FY19 Budget Request: Rail Programs Face Significant Cuts

February 15, 2018

The President’s 2019 budget proposes significant cuts in the programs of the Federal Railroad Administration (FRA), cutting pass-through grants to Amtrak in half versus the last enacted level and by zeroing out three new grant programs for intercity passenger rail authorized by the FAST Act in 2015.

The FAST Act of 2015 authorized the appropriation of up to $2.3 billion in 2019 for various grant programs and the Amtrak Inspector General (who is funded outside of USDOT). The budget only proposes to make $761 million of that materialize.

FAST Act Admin.
Authoriz. Request Diff.
Amtrak – Northeast Corridor 557.0 200.0 -357.0
Amtrak – National Network 1,143.0 537.9 -605.1
Consolidated Rail Grants 255.0 0.0 -255.0
Good Repair Partnership Grants 300.0 0.0 -300.0
Restoration/Enhancement Grants 20.0 0.0 -20.0
Amtrak Inspector General 21.5 23.3 1.8
TOTAL, FAST ACT RAIL 2,296.5 761.2 -1,535.3

Amtrak. The budget proposes to cut funding for grants to Amtrak for the Northeast Corridor (NEC) to $200 million, which is $143 million below the House-Senate average in the pending 2018 appropriations bills, and cut grants for the Amtrak National Network to $539 million, which is $633 million below the House-Senate average.

Analysis is handicapped by the fact that Amtrak has two budget requests each year – one submitted by the Administration on Amtrak’s behalf, and one submitted by Amtrak itself. They are very different. (In 2018, the Administration requested $760 million on Amtrak’s behalf, while Amtrak submitted $1.6 billion for itself.) Amtrak’s own budget is much more detailed, but it hasn’t been submitted yet, so we will do a longer article when that happens.

The budget doesn’t give any real breakdown for the proposed $200 million in NEC appropriations beyond the fact that it sets aside $5 million for the NEC Commission and $2 million for management oversight and that it does not include any money for Americans with Disabilities Act compliance, which took $50 million in 2017.

The justification in the Administration’s budget appears the most thought-out for the proposed cuts in Amtrak’s money-losing long-distance routes. In last year’s budget submission, Amtrak projected that those routes would have a total of $599 million in operating losses in 2019, averaging over $126 in subsides per passenger. That is topped by the infamous Sunset Limited, which requires an annual operating subsidy from the federal government of over $400 per passenger.

Expected FY 2019 Performance of Amtrak Long-Distance Routes
Source: Amtrak Five-Year Service Line Plans, Fiscal Years 2017-2021
Riders Op. Rev. Op. Exp. Differ. Per Pax
Thousand Mil. $$ Mil. $$ Mil. $$ Dollars
Palmetto 414.9 $26.8 $31.7 -$4.9 -$11.80
Auto Train 224.6 $70.8 $74.2 -$3.4 -$14.86
Lake Shore Limited 400.2 $39.7 $79.7 -$40.0 -$98.86
Silver Star 373.6 $30.8 $68.2 -$37.4 -$100.08
City of New Orleans 255.4 $18.7 $46.4 -$27.7 -$108.52
Silver Meteor 342.4 $37.1 $75.5 -$38.4 -$112.20
Texas Eagle 345.0 $23.7 $63.6 -$39.9 -$115.78
Coast Starlight 448.4 $42.9 $100.1 -$57.2 -$127.46
Capitol Limited 234.1 $19.9 $52.0 -$32.1 -$134.22
Empire Builder 452.0 $53.6 $125.2 -$71.6 -$158.42
California Zephyr 407.7 $55.0 $124.8 -$69.8 -$171.15
Cardinal 109.4 $8.0 $27.6 -$19.6 -$179.58
Crescent 257.5 $29.8 $77.7 -$47.9 -$186.01
Southwest Chief 371.8 $44.9 $112.9 -$68.0 -$187.87
Sunset Limited 101.1 $11.6 $53.0 -$41.4 -$408.78
Total, Long Distance 4,739.6 $513.4 $1,112.5 -$599.2 -$126.46

The budget documents make a good point – the 2008 PRIIA law required a new cost allocation system for state-supported Amtrak routes, and for commuter rail usage of the Northeast Corridor, but there is still no cost allocation information on the long-distance routes, so the federal government has to pay all of the operating subsidies. The budget then proposes to:

…form an independent commission to take a dispassionate, data-driven approach to restructuring the Long Distance network (up to and including the potential full elimination of Amtrak Long Distance service). Similar to the Base Realignment and Closure (BRAC) process employed for the Department of Defense, the President would consult with Republican and Democratic leadership from both the Senate and House of Representatives concerning the appointments and membership to the Long Distance Train Restructuring Commission.

