Amtrak rolls toward self-sufficiency but needs federal money for equipment

December 26, 1993|By New York Times News Service

WASHINGTON -- Although Amtrak is getting closer to self-sufficiency in its operating budget, the government-owned railroad needs a huge infusion of federal money to replace dilapidated equipment and property, federal and Amtrak officials say.

Amtrak passengers paid 80 percent of the railroad's operating costs in 1993, continuing a steady increase from the 48 percent they contributed in 1981. The officials say the railroad could operate self-sufficiently in the next decade.

But they also say the railroad needs nearly $4 billion in federal money to repair and replace its aging trains, dilapidated stations and inadequate maintenance yards. Without this money, experts say, Amtrak will have to curtail routes and service.

The government's current $351 million operating subsidy to Amtrak augments passenger revenues of nearly $1 billion. The subsidy has fallen over the years from $720 million in 1981 as more passengers have traveled farther and as costs have been reduced through increased efficiency.

The Clinton administration's current budget provides $200 million more for Amtrak's capital improvements, and railroad officials expect about the same amount next year.

But Bijay Pandit, Amtrak's manager of capital investment, said the railroad needs $3.9 billion for capital improvements in the next five years, including $2 billion for new cars -- more than half are more than 40 years old -- an additional $917 million for maintenance and about $1 billion for new maintenance yards, stations and reservation and information systems.

Thomas M. Downs, who took office as Amtrak's president this month, said the railroad's future depends on modernization.

"You have to invest in the capital plant, or this railroad will die as we know it," he said. "When you look at the age of the rolling stock and the state of disrepair in a number of train stations, as well as in our heavy maintenance facilities, you realize we've delivered a more cost-effective railroad in the short term by not funding our capital plant."

Competition from the airlines also provided a strong incentive for modernization, he said. "In this era of cutthroat airline competition, airlines can provide transportation cheaper than we can in a lot of corridors," Mr. Downs said. "So it can't be pricing that gets us out of this. It's got to be productivity, and a substantial portion of that comes from better capital investment."

Although the Clinton administration is expected to continue to provide operating subsidies, the availability of capital funds is unclear. Still, the administration's view of Amtrak is more supportive than those of its Republican predecessors, which denied it subsidies that were ultimately restored by Congress.

Morton Downey, deputy secretary of transportation, acknowledged that "something needs to get done."

"The present level of capital investment is not enough to keep the railroad going," Mr. Downey said. "We're going to work with Amtrak, unlike the last two administrations."

Congress will consider Amtrak's financial needs early next year and has asked the General Accounting Office, the research arm of Congress, to study the railroad.

Kenneth M. Mead, the GAO's director of transportation, who is over seeing the study, said: "Most experts agree that the capital situation for Amtrak is very serious. If Amtrak's financial situation doesn't improve, they're going to have to cut back either routes or frequency of service outside the northeast corridor."

Amtrak has wooed 2 million more passengers since 1981, for a total of 21 million this year, and reported an increase in longer, costlier trips.

It has cut operating costs, largely by negotiating new labor agreements in the late 1980s that gave managers more flexibility in assigning workers.

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