“NO” on Amtrak Reauthorization (H.R. 749)
This week, the House is expected to vote on Passenger Rail Reform and Investment Act of 2015 (H.R. 749). Introduced by Rep. Bill Shuster (R-PA) 56%, Rep. Peter DeFazio (D-OR) 12%, Rep. Jeffrey Denham (R-CA) 36%, and Rep. Michael Capuano (D-MA) 14%, the bill authorizes $7.2 billion in spending for Amtrak and other rail programs through 2019 and claims to make numerous reforms, though those reforms are suspect.
The bill’s sponsors misleadingly claim the bill “reduces Amtrak’s authorized funding levels by 40 percent.” This is a reduction in previous authorization levels, but does not represent an actual reduction in spending, as authorizations for Amtrak have consistently exceeded appropriations. For instance, Amtrak received $1.4 billion in FY 2015. According to the Congressional Budget Office, H.R. provides $1.4 billion for Amtrak in FY 2016.
Amazingly, the bill also increases the authorized subsidy for money-losing long distance routes rather than placing these routes on a path to fiscal sustainability. The Heritage Foundation called for the elimination of federal operating subsidies in its recently released “Budget Book: 106 Ways to Reduce the Size & Scope of Government.” These subsidies also stand in stark contrast to the House-passed FY 2015 budget:
“The budget supports eliminating operating subsidies that have been insulating Amtrak from making the structural reforms necessary to start producing returns. The 1997 Amtrak authorization law required Amtrak to operate free of subsidies by 2002.”
Another selling point made by the bill’s sponsors is a provision that supposedly “eliminates Amtrak’s losses in food and beverage service.” Despite the fact that Congress has technically prohibited Amtrak from running losses on its food and beverage service since 1981, Amtrak lost $87 million per year providing food and beverage services from 2006 to 2012. The consequences for noncompliance under this new policy would not occur until after the bill’s funding authority expires. There is little incentive for Amtrak to make the necessary reforms to ensure that its food and beverage service does not continue to be a taxpayer liability.
Proponents make two additional claims that need context.
First, a new accounting system will include separate accounts for the profitable Northeast Corridor (NEC) and another for the rest of the country (the National Network Account), but there is a transfer mechanism. Moreover, the new accounting mechanisms do not fundamentally affect the way rail service is delivered.
Second, a new pilot program that would allow private companies to take over certain routes would be limited to just two routes, stifling any potential cost savings. Even worse, private companies taking over routes would be required to show preference in hiring to former Amtrak employees, an unwarranted interference that drives up the cost of running a route.
Amtrak has failed to respond to congressional mandates for decades, and there is little reason for that to change under H.R. 749. If lawmakers want to provide quality, reliable service without burdening taxpayers they should seek to privatize Amtrak, ending federal subsidies altogether.
Heritage Action opposes H.R. 749 and will include it as a key vote on our legislative scorecard. Heritage Action will revoke this key vote if the Rep. Tom McClintock (R-CA) 87% amendment to strike Section 101 is adopted.
Heritage Action Scorecard
New House Bill Unlikely to End Amtrak’s Habit of Losing Taxpayer Money Selling Food
Heritage: Eliminate Grants to the National Rail Passenger Service Corporation (Amtrak)