May 25, 2017

The FY 2018 budget request from the Trump Administration calls for steep cuts in federal grants to Amtrak, with the intent to eliminate federal support for Amtrak’s long-distance routes. The budget would also reduce support for new intercity rail grant programs created by the FAST Act of 2015 below levels appropriated earlier this month in the 2017 omnibus appropriations law.

As promised in March, the budget proposes to eliminate Amtrak subsidies for Amtrak’s long-distance routes. This was calculated as a $630 million reduction from the Amtrak National Network appropriation under the FY 2017 CR, which translates into a $735 million reduction versus the actual 2017 appropriation.

FRA did the best job of any DOT mode at putting nice colorful info graphics into their budget justifications, so we thought we should include some here. Amtrak routes are divided into three classes: the Northeast Corridor (for which Amtrak also owns the track and related infrastructure), routes that are supported by financial aid from state governments (which are under 750 miles), and the long-distance routes.

The budget justifications state that “Terminating Federal funding for Long Distance services will allow Amtrak to focus its resources – and those appropriated by Congress – on better managing its successful corridor services that provide transportation options within more densely populated regions.”

The Amtrak budget is problematic because Amtrak and FRA and the Federal Railroad Administration submit separate budget requests, and Amtrak’s own budget request (which is much more detailed) is not out yet. Last year, in its 2017 budget request, Amtrak estimated that the long-distance routes would post an operating loss of $555 million. (Of course, last year Amtrak also said the Northeast Corridor would have capital needs of $1.1 billion, far above the sum of its $210 million operating profit and the $235 million in federal support under the 2018 budget.) When Amtrak’s own budget request is posted, we will link to it here.

With the elimination of the long-distance routes, the “National Network” will no longer be a real network in that it will no longer be possible from east to west or vice-versa, and many cities that now have rail service will lose it altogether. FRA included a map of the Amtrak service network under the budget request minus the long-distance routes.

If Amtrak’s own budget addresses the prospect of shutting down routes (there is no guarantee that it will, as Amtrak’s own budget request is often from a completely different universe than the one occupied by whatever Administration is in charge), the key question will be the costs of labor protection agreements in the event of a shutdown, which do not appear to be addressed in the FRA budget justifications.

A 1997 GAO report found that Amtrak’s basic labor agreement provided “1 year of salary protection for each year of prior service, up to a maximum of 6 years’ pay, for employees affected by a discontinuance of passenger rail service” and that in the event of a full-on Amtrak bankruptcy, those labor protection costs could reach $6.9 billion. This outraged Congress to the point that it ordered contracts to be renegotiated, and an arbitrator then lowered the maximum payout from 6 years pay to 4, but the labor protection costs could still be significant in the event of route shutdowns.

The budget also proposes to strike the set-aside of $50 million per year from total Amtrak grants for Americans with Disabilities Act compliance because “approximately 90 percent of the ADA set-aside in FY 2017 was for projects on the National Network. Due to the reduction in National Network funding from the Administration’s proposal to eliminate Long Distance services, the President’s Budget recommends providing more flexibility to determine the appropriate amount for ADA upgrades. This requirement can be handled through FRA’s grant agreement with Amtrak.”

The appropriation for Amtrak’s Northeast Corridor is $235 million under the budget, a freeze at the placeholder rate in the FY 2017 CR, but again, we won’t know what that number means until we see Amtrak’s own 2018 budget estimates.

FRA accounts for rail safety and for railroad R&D were frozen at the 2016 enacted rates of $199.0 million and $39.1 million, respectively.

The FAST Act of 2015 authorized three new grant programs to be run by FRA. In 2017, these programs were authorized at a total level of $350 million but the Appropriations Committees only provided $98 million. In 2017, the aggregate authorization level is $425 million but the budget only requests $50.9 million.

The FRA budget estimates note that the federal-state good repair partnership grant program is primarily intended to address the Northeast Corridor capital backlog, which is estimated by the NEC Commission to be $38 billion, and states “The President’s FY 2018 Budget request will provide an infusion of new funding to help meet these state of good repair needs on the NEC and elsewhere on the passenger rail network.” The $25.945 million request for the program in 2017 is equal to 0.068 percent of the NEC capital backlog.