Executive Summary

Intercity passenger rail in the United States has depended on public funding for its entire modern history, yet federal support has been marked by political ambivalence and episodic investment. Unlike highways, transit, and aviation, intercity passenger rail lacks a dedicated federal revenue source and remains subject to annual discretionary appropriations. Funding for intercity passenger rail is characterized by long periods of underfunding interspersed with significant but short-term infusions of capital. The uncertainty inherent in this approach creates inefficiency by undermining long-term planning, inflating costs, delaying major projects, and limiting the system’s ability to modernize or expand passenger service to meet growing demand.

The Infrastructure Investment and Jobs Act (IIJA) temporarily disrupted this cycle by providing five years of advanced appropriations in the amount of $66 billion total. This medium-term certainty enabled Amtrak and their state and regional partners to expand staff capacity, advance long-delayed major projects, replace aging rolling stock, and begin addressing a substantial state-of-good-repair backlog and planning for corridor expansions. As a result, several major capital projects are now fully funded for the first time, and Amtrak has achieved record ridership and revenue.

However, the IIJA did not resolve the underlying structural challenge facing intercity passenger rail. The advance appropriations expire in September 2026 at which point federal funding is at risk of reverting to the prior model. That unstable annual funding framework has always constrained efficiency and performance, but returning to such a model at this moment will be uniquely damaging because it will waste the opportunity created by agencies’ investments in project development and staffing capacity.

This paper argues that future federal policy should acknowledge the permanence and necessity of rail funding and commit to a long-term funding framework to improve efficiency in budgets and timelines. Different categories of rail investment may require different funding mechanisms based on the planning and development timeline for each category, but all types of projects require a greater degree of certainty. Routine capital renewal would benefit from short-term advance appropriations to improve planning certainty. Major modernization and backlog projects require phased, fully funded grant agreements that match the scale and complexity of megaprojects. Service expansion depends on a reformed development process paired with predictable capital funding.

Congress has repeatedly demonstrated that it will not abandon intercity passenger rail. A more thoughtful approach to funding that provides long-term certainty would enable agencies to conduct planning and development in a way that prioritizes both efficiency and outcomes. IIJA has provided a new foundation of readiness and capacity for a new phase of intercity passenger rail service. The question now facing policymakers is whether to commit to a stable and outcome-oriented approach to rail capital funding that improves efficiency and performance, or to allow that opportunity to be wasted.