Intercity passenger rail service is at a critical juncture in the United States. Amtrak, the current service provider, requires $1 billion a year in federal subsidies to stay financially viable but cannot keep pace with its deteriorating infrastructure. At the same time, the federal government faces growing fiscal challenges. To assist the Congress, GAO reviewed (1) the existing U.S. system and its potential benefits, (2) how foreign countries have handled passenger rail reform and how well the United States is positioned to consider reform, (3) challenges inherent in attempting reform efforts, and (4) potential options for the federal role in intercity passenger rail. GAO analyzed data on intercity passenger rail performance and studied reform efforts in Canada, France, Germany, Japan, and the United Kingdom.
Matter for Congressional Consideration
|In order to address longer term needs to maximize the transportation benefits and public benefits of intercity passenger rail service and any federal funds expended on this service, Congress may wish to consider restructuring the approach for the provision of intercity passenger rail service in the United States. Only Congress can provide the national vision and has the authority to put in place a wide-ranging restructuring effort. This restructuring should include establishing clear goals for the system, defining the roles for states and the federal government, if any, commuter rail agencies, freight railroads and other stakeholders, focusing expenditures where they will achieve the most public benefits, and developing funding mechanisms that include cost sharing between the government and beneficiaries. In undertaking this restructuring, it will be important to solicit input from all stakeholders, particularly the Department of Transportation (DOT) and the Federal Railroad Administration given their responsibility for transportation and rail matters. Evaluation of restructuring approaches should also consider the relationship between passenger and freight railroads and give due consideration to the national freight transportation policy being developed by DOT. Due to the complex nature of intercity passenger rail issues and the wide diversity of views about the future of intercity passenger rail service, an independent and properly designed commission may be an effective mechanism for developing a consensus over the future of intercity passenger rail service and helping determine a restructuring approach. By addressing the key reform elements, Congress can create a structure that not only efficiently and effectively serves travelers but also promotes performance and accountability and the chance for increased transportation and public benefits from federal expenditures for intercity passenger rail.||In October 2008, Congress passed and the President signed the Passenger Rail Investment and Improvement Act of 2008 (PRIIA). PRIIA was a comprehensive reauthorization of intercity passenger rail. Among other things, this law reauthorized funding for the National Railroad Passenger Corporation (Amtrak) for 5 years, articulated a broad mission for Amtrak, expanded Amtrak's Board of Directors from 7 to 9 members, required that a "modern" financial accounting system be implemented within 3 years of passage of the act, and required Amtrak, in conjunction with the Federal Railroad Administration, Surface Transportation Board, and others to develop performance measures for Amtrak's services, including individual routes. The act also established a high speed rail program and made Amtrak's Northeast Corridor eligible for high speed rail funds. However, the act did not change the basic structure of how intercity passenger rail service is currently provided and funded, nor conduct an assessment of how such service can best be provided soliciting the input of all stakeholders. The act also did not evaluate the transportation and public benefits of intercity passenger rail service and how federal investments could best maximize these benefits. Consequently, while PRIAA provided for a number of improvements in rail transportation, it did not provide for the recommended comprehensive evaluation of intercity passenger rail, its structure, and how to maximize transportation and public benefits.|
Recommendations for Executive Action
|National Railroad Passenger Corporation||1. To improve Amtrak's financial and internal control reporting and overall accountability, the president of Amtrak should immediately take steps to evaluate Amtrak's accountability--particularly its financial reporting, internal control, and governance practices--and formulate a plan to bring the financial reporting, internal control, and governance practices in-line with the basic requirements that federal entities or public companies practice, while also identifying opportunities to improve and streamline current reporting practices. The evaluation should include a comparison of Amtrak's current accountability requirements and practices to those of federal entities as well as public companies. This evaluation should serve as the basis for the formulation of Amtrak's plan to bring Amtrak's financial reporting, internal control, and governance practices in-line with the basic requirements that federal entities and public companies practice, based on a determination of which practices are most appropriate given Amtrak's overall mission, funding sources, and current situation. The plan should include developing management discussion and analysis as part of its annual financial reporting and developing management's assessment of internal control over financial reporting, while identifying opportunities to streamline other reporting practices. The plan should be submitted to Amtrak's Congressional oversight committees.|