Testimony of THOMAS M. DOWNS
Chairman, President and CEO
New York City Field Hearing
On R~uthorization of the
April 7, 1997

Mr. Chair and Members of the Subcommittee: Thank you for the opportunity to appear before this Subcommittee to discuss Amtrak's top priorities for the 1997 reauthorization of the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA): Inclusion of a dedicated source of capital funding, as well as program eligibility, for intercity passenger rail. These two elements are simply the single most critical factors in the survival of the nation's passenger rail system.

ISTEA was truly visionary legislation. It was the first step down the path toward a balanced transportation system. It was the first law that sought to put the movement of people at the forefront, and not the different modes that comprise our transportation system. At many state DOT's, "Intermodal" needed to be defined and added to the vocabulary.

But ISTEA brought us only part way down the path. In order to reach our ultimate destination - a truly balanced transportation system - we must eliminate modal bias. A significant step in the right direction would be to discontinue the bias against intercity passenger rail that is inherent in ISTEA. That is consistent with what has historically been the position of this Committee, and the Senate as a whole, and it is my hope that this year the position will prevail.

For those who were not there, in 1991 the Senate-passed version of ISTEA included passenger rail as an eligible entity in all state-administered programs, but when the conference on the bill began we were left in no-man's land between the insurmountable boundaries of jurisdiction In the House. And it was there that eligibility for intercity passenger rail died - on a jurisdictional impasse, not due to any substantive objection. Now, after it being codified that way for six years, we need to remind people it was never a policy decision to exclude rail - we fell victim to clearly drawn lines of committee jurisdiction. Now, with jurisdiction over all surface transportation programs, including Amtrak, consolidated in the House Transportation and Infrastructure Committee, the obstacle has been removed, and this indefensible modal bias should be eliminated.

Everyone on this Subcommittee knows that public policy on transportation modes is incredibly skewed - and that goes well beyond the gross inconsistencies in funding levels for the different modes. Current federal funding policies distort state and local decisionmaking. The federal government offers generous matches to a state if they are making highway, transit or related investments, but offers little or no funds to match state investment in rail passenger service. The result is states and localities are discouraged from investing In rail even when it's the best system for the area. Elimination of modal bias and the desire for a balanced, truly responsive intermodal transportation system demands that this change, and "NEXTEA" is the most appropriate vehicle for that change.

Highway trust fund monies can be spent on mass transit, bus acquisition, light rail, bike paths, pedestrian walkways, technology research, planning, snowmobile trails, intermodal freight facilities, driver education programs, hiking trails, and much more. I am not here to discourage these types of investments, but rather to highlight the absolute inconsistency of prohibiting expenditures on intercity passenger rail. If a state chooses to spend a portion of their federal transportation allocation on Amtrak, they should clearly be allowed to do so.

Including passenger rail as an eligible use of Congestion Mitigation and Air Quality (CMAQ), Surface Transportation (STP), National Highway System (NHS) and eligible transit program funds would eliminate this bias. States would be able to leverage a 75 or 80 percent match on their investment, and thus would be financially free to choose the best transportation solution based on transportation efficiency, not skewed economic incentives.

The legislative discrimination against passenger rail should be terminated with the enactment of NEXTEA. Inclusion of passenger rail as an eligible use of NEXTEA funds would require no new spending, would not change any federal transportation allocation formulas, and would not mandate that a state spend one penny on rail service. What it would do is provide states with the flexibility to buy the transportation service that best meets their needs.

It is clear that the American people want a national passenger rail system - the challenge for this Congress is how best to support it and ensure its healthy existence. Allowing states the right to spend a portion of their federal transportation allocation on Amtrak, if they so choose, is one critical response to this challenge.

The Senate approved legislation to provide this flexibility and eligibility in 1991, and again, by a nearly 2-1 bipartisan vote, during consideration of the National Highway System Designation Act (NHSDA) in 1995. Sixty-four Senators in the last Congress, supported by many of the nation's governors, voted in favor of this. I am pleased to see that Senator Moynihan's ISTEA reauthorization bill, cosponsored by Senators Chafee, Lautenberg, Lieberman and others on this Committee, includes this eligibility for Amtrak. I urge this Committee to ensure that whatever bill is reported to the full Senate for consideration include this very important eligibility for intercity passenger rail. Simply, it Is a states' rights issue. If a state decides that Amtrak best meets their transportation needs, that state should be able to leverage the same amount of federal dollars for rail service that it can for a new highway, a new bridge, a transit improvement or a bike path.

That is what Amtrak is seeking. Parity. Parity doesn't require an indictment of our highway system, or our transit systems, or our aviation system. As a former highway administrator, the head of a bridge and tunnel authority, a transit agency and a state DOT, I have never argued the merit of one mode over the other. Each serves a different need and a different population. They should be woven together to supplement and enhance each other.

