Strategic Points for a Privatized National Rail Passenger System
URPA STRATEGIC POINTS ON WHICH TO BUILD A NEW PRIVATIZED NATIONAL RAIL PASSENGER SYSTEM
by URPA Executive Committee
I) THE NEC AS THE ONLY SOURCE OF THE AMTRAK DEFICIT
The 1994 Amtrak Annual Report for the NEC shows: Expenses $ 1026 million Revenue $ 766 million -------------------------------------------------------------------- Expenses - Revenue $ 260 million = operating losses NEC Corporate Overhead $ 104 million -------------------------------------------------------------------- Total NEC losses $ 364 million OPERATION SUBSIDY $ 351 million FOR ALL OF AMTRAK --------------------------------------------------------------------The NEC and its Corporate Overhead in 1994 produced losses greater than the entire system wide operating subsidy.
CONCLUSION: The national system defined as all NON-NEC operations is operated without any federal operating subsidy. It is therefore impossible to reduce the AMTRAK losses by reducing service levels outside the NEC.
II) ISOLATION OF THE NEC FROM THE NATIONAL RAIL PASSENGER SYSTEM
Based on the above conclusion, the NEC regional transit system must be considered as a strictly regional transportation issue which has nothing to do with a national rail passenger network.. Congress must, through legislation, divorce the NEC from the other two business units established within Amtrak. In the future, the NEC should be operated by a compact of northeastern states, and as a transit system, must be declared eligible for funding AS A REGIONAL TRANSIT OPERATOR. Federal funding for a national rail passenger system must be directed only at the two non NEC business units in Amtrak (i.e. Amtrak InterCity and Amtrak West).
III) THE ROLE OF FEDERAL FUNDING FOR THE NATIONAL RAIL PASSENGER SYSTEM
The current AMTRAK system, if divorced from its NEC commuter operations, requires no operating subsidy since the NEC looses more money than the entire federal subsidy. However, the National (i.e. NON-NEC) system is starved for capital investment and should be given support in the form of capital investments in order to expand the national system to the point that it not only operates at break even, but begins to show real profit potential allowing the national system to be privatized over a period of five to ten years.
IV) TAX CREDITS AS A TOOL FOR INVIGORATING THE NATIONAL RAIL PASSENGER SYSTEM
The federal government should give serious consideration to enacting federal tax credits for the private freight railroads for allowing passenger trains to operate over their privately owned rights of way. These tax credits would take two distinct forms:
- a) operating tax credits would be granted for each passenger train mile produced over the network owned by the private freight railroad.b) capital investment tax credits would be granted for all capital improvements made to a privately owned freight railroad as long as the investment was related to expediting the flow of passenger trains, or to reducing the interference to freight trains caused by passenger trains.
V) OWNERSHIP OF A PRIVATIZED AMTRAK INTERCITY AND AMTRAK WEST
The ownership of the NON-NEC segments of the current Amtrak System should revert back to private ownership through a five year privatization program. This new entity would become a privatized stock corporation with the stock held by the major Class I freight railroads.
Copyright © URPA, September 1996
POSTED 1 September 1996