insinuated, even verified, that freight haulers believe Amtrak gets in their way and gives Amtrak sidings and red boards instead of keeping them going. Even Amtrak's allowing freight on their passenger railroad is different than when Conrail or PC or PRR owned the Corridor. Today's oversight agencies don't want freight an passenger services on the same track...some railroads don't want the two on the same right of way. We've got to get out of our own way before Amtrak passenger trains and private freight railroad trains can make weigh.
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henry6 But often Amtrak pays for the improvement or their payment, in part, pays for mainaining the improvement with the eye to the idea that the railroad's freight operations are gaining a benefit from that improvement. Each contract with each railroad is different.
But often Amtrak pays for the improvement or their payment, in part, pays for mainaining the improvement with the eye to the idea that the railroad's freight operations are gaining a benefit from that improvement. Each contract with each railroad is different.
Without detailed cost information it is impossible to conclude whether the hoist railroad is benefiting from any improvements financed in part by Amtrak. It depends on how much it put into the upgrade and how much Amtrak put into it.
To say that Amtrak contributes to the improvement of a freight railroad facilities is a stretch. Amtrak does not have any money to invest in any capital project. It gets it capital investment funds from the taxpayers.
More than 20 years ago, if I remember correctly, Amtrak partnered with the MKT to improve the Temple to Taylor line for the Texas Eagle, which may have been the Inter American at the time. Amtrak is the primary beneficiary.
Freight operators that use the NEC benefit from the investments Amtrak made to improve it. If Amtrak is pricing its rentals correctly, which is questionable, it should be recovering the proportional investment used by the freight operators.
Sam1 In FY11 Amtrak paid the hoist railroads $123.4 million dollars or 3.12 per cent of its total operating spend to hoist its trains. This is the normal, annual rental paid by Amtrak to the hoist railroads. It does not have anything to do with capital improvements.
In FY11 Amtrak paid the hoist railroads $123.4 million dollars or 3.12 per cent of its total operating spend to hoist its trains. This is the normal, annual rental paid by Amtrak to the hoist railroads. It does not have anything to do with capital improvements.
So let me see if I have this correct. Amtrak pays 3.12 percent of its total operating expense on "trackage rights to the freight railroads outside of the Northeast Corridor"? And these payments are towards whatever expenses the host railroads incur, which may mean maintaining rail lines to higher speed standards than if Amtrak were not there?
If GM "killed the electric car", what am I doing standing next to an EV-1, a half a block from the WSOR tracks?
Where did the "3.3 per cent of its total budget" come from? Budgets are not meaningful for public reporting purposes. At best they are internal management planning documents. At worst they are gaming exercises designed to pull the wool over the eyes of key stakeholders.
Amtrak makes payments to states, localities, and other transportation companies (hoist railroads) for facilities improvements. As a general rule, if the payments extend the life of the facilities, i.e. upgrading a rail line from 40 mph to 79 mph, they would be capitalized and amortized over the expected life of the improvements. If the railroad capitalized the improvement, it would have to adjust its annual bill to Amtrak to reflect the increased depreciation charges.
If I pay a tax and you don't, irrespective of what you call it, you have a tax advantage. If you pay property taxes and I don't, irrespective of what you call it, I have a tax advantage. However, they don't cancel each other. The net effect depends on the tax shield of the companies, which differ for each company.
Whether the total taxes paid by truckers compensates for the wear and tear that they do to the roadways is another issue.
In 2011, the Norfolk Southern had an effective income tax rate of 34.34 per cent. JB Hunt Transportation had an effective income tax rate of 38.22 per cent. JB Hunt pays fuel taxes, property taxes, inventory taxes, etc. Norfolk Southern pays property taxes, inventory taxes, etc. This is a small sample, to say the least, but it shows that what may be crystal clear with respect to taxes quickly becomes opaque when one drills into the numbers.
Paul Milenkovic But I still hold the view that the cause of Amtrak, of expanding Amtrak by giving it more subsidy money, could be advanced if the advocacy community would concentrate more on "bang for the buck", that is how could that subsidy dollar serve the most people and start a snowball effect of more people liking trains and wanting money for trains. This is in contrast with a 'fairness" approach, of "I live in rural Illinois far from O'Hare airport and Amtrak will take me to Denver for $75 and it is unfair if I lose that."
