Tuesday, April 16, 2013

Amtrak budget reality could make a preacher cuss

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Let's get real about President Obama’s fiscal year 2014 and beyond budget recommendations to Congress. They’re street theater, and one might just as well be entertained viewing Gucci-clad Washington lobbyists intermingling with Capitol Hill tourists outfitted in spandex and plaid-pattern polyester.

It is the House and Senate that eventually will craft new federal spending levels, and expect that product to be quite different — and fiscally more conservative — than the President’s multi-volume recommendations, which, as with all presidents, soon suffer ignominy in recycling centers and landfills.

Consider the President’s rail-related budget recommendations, most of which benefit Amtrak – the national passenger railroad conservatives and libertarians detest for its subsidies, but which most Americans cherish, a majority in Congress tolerate, and a precious few lawmakers defend.

Obama’s budget recommendations include, for the next fiscal year, some $800 million for Amtrak’s long-distance routes, which attract the loudest raspberries from Amtrak’s congressional detractors. Another $300 million for fiscal 2014 is for state passenger rail corridors, even though existing legislation requires states to fund 100% of those costs effective Oct.1.

A whopping $3.7 billion more is recommended in fiscal year 2014 for vaguely defined “rail service improvements,” which include creation of new and improved rail passenger corridors. Republicans are still fuming over the Obama administration’s alleged squandering of $8 billion previously provided by Congress for high- and higher-speed rail initiatives.

That $8 billion sum was so sprinkled and diluted around the nation that — with the single exception of the Chicago-St. Loius higher-speed rail corridor — not a single tangible demonstration project will emerge as a result, dampening enthusiasm for a second round of such spending, which Obama recommends top $40 billion over the next five years. House Transportation & Infrastructure Committee Chairman Bill Shuster (R-Pa.) observed, “There still seems to be regret of just how the first $8 billion round of high speed rail grants went out.”

The most pregnant question is how the President’s rail spending recommendations will be funded.

For non-starters, the president proposes folding Amtrak funding into the Highway Trust Fund by creating a broader Transportation Trust Fund. For sure, a broader surface transportation funding approach, providing Amtrak with a consistent source of funding, is logical. Trace that initiative to former Amtrak President Graham Claytor, who coined the term “Ampenny,” which envisioned 1% of Highway Trust Fund spending (about $1 billion annually) go to Amtrak.

Why is that a non-starter? Recognize that the politically powerful American Trucking Associations has long viewed the Highway Trust Fund as Richard Nixon coveted his dog Checkers, and will draw a bright line in concrete against any scheme broadening the Highway Trust Fund’s coverage. Moreover, owing to reduced highway travel and elevated highway reconstruction demands, the Highway Trust Fund is as broke as Bernie Madoff’s former clients, requiring $50 billion in federal bailouts over the past four years.

Raise fuel taxes, you say? That will align most American car-owning families with the American Trucking Associations, and likely make railroads fellow travelers with the trucking lobby. It took years for the railroad industry to convince Congress in 2004 to eliminate a 4.3 cents per gallon federal tax on diesel fuel used by railroads, successfully arguing that railroads, which own, build, and repair their own rights-of-way, should not be taxed almost $200 million annually on diesel fuel they use. Freight railroads are in no mood to see a similar tax reemerge as part of a transportation trust fund primarily benefiting trucks, mass transit, and Amtrak.

There also have been calls for commuter rail agencies using the Amtrak-owned Northeast Corridor (NJ Transit and SEPTA, for example) to pay the full costs of that access, but decades-old legislation caps those payments, and it is naïve to think Amtrak’s most effective supporters, most of whom represent districts enjoying lower-cost commuter access, will sign on.

But didn’t President Obama also say increased Amtrak funding could be paid for from the so-called “peace dividend” as the wars in Afghanistan and Iraq wind down? Even if U.S. troops do not have to return to those nations, or become embroiled in a new Mideast war involving Iran, there is the growing military threat from China and North Korea, not to mention the still escalating war on terror at home.

And let’s not ignore the Republican-controlled House, chock-a-block with lawmakers anxious to eliminate – rather than expand – Amtrak subsidies, and who demand lower, rather than higher, federal spending when deficits already are stratospheric. Sniffed Shuster after viewing the President’s transportation budget recommendations, “The President’s budget repeats his call to increase spending without identifying a viable means to pay for it. We can’t just keep adding to our tab and expect future generations to foot the bill.”

The more likely outcome from Congress is that it will provide Amtrak with something close to its $373 million request for operating subsidies, and likely far less toward its $2.3 billion request for Northeast Corridor upgrades and new and reconditioned equipment systemwide to meet sharply increasing seat demands.

For Amtrak supporters, it’s all enough to make a preacher cuss.

Frank N. Wilner

Frank N. Wilner is author of six books, including, Amtrak: Past, Present, Future; Understanding the Railway Labor Act; and, Railroad Mergers: History, Analysis, Insight. He earned undergraduate and graduate degrees in economics and labor relations from Virginia Tech. He has been assistant vice president, policy, for the Association of American Railroads; a White House appointed chief of staff at the Surface Transportation Board; and director of public relations for the United Transportation Union. He is a past president of the Association of Transportation Law Professionals.