MARCH 13, 1997

Mr. Chairman, thank you for the opportunity to testify this morning on ISTEA reauthorization. I recognize the challenges facing this Committee and I want to begin by commending your leadership in steering away from the demonstration project frenzy taking place in the House. The Senate is on record opposing demonstration projects and I am committed to working with this Committee in holding strong our position.

As you consider program eligibility, you will hear from members advocating that Amtrak should be entitled to funding from Highway Trust Fund. I strongly oppose their proposal. I encourage you to carefully consider Amtrak's legislative history, as well as its current financial condition.

Amtrak was created in 1971 in order to relieve the freight railroad industry from the economic burden of providing ongoing passenger service. With capital acquired from participating railroads and the federal government providing $40 billion in direct grants and another $100 million in loan guarantees, the corporation was to become self-sustaining within 2 years.

By 1972, Amtrak was already losing $152 million and requested Congress for additional funding. Congress responded as it has for 26 years, giving Amtrak more federal money. Congress authorized another $225 million plus another $100 million in loan guarantees. You know the rest of the story.

Since 1971, Amtrak has received $19 billion in Federal funding to help cover its operating, capital, and labor protective costs. I recognize Amtrak has strived to reduce its operating costs and increase its revenues. Frankly, many of Amtrak's financial challenges are due to statutory constraints that Congress has not lifted. But the fact remains: the Amtrak "two-year experiment" was unsuccessful 20 years ago, it's unsuccessful today, and it will be unsuccessful in the future.

Even if Congress approves statutory reforms and a dedicated funding source, Amtrak's viability remains uncertain. That is why the Commerce Committee's Amtrak authorization bill during the last Congress included a sunset trigger provision to kick in if the reforms and funding authorized in the Committee-passed bill were not effective in preserving Amtrak's future.

This afternoon, the Commerce Committee's Subcommittee on Surface Transportation and Merchant Marine will hold a hearing to analyze Amtrak's financial condition. We will hear Amtrak is in dire financial straits--on the brink of bankruptcy. Amtrak is $1 BILLION in debt and that debt level is projected by GAO to double to $2 billion in the next two years.

If it can become a recipient of highway trust fund money, however, Amtrak wants us to think its troubles will be over. But the fact is its financial challenges would continue. Let there be no illusions. Once in the door, Amtrak would remain a recipient of highway funds for years to come. Amtrak already projects negative cash balances during the next three years even with an injection of highway trust fund monies. If an Amtrak trust fund is approved, highway investment will suffer. It would be bad public policy.

Amtrak continually tells Congress it is working to be free from federal operating support, but that Congress needs to give them still more money for now. And Amtrak's story has not changed in 26 years, except in the 1980s, Amtrak wanted a whole jenny of the gas tax, not lust one-half.

Even though I think it is high time to end subsidies, the political realities are that Amtrak will likely continue to receive federal funding. But if the collective Congressional wisdom concludes it is sound policy to continue pouring money into a passenger rail system that serves only about 500 locations across the nation, why rob the trust fund? The $19 billion given to Amtrak so far has come from the General Treasury.

Why, I ask, should highway dollars pay to subsidize Amtrak? They don't even pay into the fund. Already highway infrastructure needs outweigh public investment capabilities. Even if the budget permitted spending down all of the money in the Fund, a significant funding shortfall would remain.

Let me also point out that many states, like Arizona, are donor states. Why should gas tax dollars paid in by donor states already subsidizing highway projects in donee states, now be used to pay for Amtrak service that is not even available to most communities? And, why should citizens across the country have a portion of their gas taxes diverted away from critical transportation projects to the Northeast Corridor system that essentially subsidizes high income travelers?

According to the American Highway Users Alliance, 86.7% of travel is by car; 9.4% by air, 3.6% by mass transit and school buses; and 0.3% by Amtrak. Instead of turning on a new spigot for Amtrak which serves less than 1 percent of the traveling public, maybe a better alternative would be to expand funding flexibility. If passenger rail service is a transportation priority, let States use their federal funds to help support passenger rail service.