But I still hold the view that the cause of Amtrak, of expanding Amtrak by giving it more subsidy money, could be advanced if the advocacy community would concentrate more on "bang for the buck", that is how could that subsidy dollar serve the most people and start a snowball effect of more people liking trains and wanting money for trains. This is in contrast with a 'fairness" approach, of "I live in rural Illinois far from O'Hare airport and Amtrak will take me to Denver for $75 and it is unfair if I lose that."
Paul --- IMHO you have hit the nail on the head. The hardest part will be how to tell where you can serve the most people. i checked some of the day before Thanksgiving routes and already some business class trains are sold out. Note -- CHI - STL FOR ONE. At present the lack of cars ( additional seats ) in all classes does not enable a properly initiated marketing blitz to sell routes to potential riders. More seats on an existing train reduces operating losses without initiating a new train.
It appears that enough seats are not going to be available for several years ?
schlimm Amtrak pays freight railroads the incremental cost incurred by the railroad because of Amtrak's trains. "That means that if the freight railroad needs a 30 mph track and Amtrak needs it to sustain speeds of 60 mph Amtrak will pay the cost of the track upgrade beyond the point where the freight railroad needs it. In actual practice the incremental cost is negotiated between Amtrak and the freight railroad. If they cannot come to an agreement the Surface Transportation Board comes into the picture. It is easy to see that after an amount is agreed upon circumstances may change for either the freight railroad or Amtrak and that could be good or bad for either side. The process also depends on the integrity of negotiators on both sides of the table. Finally, Amtrack's incremental cost is about 3.3 per cent of its total budget so this is not a large factor in actual costs to operate. " The reference was apparently to track upgrades for Amtrak beyond what the host railroad's needs are.
Amtrak pays freight railroads the incremental cost incurred by the railroad because of Amtrak's trains. "That means that if the freight railroad needs a 30 mph track and Amtrak needs it to sustain speeds of 60 mph Amtrak will pay the cost of the track upgrade beyond the point where the freight railroad needs it. In actual practice the incremental cost is negotiated between Amtrak and the freight railroad. If they cannot come to an agreement the Surface Transportation Board comes into the picture. It is easy to see that after an amount is agreed upon circumstances may change for either the freight railroad or Amtrak and that could be good or bad for either side. The process also depends on the integrity of negotiators on both sides of the table.
Finally, Amtrack's incremental cost is about 3.3 per cent of its total budget so this is not a large factor in actual costs to operate. "
The reference was apparently to track upgrades for Amtrak beyond what the host railroad's needs are.
So what we are talking about is that Amtrak paying extra to the freight railroads to "run at passenger trains speeds" is a small, 3.3% part of their budget? I presume this leaves out the entire (OK, most of) the NEC where the entire expense is operating that Amtrak-owned and operated rail line to support 125-150 MPH speed?
But this leaves out the payments Amtrak makes for "trackage rights" to run passenger trains over the host railroad lines? Last I saw, that was not a very large portion of the Amtrak budget either, but people could correct me. Also, the arrangement where the railroads let Amtrak use their rails "at cost, according to an accounting formula" may be another form of subsidy to Amtrak -- that Amtrak uses those rail lines below some measure of "economic cost" is in effect the price the legacy freight railroads pay to be out of the passenger business.
So is it fair to say that most of Amtrak's expenses are incurred "above the wheel-rail contact patch"? Some people tell me that Amtrak incurs considerable expense operating stations?
C&NW, CA&E, MILW, CGW and IC fan
John WR Finally, Amtrack's incremental cost is about 3.3 per cent of its total budget so this is not a large factor in actual costs to operate.
Finally, Amtrack's incremental cost is about 3.3 per cent of its total budget so this is not a large factor in actual costs to operate.
Are you reasoning that Amtrak has a low cost of providing incremental increase in service? 3.3 percent of total budget to do what? Please elaborate, this is intriguing.
Just think, a thread got locked that I didn't even comment on .
