Intercity Passenger Rail:

Increasing Amtrak's Accountability for Its Taxpayer Relief Act Funds

T-RCED-00-116: Published: Mar 15, 2000. Publicly Released: Mar 15, 2000.

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Pursuant to a congressional request, GAO discussed the National Railroad Passenger Corporation's (Amtrak) use of Taxpayer Relief Act (TRA) funds, focusing on: (1) how much Amtrak has spent in TRA funds and what types of activities it has funded; (2) whether Amtrak used the funds in accordance with the act; (3) to what extent the Amtrak Reform Council and the Internal Revenue Service (IRS) have overseen Amtrak's use of TRA funds; and (4) observations on Amtrak's capital needs, its progress toward reaching operational self-sufficiency, and the administration's fiscal year 2001 budget request for Amtrak.

GAO noted that: (1) through June 1999, Amtrak reported spending about $1.3 billion of the $2.2 billion provided under the TRA; (2) Amtrak spent nearly two-thirds of the funds for capital improvements, including almost $400 million for its high-speed rail program; (3) it spent the other third of these funds for equipment maintenance expenses and for debt servicing; (4) Amtrak's use of these funds for capital improvements have largely supported the initiatives laid out in its strategic business plan; (5) GAO's review of 23 TRA expenditures revealed the following: (a) 18 expenditures were consistent with the act; (b) for three expenditures, GAO believes Amtrak improperly spent TRA funds to reimburse itself for expenses incurred and paid prior to the act; and (c) from information provided by Amtrak, GAO could not determine if two expenditures associated with a Northeast Corridor capital improvement project were eligible for TRA funding; (6) Amtrak does not review individual expenditures to determine if they are eligible for funding under the act but presumes that any expenditure charged to a capital improvement project is an allowable expense, as long as it has reviewed and approved the project as qualified under the TRA; (7) the Amtrak Reform Council has not yet monitored Amtrak's use of TRA funds, and the IRS has not yet examined Amtrak's use of these funds; (8) the Council stated that it has lacked the resources to monitor Amtrak's use of these funds and explained that it was deferring that activity until after GAO completed its work, so as to avoid duplication of effort; (9) according to the IRS, it is too early for the Service to have examined Amtrak's tax return, including Amtrak's use of Taxpayer Relief Act funds, because the first tax return showing Amtrak's use of these funds was filed in March 1999; (10) since fiscal year (FY) 1997, Amtrak has not had a multiyear plan that identifies its capital needs and sources of funds; (11) in addition, it needed about $300 million annually in capital funds to replace facilities and equipment that were wearing out; (12) Amtrak has made only modest progress in reducing its need for federal operating subsidies; (13) the administration has requested $468 million in funding for FY 2001 for a proposed expanded intercity rail passenger service program that could benefit Amtrak; and (14) the program would be supported by the Highway Trust Fund and is likely to generate considerable debate from those who oppose using the Highway Trust Fund for non-highway purposes.

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