Over the course of two years, the proposed commission would analyze the Long Distance network and provide a singular recommendation to Congress for an up-or-down vote on how to restructure the network. In making its recommendation to Congress, the Long Distance Train Restructuring Commission will consider a number of factors, including, but not limited to: financial and operating performance, rural connectivity, transportation network redundancy and resiliency, and transcontinental and North-South connectivity.

(If you can’t fix it through the regular process, BRAC it. This idea is one of the lasting legacies of former Rep. Dick Armey (R-TX), who in 1987 first proposed that the politically charged process of figuring out which military bases to close should be outsourced to an independent commission whose recommendations would have to be given to Congress in a single un-amendable list, forcing Congress to either accept or reject the entire list. See here for the history of the BRAC process.)

In the interim, the budget proposes to have states somehow pay half of the operating losses of the long-distance trains. We anxiously await the fine print of the cost allocation formula on this, especially on trains like the Chicago-to-Seattle (or Portland) Empire Builder, which runs east-west through over 400 miles through North Dakota and then about 1,100 miles through Montana, which is about three-fourths of the total route mileage. Amtrak projects the Empire Builder to have an allocated operating loss of $72 million in FY 2019. If North Dakota and Montana are expected to pay three-fourths of that ($54 million), which works out to about thirty bucks per year for every man, woman and child in those two states, for the privilege of having Amtrak service once a day. Will they pay it? Who knows…

The budget also proposes to allow complete intra-NEC ridership on the long-distance routes that pass through the NEC, the specific elimination of the Silver Meteor (since, between the Palmetto and the Silver Star, the service is redundant and killing the Silver Meteor would not eliminate anyone’s access to Amtrak, only reduce the frequency), and an immediate end to premium sleeping car and dining car service on long-distance trains (cafe cars would stay so passengers wouldn’t starve while sleeping in their seats).

New grant programs. The FAST Act created three new discretionary grant programs for rail service that are authorized at a collective $575 million in 2019. There has been a wide discrepancy in authorization and appropriations levels here. In 2017, appropriations for these accounts totaled $98 million. The 2018 Senate appropriations bill provides $123.5 million, but the House bill provides $525 million, because the chairman of House Appropriations, Rodney Frelinghuysen (R-NJ), is trying to dedicate that money towards the $13 billion Hudson River Tunnel project.

The Administration proposes zero funding for these programs, on the grounds that the proposed new grant programs in the President’s infrastructure initiative would serve the same purpose.

Ongoing FRA programs. The budget proposes a gross $202.3 million for FRA Safety and Operations, $11.8 million below the last enacted level (2017) and $16.0 million below the average of the pending House and Senate appropriations bills. But this is a gross total.

The budget proposes to establish a new system whereby FRA can levy “a schedule of rail safety fees for railroad carriers subject to Part A of Subtitle V of title 49, United States Code. The fees shall be imposed fairly on railroad carriers, in reasonable relationship to appropriate criteria to be developed by the Secretary.” The budget anticipates $50 million per year in fee receipts to offset part of the cost of the FRA Safety and Operations appropriation, forever. This would lower the 2018 net appropriation to $152.3 million.

As part of the Administration’s inexplicable 50 percent cut in most USDOT research programs, the budget proposes to cut the Railroad Research and Development account from $40.1 million (the 2017, 2018 House, and 2018 Senate numbers are all the same) to $19.55 million. No justification for this proposed reduction is given.

The budget also proposes to rescind $53.4 million in unobligated balances from the fiscal year 2010 high-speed and intercity passenger rail appropriation. This money was either never obligated or has since been de-obligated, but because the account is “no-year” money, it does not lapse like the FY 2009 high-speed rail appropriation did. The budget also proposes to rescind $2.3 million in unobligated money from the rail line relocation program in FY 2008, 2009 and 2010.

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