Invariably the subject of subsidies comes up, someone advocating a cold-turkey approach to weaning Amtrak from subsidy, perhaps more of a free-market or privatized and contracted government service approach, and that view is slammed because of the many important functions performed by the government or as the result of government funding and why-are-you-picking-on Amtrak. Sometimes, this is expressed by saying that the Federal government wastes much more money in some area than it spends on Amtrak.
I invariably weight in with I consider "The Subsidy (rate) Problem." It is not that Amtrak is subsidized, but that it is subsidized at a high rate in relation to the other modes of transportation. Or some portions of Amtrak have that condition, but it is hard to know from Amtrak's accounting practices some say.
And when I contribute that point of view, including some figures, as of late I have been branded as "Anti-train" and that I need to wear the shameful Scarlet Letter ("A" for anti). Or more commonly, I am accused of being a "bean counter", knowing the "cost of everything and the value of nothing."
In other words, the answer to the High Rate of Subsidy Problem is that passenger trains have a deep, intrinsic, but unquantifiable value that discussions of costs and subsidy rates are not taking into account. OK.
For the most part you are right, John WR. But often freight railroads get subsidies and other help from local governments and agencies, especially when there are changes of alignment, opening or lowering track, grade crossings, new bridges over or under the railroad's right of way. No, they don't normally over maintain track for conditions and needs beyond their own but will accept such improvements if so paid for by the likes of Amtrak or others. Bruce Sterzing, when President of the D&H, commented once that Amtrak improved his ability to run freight trains from something like 35 or 40 to over 50 mph and he accepted that. His railroad could not afford the improvements of maintaining up to meet the level of service they wanted to or could supply.
Dave,
You are absolutely correct in pointing out that freight railroads do pay all costs of maintaining their own tracks. That is why freight railroads are careful not to over maintain their tracks. If they have a track that very few trains run on at a speed of 30 miles an hour they will maintain them to that level.
Amtrak pays freight railroads the incremental cost incurred by the railroad because of Amtrak's trains. That means that if the freight railroad needs a 30 mph track and Amtrak needs it to sustain speeds of 60 mph Amtrak will pay the cost of the track upgrade beyond the point where the freight railroad needs it.
In actual practice the incremental cost is negotiated between Amtrak and the freight railroad. If they cannot come to an agreement the Surface Transportation Board comes into the picture.
It is easy to see that after an amount is agreed upon circumstances may change for either the freight railroad or Amtrak and that could be good or bad for either side. The process also depends on the integrity of negotiators on both sides of the table.
daveklepper This is response to the posting on the "New Approach" thread, which has been locked. The post indicated that truckers pay a fuel tax and railroads don't. The location of this statement within the post indicated that perhaps the post intended to indicate that this was a hidden subsidy for railroads. It certainly is NOT!!! The fuel tax payed by the truckers is estimated to pay for 1/3-1/2 the maintenance costs of the highways that the trucks use as required by the truck traffic without the wear of other traffic. Railroads don't pay fuel taxes because they maintain their own right of way out their own earnings.
This is response to the posting on the "New Approach" thread, which has been locked.
The post indicated that truckers pay a fuel tax and railroads don't. The location of this statement within the post indicated that perhaps the post intended to indicate that this was a hidden subsidy for railroads.
It certainly is NOT!!!
The fuel tax payed by the truckers is estimated to pay for 1/3-1/2 the maintenance costs of the highways that the trucks use as required by the truck traffic without the wear of other traffic.
Railroads don't pay fuel taxes because they maintain their own right of way out their own earnings.
It strikes me that this topic belongs under general discussion. The fact that railroads don't pay fuel taxes whereas truckers do has nothing to do with Amtrak, commuter rail, or any form of passenger rail in the United States.
Under the Amtrak enabling legislation, the freight carriers that hoist Amtrak's trains may not pass along any taxes in the form of rentals to Amtrak.
Amtrak pays no taxes as per the legislation that set it up.
Railroads and trucks did pay a "deficit reduction" fuel tax under Geo. Bush (ver 1.0). - 4.3 cents per gallon. The truck portion was redirected to the highway trust fund later, while the railroad tax continued on. It was repealed in the mid-1990s, I think.
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
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