Representatives from Amtrak and the General Accounting Office Wednesday said Congress will be forced to decide this session whether to invest in the long-term viability of Amtrak or shut it down.
The stark analysis of Amtrak's immediate future was delivered to the Senate Finance Committee by Amtrak chief executive officer Thomas Downs and GAO Associate Director for Transportation Issues Phyllis Scheinberg, who released a report titled, "Amtrak's Financial Crisis Threatens Continued Viability."
Downs said that because Amtrak is now borrowing just to cover operating costs, "the company cannot survive beyond another 18 or 20 months."
Scheinberg said Amtrak's debt level has doubled since 1993, and interest payments consume 21 percent of its federal subsidy. The GAO report says Amtrak's financial condition is "still very precarious."
To place Amtrak on the tracks towards self-sufficiency, Downs said the passenger railroad will need a multi-billion dollar infusion of cash for capital improvements, which he said have been neglected as Amtrak's federal subsidy has been cut.
Downs had a friendly audience in Senate Finance Chairman William Roth, who uses Amtrak to go home to Delaware each weekend, and ranking member Daniel Patrick Moynihan, D-N.Y. The two have introduced legislation to take one-half cent of the 4.3 cents-per-gallon gasoline tax that goes toward deficit reduction to create a capital trust fund for Amtrak.
Several other senators at the hearing expressed support for the bill.
"Our legislation would raise about $4 billion over 5 years for the rail trust fund," Roth said. "It would allow Amtrak to make capital improvements necessary to operate a modern and efficient railway."
Downs also testified that letting Amtrak go bankrupt in the next couple of years might actually cost more than meeting its current capital needs. That is because when Congress created Amtrak, it guaranteed most of its workers six years of compensation if the railroad shut down.
"The elimination of Amtrak would mean the loss of over 20,000 jobs, well over 1,500 pieces of equipment would have to be parked, mandatory labor protection be triggered, and railroad retirement would be further burdened," Downs said.
He added, "Ironically, the dissolution of Amtrak would likely cost the American taxpayers nearly 20 percent more money than the entire five years of funding for a trust fund proposal."
Scheinberg said it would be impossible to meet the goals of many conservatives to privatize Amtrak if it is not made into a viable railroad.
When Sen. Charles Grassley, R-Iowa, complained about the six-year compensation promise for Amtrak workers, Downs shot back that the promise was not Amtrak's decision, but that of Congress when it created Amtrak.
Downs said most of Amtrak's union contracts have expired and must be renegotiated. "We've told them we cannot have settlements that increase our operating costs," Downs said.
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