	Background

The Rail Passenger Service Act of 1970 created Amtrak to provide intercity  passenger rail service because existing railroads found such service  unprofitable. Amtrak operates a 22,000-mile network, primarily over  freight railroad tracks, providing service to 46 states and the District of  Columbia. Amtrak owns 650 miles of track, primarily on the  Northeast Corridor, which runs between Boston, Massachusetts, and  Washington, D.C. On some portions of the  Corridor, Amtrak provides high-speed rail service (up to 150 miles per  hour). Amtrak has  reported that just doing that will require nearly $2 billion annually over the  next several years—about twice the amount provided annually over the  last 5 years. Amtrak’s financial  struggles have become even more acute in recent years. This is about twice the approximately $1 billion  in federal funding Amtrak has received annually over the last 5 years. Amtrak has indicated that it will require $2 billion annually in federal  contributions over the next few years, with a focus on stabilizing its  system. For example, in January 2000, Amtrak  estimated that about $12 billion (in 2000 dollars) would be needed  between fiscal years 2001 and 2025 to improve the Northeast Corridor  between New York City and Washington, D.C., in order to increase the  reliability of the Corridor and make enhancements that permit higher  speed service. Amtrak’s identified funding requests do not address the future needs that  might be required to expand or enhance service or develop high-speed rail  corridors. According to Amtrak, additional federal and state investment— over and above the $2 billion per year—would be required to address  these issues and begin developing high-speed rail corridors. Framework for Creating a National Intercity Passenger Rail Policy

Based on GAO’s analyses of federal investment approaches across a broad  stratum of national activities, we have found several key components of a  framework for evaluating federal investments. Congress may find this  framework useful to consider as it develops a national intercity passenger  rail policy. A systemwide  approach to transportation planning and funding, as opposed to focusing  on a single mode or type of travel, could improve the focus on outcomes  and the contribution to customer or community needs. Establishing Roles of Governmental and Private Sector Entities Will Better Ensure That Goals Are Achieved

Establishing the relative roles of federal, state, and local governments and  private sector entities, to the extent practicable, could better ensure that  goals are achieved. Regarding structures and organizations as they pertain to intercity  passenger rail travel, the Congress will need to pose and resolve such  questions as:    Should there be a government-established entity, such as Amtrak, with a  monopoly over intercity passenger rail, or could federal and state  governments allow private operators to receive government assistance on  a competitive basis to provide intercity passenger rail service? Choice and Design of Financing Mechanisms Will Have Important Consequences for Performance, Transparency, and Accountability

The choice and design of financing mechanisms, including mechanisms  used to provide federal assistance, will have important consequences for  performance, transparency, and accountability. How should it be paid for? Amtrak’s  market share decreases rapidly as travel time and distance increases.
Why GAO Did This Study

The Rail Passenger Service Act of 1970 created Amtrak to provide intercity passenger rail service because existing railroads found such service unprofitable. Amtrak operates a 22,000-mile network, primarily over freight railroad tracks, providing service to 46 states and the District of Columbia. Most of Amtrak's passengers travel on the Northeast Corridor, which runs between Boston, Massachusetts, and Washington, D.C. On some portions of the Corridor, Amtrak provides high-speed rail service (up to 150 miles per hour). Since its inception, Amtrak has struggled to earn revenues and run an efficient operation. Recent years have seen Amtrak continue to struggle financially. In February 2003, Amtrak reported that it would need several billion dollars from the federal government over the next few years to sustain operations. However, some have indicated that there needs to be a fundamental reassessment of how intercity passenger rail is structured and financed. Options raise questions about whether or not Amtrak should be purely an operating company, whether competition should be introduced for providing service, and if states should assume a greater financial role in the services that are provided.

What GAO Found

Compared to current levels of federal funding, substantially higher federal investment will be required in the future to stabilize and sustain Amtrak's existing network. Amtrak will be seeking about $2 billion per year over the next several years to stabilize its system and begin addressing its deferred maintenance needs and to cover operating losses. This is about twice the federal funding Amtrak has received annually over the last 5 years. However, Amtrak's identified funding requests do not address potential future needs to enhance or expand service or develop high-speed rail corridors, which Amtrak has previously estimated at up to $70 billion over the next 20 years. According to Amtrak, this will require additional federal and state investment--over and above the $2 billion annually in identified needs. Based on analyses of federal investment approaches across a broad stratum of national activities, we have identified several key components of a framework for evaluating federal investments. The Congress might find this framework useful as it deliberates the future of intercity passenger rail. At the outset, clearly defined goals would provide the foundation for making other decisions. For example, if reducing air and highway congestion were a goal, this may only be achievable in limited markets, because Amtrak's market share decreases rapidly as travel time and distance increase. To improve the focus on outcomes, it will be important for Congress to consider a systemwide approach, as opposed to a focus on one mode or type of travel. Establishing the roles of governmental and private entities could better ensure that goals are achieved. Finally, the choice and design of financing mechanisms will also have important consequences for performance as well as transparency and accountability.