Intercity Passenger Rail:

Highlights of GAO Report on Need for National Policy and Strategies to Maximize Public Benefits from Federal Expenditures

GAO-07-382R: Published: Jan 18, 2007. Publicly Released: Jan 18, 2007.

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Jayetta Z. Hecker
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The future of intercity passenger rail service in the United States has come to a critical juncture. The National Railroad Passenger Corporation (Amtrak) continues to rely heavily on federal subsidies--over $1 billion annually in recent years--and operating losses have remained high. In addition, Amtrak will require billions of dollars to address deferred maintenance and achieve a "state of good repair." These needs for Amtrak come at a time when the nation faces long-term fiscal challenges. As we reported in February 2005, the federal government's financial condition and long-term fiscal outlook present enormous challenges to the nation's ability to respond to emerging forces reshaping American society, the United States' place in the world, and the future role of the federal government. Addressing the projected fiscal gaps will require policy makers to examine the affordability and sustainability of all existing programs, policies, functions, and activities throughout the federal budget. Reexamining the federal role and expenditures on intercity passenger rail service will be particularly difficult because opinions differ about what this service should be. Some advocate a greatly expanded federal role and the expansion of intercity passenger rail to relieve growing congestion on highways and airways and (as energy prices increase) to provide more fuel-efficient transport; others believe the federal role should be scaled back, and that at least some federal operating subsidies should be eliminated. Specific proposals vary--while one proposal would keep Amtrak largely intact and provide more funding for capital and other improvements, another proposal would significantly restructure the management and accountability for intercity passenger rail with regional, state, and local entities making fundamental decisions about what intercity passenger rail services are justified and will receive public financial support. Amtrak itself has proposed a new vision for intercity passenger rail service that would include a greater role for states in planning and developing passenger rail corridors. The former acting president of Amtrak told us that, in his view, Amtrak itself is not a substitute for a national intercity passenger rail policy and that Congress needs to develop such a policy. One of the primary difficulties in reexamining the federal role and expenditures on intercity passenger rail service and developing a clear national intercity passenger rail policy will be reconciling the wide diversity of views about what this service should be and what it should achieve. On November 13, 2006, we issued our most recent report on intercity passenger rail. The objectives of this report were to determine: (1) the characteristics of the current U.S. intercity passenger rail system and the potential benefits obtained from this system, (2) foreign experiences with passenger rail reform and observations for the United States, (3) how well the United States is positioned for reforming its intercity passenger rail system, (4) challenges the United States faces in overcoming obstacles to reform, and (5) potential options for the future of intercity passenger rail service.

In general, we found that the current system is in poor financial condition and does not target federal funds to where they provide the greatest public benefits, such as transportation congestion relief. We also found that foreign experience with reform shows that the United States needs to consider three key elements in attempting any reform: (1) defining national policy goals, (2) defining the roles of government and other participants, and (3) establishing stable funding. The U.S. is currently not well positioned to address these reform elements and there are a number of challenges to be overcome in addressing the key reform elements, including the wide diversity of views in determining the overall goal for passenger rail in the United States and the federal role in achieving this goal. There are four primary options for the future federal role in intercity passenger rail. These are keeping the existing structure and funding of intercity passenger rail, making incremental changes within the existing structure, discontinuing the federal role in intercity passenger rail, and restructuring intercity passenger rail.

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