Cutting Waste at Amtrak

Amtrak, the federally-funded, Soviet style intercity passenger rail service, has a lengthy history of mismanagement and wasting taxpayers’ money.

Amtrak receives more than $1.5 billion in federal funding every year, and each ticket sold is subsidized an average of $49.25 by the taxpayers. Routine poor performance, inefficiency and waste at Amtrak demand that the United States turn to more private sector competition to help dramatically reduce the costs of operating passenger rail service.

One example of Amtrak’s waste of taxpayer dollars is in food and beverage operations. On August 2, 2012, the Committee held a hearing on Amtrak’s staggering losses over the years because of its failure to more effectively operate food and beverage service. Over $833 million of the taxpayers’ money has been lost by Amtrak over the last decade.

At the Committee hearing, it was revealed that Amtrak has to spend $1.70 to bring in just $1.00 of revenue in its food and beverage operations. Click here for more information from this hearing.

On September 11, 2012, the Committee examined the high cost to taxpayers of Amtrak’s monopoly mentality and inability to compete effectively in commuter rail contract competitions. The Committee released an investigative report on this issue in conjunction with an oversight hearing. According to the Committee’s report, even with high federal subsidies, Amtrak loses when competing with private operators. Commuter rail agencies have saved $107.8 million or 11.5% by awarding contracts to private operators.

More savings can be experienced if the competitive commuter rail model is applied to longer intercity passenger rail routes known as “state-supported routes.” If the kind of savings that transit agencies have realized through competitive procurement of commuter rail service is realized by also competing out the state-supported routes, the states could potentially save an estimated $91.3 million annually.

On September 20, 2012, the Committee held its third oversight hearing on Amtrak, focusing on the total $40 billion cost to taxpayers in subsidizing Amtrak over the years, and comparing these exorbitant subsidy levels to those in other modes of passenger transportation.

While all modes of transportation receive a federal subsidy, a cross-modal comparison shows just how dramatically the amount of federal subsidy per passenger trip varies. At the September 20th hearing, Mica cited a recent study that found, on a per trip basis, and taking into account all types of federal funding going to each mode for 2008, aviation received $4.28 per passenger trip, mass transit received $0.95 per passenger, intercity commercial bus received $0.10 per passenger, and Amtrak received $46.33 per passenger. Click here for more information from this hearing.

In recent years, the passenger rail service also has been found to have improperly removed its Inspector General, spent millions on outside legal services without proper management or oversight, and badly mismanaged the acquisition process for the Acela train.

We must cut the astonishing amount of waste at Amtrak. Only greater accountability and strong reform of the rail service will help stem the financial hemorrhaging and provide substantial taxpayer savings.

On November 28, 2012, the Committee held a hearing to examine Amtrak's Reorganizational Plan and stressed that Amtrak’s plans must significantly reduce the rail service’s reliance on taxpayer subsidies by improving performance, accountability, and cost savings.


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