Looking Back – When Amtrak Almost Got its Own Trust Fund in 1997
May 7, 2021|Jeff Davis
The discussion in this week’s House high-speed rail hearing of a possible federal trust fund to support Amtrak capital expenditures prompted ETW to do some recollecting of how the “Amtrak trust fund” issue played out the last time Congress got serious on the issue – in 1997.
President Clinton’s 1993 budget deal increased federal gasoline and diesel taxes by 4.3 cents per gallon, which was dedicated to general revenues for deficit reduction. The budget deal was to reduce deficits over five fiscal years (1994-1998), so it was always clear that the fate of the 4.3 cents was going to be up for grabs starting in fiscal 1999.
But that and the other 1993 tax increases, along with spending discipline and a booming stock market, wound up balancing the federal budget in 1997, which allowed Congress to consider redistributing the 4.3 cents a year early.
At the same time, Amtrak was undergoing one of its periodic financial crises. A March 1997 House hearing revealed that, within the month, Amtrak was going to have to start borrowing money just to meet payroll. GAO testimony declared Amtrak’s financial situation to be “very precarious.”
At the same time, the Clinton Administration’s fiscal 1998 budget request had just proposed that “Funding for Amtrak will be derived from the Highway Trust Fund beginning in 1998.” But the budget did not propose to shift the 4.3 cents per gallon of general fund fuel taxes to the Trust Fund, or to give any other additional revenues to the Trust Fund, so the Administration was essentially proposing to take financial resources away from highways and mass transit and give those resources to Amtrak.
As a response to the Administration’s budget, Amtrak President Tom Downs (who later became President of the Eno Center) proposed what he called the “1/2 Cent Solution” – giving Amtrak a dedicated revenue stream from a half-cent of federal gasoline and diesel taxes.
The day after the House hearing, Senate Finance Committee chairman Bill Roth (D-DE) and ranking minority member Pat Moynihan (D-NY) introduced a bill (S. 436, 105th Congress) called the “Intercity Passenger Rail Trust Fund Act of 1997 along with cosponsors like Joe Biden (D-DE) and Ron Wyden (D-OR). The bill established a trust fund by that name and gave it a 0.5 cents per gallon of the 4.3 cents per gallon of fuel tax which was, at the time, still dedicated to the general fund. The transfer of taxes was to last for five fiscal years (1998-2002).
Proceeds of the half-cent deposited in the trust fund were to be available to Amtrak for capital expenses only. However, Amtrak was not to get all of the money from the trust fund. Taxpayers in all 50 states paid gasoline and diesel taxes, but at the time, seven states (Alaska, Hawaii, South Dakota, Wyoming, Oklahoma, Arkansas, and Maine) had no Amtrak service. Accordingly, each non-Amtrak state got 1 percent of total trust fund receipts each year to spend on its own intercity rail or bus capital expenses.
S. 436 never went anywhere on its own (aside from a committee hearing), but when Finance reported its version of the 1997 tax reconciliation bill (S. 949, 105th Congress) on June 20, a version of the intercity rail trust fund bill was folded into the reconciliation bill as section 702 of the larger legislation. The trust fund shutoff date was moved up from September 30, 2002 to April 15, 2001. The Joint Committee on Taxation estimated that the trust fund would receive and spend $2.3 billion over those four years.
When the reconciliation bill moved to the Senate floor, Sen. Tom Daschle (D-SD) offered an amendment (SA #565) on behalf of the non-Amtrak states that would have allowed those non-Amtrak states to spend their trust fund money on local mass transit or railway-highway grade crossing improvements in addition to intercity rail and bus projects. Daschle’s amendment was adopted by unanimous consent.
At the end of debate on the bill, John McCain (R-AZ) raised a point of order against the Amtrak trust fund section of the bill on the grounds that it violated the Senate’s “Byrd Rule” and was was an extraneous matter riding on a reconciliation bill. (Technically, McCain made the point of order that subsection (d) of section 704 of the bill violated the Byrd Rule – (d) was the bit that made spending out of the trust fund automatically available outside the appropriations process.)
McCain complained that “These funds would be appropriated outside of the existing budget caps ensuring that Amtrak would not have to compete with other transportation priorities such as highways or aviation.” Roth responded that “this point of order is to kill Amtrak. This is very important, both to Senator Moynihan and to myself. Passenger rail is extremely important to the entire country. What we have done is fully paid for. We do not ask for any special treatment.”
Roth then moved to waive the Byrd Rule and other budget rules against section 702. The vote of at least 60 Senators was necessary to allow the motion to waive to succeed, and Roth got that and then some – the vote was 77 to 21 with two absentees. 35 Republicans and 42 Democrats voted to support Amtrak and defeat McCain’s point of order, including a few who are still around: Susan Collins (R-ME, then a freshman), Richard Durbin (D-IL), Dianne Feinstein (D-CA), Chuck Grassley (R-IA), Pat Leahy (D-VT), Mitch McConnell (R-KY), Patty Murray (D-WA), Jack Reed (D-RI) and Ron Wyden (D-OR). (The only Senator still serving who voted with McCain on the issue is Richard Shelby (R-AL).)
The Senate reconciliation bill also contained a section that transferred the other 3.8 cents per gallon of the general fund’s 4.3 cents per gallon gas and diesel taxes to the Highway Trust Fund, effective on July 1, 2000.
The House companion bill (H.R. 2014, 105th Congress) contained no Amtrak trust fund, and it didn’t have any provision transferring the 4.3 cents of gas and diesel taxes to the Highway Trust Fund, either.
In House-Senate conference talks, the House Transportation and Infrastructure Committee wanted all of the 4.3 cents, not just 3.8 cents of it, to go to the Highway Trust Fund. A deal was struck – in the final act (Public Law 105-34), the full 4.3 cents was given to the HTF, effective October 1, 1997 (sec. 901 of the act).
Amtrak did not get its own trust fund. Instead, Roth and Moynihan got Amtrak the same $2.3 billion it would have received under the four-year, half-cent trust fund provision passed by the Senate, but instead of the money coming from a trust fund, it came from a complicated provision (sec. 977 of the act) allowing Amtrak to get retroactive tax deductions for operating losses of private railroads that provided passenger service prior to 1971. (However, the final law kept language requiring Amtrak to give 1 percent of the money to each state which had no Amtrak service.)
24 years later, the 1997 experience is still as close as Amtrak has ever come to having its own dedicated multi-year revenue stream.
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