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What's Going to Happen to Amtrak?

When the troubled rail line began its increased service this past fall, it marked the first Midwest expansion in nearly 20 years.

By LIZA ROCHE

When Amtrak began its increased service this past fall, it marked the first Midwest Amtrak expansion in nearly 20 years. The excitement continues as there is talk of providing new service to other Illinois towns, including Rockford and Galena. But as this state is enjoying expanded service, beginning in Chicago and ending in St. Louis and Carbondale, the future of the entire train system is still cruising on an unknown track.

Amtrak, also known as the National Railroad Passenger Corp. and now more than 30-years-old, typically operates with at least $1 billion in federal subsidies. For fiscal year 2007, which began Oct. 1, Congress is considering how much it will subsidize the passenger rail service. One proposed package, sponsored by Sen. Trent Lott (R-MS), places subsidies as high as $1.8 billion this year and $11.4 billion over six years. Some estimate the likely subsidy for this year to be somewhere between $1.2 and $1.4 billion.

Unlike other years, however, recent talk isn't about shutting down the service. Carrying 24.3 million passengers during the year, Amtrak has recently celebrated some small victories. Approximately 300,000 more people took Amtrak last fiscal year than in the previous year. Ticket revenue rose to $1.37 billion, about an 11 percent increase. Much of the increase came from its high-speed express service, Acela Express, which runs from Boston to Washington, D.C.

Many observers note that one of the biggest reasons for federal subsidies over the years has simply been due to poor financial management. The belief that federal money is always in the pipeline, they say, creates a culture that doesn't seriously look at cost-effective, or transparent, ways of handling business.

And some observers have complained about Amtrak's service on the corridor running between Boston and Washington, D.C. Although it handles the most passengers, it also takes the lion's share of federal subsidies. Other states, including Illinois, must provide more of their own money for service.

The new trains that came to Illinois this year were in part a result of the state's commitment to spend $24 million on Amtrak. Bruce Richardson of the United Rail Passenger Alliance, a public policy group based in Florida, says he favors an expansion of the long-distance network and an increased frequency in trains to make Amtrak profitable.

Other observers take a different approach.

"The federal government's effort to maintain the Amtrak status quo is worth censure," says Joseph Vranich, author of the book End of the Line: The Failure of Amtrak Reform and the Future of America's Passenger Trains (AEI Press, 2004), which examines rail service's longtime financial woes. "Amtrak represents Washington's difficulty in freeing itself from the grasp of special interests who are big spenders, not of their own money, but of taxpayers' money."

Amtrak is "a marketplace disaster, but a politician's pork barrel dream" because the subsidies please train enthusiasts, railroad employees and people in small towns, Vranich says. Now a business performance coach, Vranich is a former spokesman for Amtrak and once served on the Amtrak Reform Council, an oversight body charged with looking into Amtrak affairs and offering recommendations.

One of the most obvious ways to reduce federal subsidies is to take a serious look at long-distance routes. The Sunset Limited train, which runs from Florida to California, requires a subsidy of about $466 per passenger, Vranich says. And while long-distance train travel is only a marginal player against the airlines, increased passenger counts on long-distance rail routes wouldn't fix the problem, he adds. Ironically, because even the providing of amenities such as food service and sleeping cars doesn't cover its costs, more passengers on a long-distance train means more subsidies paid by taxpayers.

Under some pending legislation for this year, Amtrak would be required to establish improvement plans for the five long-distance routes with the worst performance. Vranich says he believes the answer is to only keep the parts of long-distance routes that are truly used. For example, on Amtrak's Empire Builder train, which runs from Chicago to Portland and Seattle, the majority of passengers are on it only from Chicago to Minneapolis and in Oregon and Washington.

Following an international trend, there's always the option of privatization. Nearly 60 countries in the world have moved away from publicly run passenger railroads and opted for a system where operations of the service are competitively bid on. Studies have shown that bringing rail operations out for bid could reduce expenses by 22 to 40 percent. The results, Vranich argues, have been better service to passengers, lower costs to taxpayers and overall healthier systems.

Published: December 01, 2006
Issue: Holiday 2006