Intercity Passenger Rail:

Decisions on the Future of Amtrak and Intercity Passenger Rail Are Approaching

T-RCED-00-277: Published: Sep 26, 2000. Publicly Released: Sep 26, 2000.

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Phyllis F. Scheinberg
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Pursuant to a congressional request, GAO discussed the National Railroad Passenger Corporation's (Amtrak) intercity passenger rail, focusing on: (1) Amtrak's progress toward achieving operating self-sufficiency; (2) its capital investment needs and how these capital needs compare with expected federal funding; and (3) the future of Amtrak and intercity passenger rail.

GAO noted that: (1) Amtrak continues to struggle financially and must overcome substantial hurdles to reach operational self-sufficiency; (2) Amtrak has made limited progress in reducing its budget gap--the gap that Amtrak needs to close to reach operational self-sufficiency; (3) from fiscal year (FY) 1995 through FY 1999, Amtrak was able to reduce its budget gap by only $78 million--from about $554 million to $476 million; (4) from FY 2000 through FY 2002, Amtrak will need to achieve about $287 million in additional savings to reach operational self-sufficiency; (5) yet Amtrak has made limited progress toward this goal in the first 9 months of this fiscal year; (6) furthermore, Amtrak's costs are expected to increase, and Amtrak has a mixed record in controlling cost growth; (7) in addition, Amtrak's ability to realize substantial revenue increases and productivity improvements is uncertain; (8) nearly three-quarters of the $1.9 billion in net financial benefits that Amtrak expects to achieve between now and 2004 have either not been identified or are based on initiatives that have yet to be fully implemented; (9) Amtrak has substantial short- and long-term capital investment needs that will be difficult to meet; (10) from discussions with Amtrak managers and a review of published reports, GAO estimates Amtrak's identified capital needs to be at least $9 billion through 2015 (in 1999 dollars); (11) in addition, Amtrak will have other capital needs, such as acquiring new equipment, for which the company has not yet developed cost estimates; (12) Amtrak will find it difficult to pay for these needs; (13) over the 2001 through 2004 period, the identified capital investment needs will exceed expected federal capital funds by nearly $2 billion; (14) although some of this amount may be paid by other railroads that use Amtrak facilities, the federal government could be called upon to cover any funding shortfall, with capital financial support requested substantially higher than current levels; (15) if Amtrak does not reach operational self-sufficiency within the next 2 years, federal law requires that the Amtrak Reform Council submit a plan to Congress for a restructured intercity passenger rail system and that Amtrak prepare a plan for its own liquidation; and (16) if Amtrak does attain operational self-sufficiency, it could require a substantially higher level of financial support than it receives now to meet its capital needs and for certain railroad retirement expenses.

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