The single most important issue to preserving our national rail system, that must be addressed in NEXTEA, is the inclusion of a dedicated funding source for Amtrak. I'm not going to sit here in front of you and "cry wolf," but I know our national rail system cannot survive intact through yet another year of inadequate funding, and I can assure you that Amtrak will have to break its commitment to achieve independence from federal operating support if we are not given an adequate, reliable dedicated source of capital funding. As we have always said, operational self-sufficiency is absolutely dependent on adequate capital investment in the system.

For some reason~ Amtrak, the only major mode of transportation which does not have a dedicated source of funding, is held to a higher standard than any other mode, all of which are dependent on the federal government for support and none of whom are called upon to defend themselves in terms of "profitability." We are also held to a higher standard than any other passenger rail system in the world, all of which rely on some level of federal support. Amtrak covers more of its operating costs - an estimated 84 percent - than any other passenger railroad in the world, and serves more than 93 percent of the continental United States, while receiving less than 3 percent of all federal transportation spending.

What do we mean in this area - the greater metropolitan area? Amtrak owns, operates, and maintains the majority of the Northeast Corridor. As everyone in this room knows, it is a critical transportation asset that carries more than 1 , 000 trains a day, including Amtrak, seven different commuter railroads, and freight. The Corridor is in the midst of a tremendous make over of transportation. Work is underway to introduce high-speed rail service to America. In preparation, investments have been made to upgrade and modernize the infrastructure--track, bridges, and structures--in the north end. This past spring, construction also started on the completion of a 75-year transportation plan---electrification north of New Haven. The high-speed rail program has been met enthusiastically by rail riders as well as investors. Significant capital investments are needed on the south end and a continued source of capital will be needed for the entire program if we are to have the highest return on this investment.

We carry almost half of the combined air-rail market between here and Washington, DC, and when intermediate cities (such as Baltimore and Philadelphia) are included, Amtrak's share of the air-rail market rises to seventy percent. Loss of Amtrak service in this corridor would not only put a huge financial burden on the affected states, it would require another 7 , 500 fully- booked 757's to carry our passengers every year, or hundreds of thousands of cars added to already congested highways. If Amtrak disappeared tomorrow, there would be an additional 27 , 000 cars on the highway between Boston and New York every day. Between New York and Philadelphia Amtrak service removes 18,000 cars from the highways every weekday.

That number - 18,000 cars a day - does not include the thousands of commuter rail passengers, and their parked cars, that are carried on Amtrak's Northeast Corridor by commuter agencies such as New Jersey Transit (NJT) and the Southeastern Pennsylvania Transit Authority (SEPTA) every day. These commuter agencies could not operate if Amtrak did not maintain the track, bridges, signals and electric traction system on the Corridor. Above and beyond Amtrak's enumerated ridership, another 220 million commuter passengers ride on Amtrak's Corridor between Boston and Washington, DC every year. You can measure Amtrak's impact not only in the number of cars removed from the road, but also in terms of avoided costs - as reported in the Journal of Commerce last May, Amtrak's presence eliminates the need for twenty additional highway lanes here in New York City, and ten new tunnels under the Hudson.

The Northeast Corridor business unit contributes nearly 52 percent of our ridership and 56 percent of our revenues. In 1999, when we will begin operating our high-speed train sets between Boston and Washington, we estimate that this service will generate at least $150 million annual profit. This profit, along with over $200 million of additional financial improvements, will help offset costs on other parts of th~e system. This business unit will generate profits for Amtrak. The key is to sustain the capital funding stream that is required to finish the improvements necessary to support high-speed rail, rebuild tunnels, repair the sixty-year old catenary system, and make other life safety improvements.

What happens if we disappear, besides new airports, highway lanes, tunnels and bridges being needed? Besides the congestion air quality implications? The elimination of Amtrak would mean the loss of over 20,000 jobs. Commuter operators would need to provide the infrastructure for their own use, at full cost, which would be approximately double what they are now paying, based on the residual operating and capital expense in Amtrak's absence. That would amount to more than $80 million annually, in addition to the need to bring this property up to a state of good repair at a cost of more than $4 billion. Ironically, the dissolution of Amtrak would likely cost the American taxpayers nearly 20 percent more money than the entire five years of funding for a trust fund proposal. The latter solution has the bonus of creating a viable and less costly national rail passenger service.

Publicly elected officials from this region, at the local, state and federal level, have been the most consistent, most outspoken and most influential supporters of a dedicated funding source for Amtrak, because this region in particular is dependent on us economically, environmentally, congestion-wise and employment-wise. I am grateful for their support.

One parting thought. Like so many worthwhile things that have been done to little applause, ISTEA has faced criticism. You have invited witnesses here to discuss the good and the bad, to criticize and commend, and they may disagree by mode, or by state, or by region. Despite that, I believe your highest priority must be defending the ground already gained with that landmark bill and to build on it.

If we are to continue the vision of ISTEA and maximize our transportation resources in NEXTEA, we must move past the counting up and comparing of costs of each mode. A truly balanced transportation system is like an effective education system. All of society benefits from its existence, those who use it directly and those whose lives are eased or enriched by its existence. That is what NEXTEA should embody, promote and protect, and we at Amtrak believe intercity passenger rail should be a part of it.