Auditors question Amtrak's financial claims

Auditors question Amtrak's financial claims

While Amtrak management Thursday claimed the railroad is on target to reach self-sufficiency by 2003, the General Accounting Office and Transportation Department's inspector general clouded that rosy scenario, testifying that Amtrak has made little improvement and will have a tough time meeting that goal.

Not counting the federal assistance Amtrak received in fiscal 1999, the railroad lost $907 million last year, down only $23 million from the year before, according to a GAO report released Thursday.

The railroad estimates its net losses, without federal subsidies, to be $828 million in fiscal 2000. While that means the railroad is making progress, it will be tough to close that gap within two years, the GAO said.

Amtrak's business plan also includes broad categories of cost-saving initiatives referred to as "undefined initiatives" and "planned management actions to be developed." The GAO said, "These categories represent $210 million in net financial improvements for which Amtrak has not identified specific initiatives or developed any plan of action when the budget was approved."

The GAO and IG reports come near the two-year anniversary of Congress passing an Amtrak reform bill that restructured the railroad and provided $2.1 billion over two years for capital investments. The legislation removed many of the restrictive work rules for its labor force, and gave the railroad leeway to set its own route structure based on economic viability, rather than the political whims of Congress.

Amtrak President George Warrington Thursday told the House Transportation and Infrastructure Ground Transportation Subcommittee that the railroad by December will finish collecting data about potential route restructuring, and create a new route map soon thereafter. Warrington said the "city-pairs" and routes will be based not only upon potential passenger volumes, but also on revenue that can be generated by carrying freight. He said Amtrak is dramatically increasing its revenue now that Congress lets it carry freight cars of refrigerated goods and express packages.

But the outside reports said Amtrak faces both short-term and long-term challenges. Implementation of the new high speed service between Washington and Boston has experienced delays; Amtrak is counting on that profitable route to subsidize losses on other routes.

The IG report said the infrastructure along the route is in disrepair. "If these infrastructure improvements are not made, the quality of high speed service on the Northeast Corridor will start to deteriorate, threatening ridership and revenue that are essential for Amtrak to maintain operating self- sufficiency."

In addition, the IG said the $2.1 billion given to Amtrak in the 1997 budget deal "will not be enough to cover its minimum capital needs." And the GAO found that Amtrak has used one-third of the money to cover routine maintenance, instead of capital investment.