Amtrak Submits Ambitious $11 Billion Budget Request

Amtrak Submits Ambitious $11 Billion Budget Request

February 22, 2018  | Jeff Davis

February 22, 2018

As part of the regular federal budget process, the Trump Administration on January 12 submitted a budget request on behalf of Amtrak for fiscal year 2019. But Amtrak also submits its own budget request directly to Congress every year, and that request (submitted on February 16) is drastically different from that of the Administration.

All told, Amtrak is requesting that Congress enact at least $11 billion in appropriations for Amtrak and Amtrak-related programs in fiscal year 2019 (though much of that money would be “advance appropriations” for future years). By contrast, the Trump Administration only requested $738 million for Amtrak, all of which would be for 2019.

Amtrak submitted two documents last Friday: the FY 2019 legislative grant request and the more detailed FY 2019-2023 service line plans.

Here’s how that $11 billion breaks down:

FY 2019 Grants to Amtrak 1,700
FY 2020-2023 Advance Appropriations to Amtrak 7,800
FY 2019 Mass Transit New Starts for Amtrak 725
FY 2019 FRA Grant Programs 820
Total FY 2019 Appropriations Request 11,045

This article summarizes each of those four areas, in order.

Amtrak Grants – FY 2019 Only

For fiscal 2019, Amtrak is requesting $1.700 billion in appropriations for grants to itself, the exact amount authorized by the FAST Act of 2015. $543 million would be for the Northeast Corridor (NEC) and $1.157 billion would be for the National Network. This total is more than double what the Trump Administration requested on Amtrak’s behalf on February 12 and is $100 million higher than the pending Senate appropriations bill for 2018 ($272 million more than the pending House bill).

FY 2017 FY 2018 FY 2018 FY 2019 FY 2019
Enacted House Senate FRA Req. Amtrak
Northeast Corridor 328.0 328.0 358.4 200.0 543.0
National Network 1,167.0 1,100.0 1,241.6 537.9 1,157.0
TOTAL 1,495.0 1,428.0 1,600.0 737.9 1,700.0

(The precise FAST Act authorizations for 2019 are $557 million for the NEC and $1.143 billion for the NN, which still adds up to $1.700 billion. According to Amtrak’s new budget documents, at the time of the FAST Act, the definitions for the new budget accounts weren’t quite set, which explains the $14 million discrepancy between the authorization and the request.)

A total of $15.5 million of the $1.7 billion would be set aside for Federal Railroad Administration oversight of Amtrak and for the expenses of the Northeast Corridor Commission and the State-Supported Route Committee. The remainder would be applied to Amtrak capital and operating expenses.

When looking at the request in terms of operations versus capital, Amtrak expects the Northeast Corridor to run a $441 million operating profit in 2019, all of which would be plowed back into NEC capital expenses. The National Network would run a $573 million operating deficit, all of which would be covered by operating subsidies from the federal appropriation.

NEC Nat’l Network Total
Operations
Income
Passenger Revenue 1,318.8 1,166.0 2,484.8
Access Payments 358.1 404.6 762.7
Other Revenue 90.6 39.5 130.1
   Subtotal, Operating Income 1,767.5 1,610.1 3,377.6
Expenses
Service Line Management 5.4 11.1 16.6
Transportation 349.6 984.1 1,333.6
Equipment 231.9 413.0 644.9
Infrastructure 240.2 93.8 334.0
Stations 55.0 160.0 215.0
National Assets/Corp. Services 444.0 520.9 964.9
   Subtotal, Operating Expenses 1,326.1 2,182.9 3,509.1
Operating Surplus/Deficit +441.3 -572.8 -131.5
Federal Grant for Oper. Subsidies 0.0 572.8 572.8
Operations Including Fed. Grant +441.3 0.0 +441.3

Of the National Network’s $573 million in operating losses, they estimate that $493 million would be losses from long-distance trains and $84 million would be losses on state-supported routes, offset slightly by a $3.4 million profit from access and ancillary operations.

On the capital side, the $441 million in NEC operating surpluses would be combined with a $535 million federal grant, $349 million from borrowing, $213 million from access payments from other railroads, and $13 million from other sources and used to pay for $1.56 billion in NEC capital expenses. For the National Network, the $576 million federal grant would pay most of the $705 million in capital costs.

NEC Nat’l Network Total
Capital
Available Funding
Proceeds From Borrowing 349.0 13.6 362.6
Access Payments 213.3 124.9 338.2
Other 3.2 0.0 3.2
Federal Grant 535.3 576.4 1,111.7
Other Federal 10.2 3.0 13.2
Operating Surplus for Capital 441.3 0.0 441.3
   Subtotal, Capital Funding 1,552.3 717.9 2,270.2
Expenses
Service Line Management 71.6 3.4 75.0
Transportation 35.6 71.0 106.7
Equipment 370.9 283.5 654.5
Infrastructure 696.4 145.3 841.7
Stations 150.5 98.5 249.0
National Assets/Corp. Services 57.6 65.7 123.3
RRIF Loan Repayment 34.9 0.0 34.9
Legacy Debt Repayment 147.8 37.5 185.2
   Subtotal, Capital Expenses 1,565.2 705.0 2,270.2
Capital Program EOY Balance -13.0 13.0 0.0

Amtrak Grants – Advance Appropriations for Future Years

Amtrak has always had a serious case of Trust Fund Envy. Since the Budget Act of 1974, the only way to get contract authority (multi-year mandatory budget authority) from Congress is to have it drawn from an excise-tax-supported trust fund. The federal highway, mass transit formula, and airport aid programs all have access to contract authority and therefore have a kind of certainty to their funding levels in future years (at least until the multi-year reauthorization bill providing the contract authority expires). Multi-year certainty is a good thing where capital programs are concerned.

