Testimony given by The Honorable Joseph H. Boardman, Administrator
Chairman Bond, ranking member Murray and other members of the Subcommittee, it is my pleasure today to represent Secretary of Transportation Norman Y. Mineta to discuss the Bush Administration’s budget request for Fiscal Year 2007 as it relates to subsidies for the National Railroad Passenger Corporation, better known as Amtrak.
As Secretary Mineta has already stated, the budget promotes continued transformation of intercity passenger rail. The President requests $900 million to help Amtrak make the transition to a new and better model of intercity passenger rail. $500 million of that request is for capital needs and maintenance. The remaining $400 million would be available as Efficiency Incentives tied directly to continued reform.
The Department has been and continues to be consistent in believing that Amtrak’s business model is flawed and must be reformed. Amtrak does not yet have effective budget discipline. They are not subject to the rigors of the need to turn a profit, and they do not prepare a public budget in the tradition of a city or a county, or even a transportation authority. By falling into a unique in between category of existence, Amtrak has managed to avoid the discipline that normally governs either private or public corporations. While the present Board of Directors has made the first tentative steps in developing discipline, much more must be done. Improvements to date have only occurred because of the demand for reform by this Administration and support for that reform by this Committee. We need to be steadfast in FY 2007 and following years if a true change in the Amtrak culture is to be achieved. There have been too many false starts and empty promises. Amtrak must do better, and we should be partners in making sure that they do.
This Committee embraced the spirit of that reform last year, with its provision that the Secretary shall determine and assess fees on commuter railroads operating on the Northeast Corridor (NEC) that would cover the capital and maintenance costs attributable to those same commuter railroads. This idea would promote fair and equitable access for all operators. The Committee’s leadership in reforming this aspect of the very complex Amtrak picture has been accepted and embraced by the Administration as a significant opportunity to develop a key principle of the Administration’s proposed approach to reform of intercity passenger rail service.
With the assessment of the commuter fees, the States should have a strong incentive to partner with the Federal government in establishing both policy standards and service warrants, along with investment policies that would maintain the infrastructure at a maintenance level that meets the needs of business travelers; commuters; tourists; and freight operators. This kind of policy level attention will help to strengthen and extend the economic opportunities provided by the mobility and reliability of rail service on the NEC, and continue to enhance the region’s globally competitive advantages in the financial, insurance and real estate industry. By combining those levies with the Department’s proposed $500 million capital budget for Amtrak, and including State and Federal policy and planning goals for infrastructure investment on the NEC this new partnership will benefit intercity passenger rail for all interested stakeholders. This then opens up opportunities as have been expressed by Secretary Mineta that with the right Amtrak reforms, this Administration will not only support infrastructure improvement on the NEC, but could assist State partners that are ready to improve intercity passenger rail services.
We are at a point where this Administration, together with Congress can demonstrate both significant progress in reforming Amtrak, and major progress in advancing goals for improved intercity passenger rail. Amtrak must find new ways to operate competitively. Even from the earliest times of discussion and debate over several Administrations, and several Congressional periods, there have been both general and specific suggestions made to improve upon Amtrak’s operational performance. Amtrak’s core business is to provide a safe, clean, efficient transportation service that is on-time and placed in the appropriate market at the right time to provide a connected and reliable service to fare paying customers. With that clear focus Amtrak can be successful and competitive.
Amtrak’s internal reform must progress quickly to allow a clear operating focus with effective financial discipline. The Department and the States must progress quickly to find success in forming a partnership on the NEC infrastructure and operation this committee has opened an opportunity for us to do that. The public demands real accomplishment in this partnership, not only in the Northeast, but in the south, and Midwest and far west. Intercity passenger rail – when delivered in partnership and focused on being effective and seamless – has the potential to improve our environment and strengthen our economy. As Federal Railroad Administrator I will work with this Committee, other Committees; Amtrak; States and Stakeholders to make that happen.
Mr. Chairman, thank you for this opportunity. I would be happy to answer any questions at this time.