Amtrak actually came close to trust fund access once – the Senate version of the 1997 tax reconciliation bill would have created an Intercity Passenger Rail Fund supported by a half-cent of the existing gasoline and diesel taxes (see section 9901 of that bill here). But the House killed that provision in conference, and Amtrak has never come close to trust fund access again.

So the FY 2019 budget request (like the 2018 request) asks for the next best thing:

…Amtrak does not receive any trust fund dollars and, as such, we are dependent on discretionary funding via the annual appropriations process. Our discretionary funding originates in the Transportation, and Housing and Urban Development, and related agencies (THUD) appropriations bill, competing with other important priorities beyond transportation needs. This places Amtrak in a precarious position and complicates our annual and long-term capital planning, which can result in investment delays, inefficiencies, and higher federal funding requirements.

We remain committed to the idea of a trust fund for capital investment connected to Amtrak. However, absent Amtrak having access to such a trust fund, Amtrak requests that Congress provide its discretionary funding through a mechanism known as “advance appropriations.” This would provide a predictable funding stream that Amtrak has sought since our creation and would improve our ability to plan.

So Amtrak’s request for grants to Amtrak is not just the $1.7 billion for FY 2019, but also an additional $7.8 billion in advance appropriations to be provided in the FY 2019 bill for the next four years (FY 2020-2023).

FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 Total
Northeast Corridor 543.0 638.2 758.8 831.2 966.3 3,737.5
National Network 1,157.0 1,161.8 1,141.2 1,168.8 1,133.7 5,762.5
TOTAL 1,700.0 1,800.0 1,900.0 2,000.0 2,100.0 9,500.0

If this request is granted (which it almost certainly won’t be – see below), the FY 2020 DOT appropriations bill would then only have to provide appropriations for Amtrak for FY 2024, and so on.

Advance appropriations are not novel – each year, almost $100 billion in discretionary appropriations are advance appropriations provided by bills enacted in prior budget cycles. (They are identified each year in a special section in the back of the Budget Appendix).

Existing Accounts Receiving Advance Discretionary Appropriations
FY 2018
One Year In Advance
Dept. of Education
Education for the Disadvantaged 10,841
Special Education 9,283
Career/Techincal/Adult Education 791
School Improvement Program 1,681
Dept. of Housing and Urban Develop.
Tenant-Based Rental Assistance 4,000
Project-Based Rental Assistance 400
Dept. of Labor
Training and Employment Services 1,772
Dept. of Veterans Affairs
Medical Services 44,887
Medical Support and Compliance 6,654
Medical Facilities 5,435
Medical Community Care 9,409
   Subtotal, One-Year Advance 95,153
Two Years In Advance
Corporation for Public Broadcasting 445
Total, Existing Advance Appropriations 95,598

The reader will note from looking at the table that almost 100 percent of all advance appropriations are only made available one year in advance, and none more than two years in advance. Amtrak is asking for appropriations four years in advance.

From a scorekeeping point of view, advance appropriations are scored against the Appropriations Committee totals in the year the budget authority becomes available for obligation, not in the year in which the appropriations bill is enacted. For example, if Amtrak were to get its five-year $9.5 billion request in the 2019 bill, only the $1.7 billion available in 2019 would be scored against the 2019 spending limits. The appropriators would open the FY 2020 cycle with $1.8 billion in already-enacted Amtrak money on the books and scored against their 2020 totals, etc. etc.

Because advance appropriations provide real money in a way that evades current year budget pressures, the Budget Committees take a dim view of them. Each year’s Congressional budget resolution contains a section limiting advance appropriations to accounts and totals listed in the resolution (see sections 4101 and 5104 of the 2018 resolution for examples). Waiving those restrictions takes 60 votes in the Senate.

Sections 4101 and 5104 of the 2018 resolution apply to FY 2019 appropriations bills as well, so in order to allow Amtrak to get advance appropriations, Congress would have to enact a new budget resolution to allow the money (or else get 60 votes to waive the budget rules in the Senate). And the enactment of the recent bipartisan budget deal eliminates the need for Congress to enact a 2019 resolution, so Amtrak is probably out of luck in terms of getting advance appropriations in this budget cycle.

Mass Transit New Starts.

Not content to ask for $9.5 billion for itself to flow through the Federal Railroad Administration, Amtrak is also asking for money through the Federal Transit Administration’s Capital Investment Grants (new starts) program.

These two projects are part of the $30 billion Gateway Program of rail projects in New York and New Jersey. The new tunnel in particular is the centerpiece of Gateway, and the most time-sensitive. (Gateway as conceived in 2011 was all about increased capacity, but the flooding of the existing Hudson tunnel by Hurricane Sandy in 2013 has made tunnel replacement a safety issue as well, giving it an urgency that the rest of Gateway lacks.)

The $725 million requested by Amtrak for those two Gateway projects (which have shared use between Amtrak and New Jersey Transit trains) are just the tip of the iceberg – the $125 million for the Portal North Bridge would be a down payment towards a total of $772 million in requested CIG appropriations, and the $600 million towards the new tunnel would be a down payment on a requested $6.7 billion total CIG appropriation.

Amtrak’s request for this money was put together before FTA released its FY 2019 new starts report which rated both the Portal North Bridge and the Hudson Tunnel as “medium-low” quality projects which makes them statutorily ineligible for funding under the CIG program. (Unless FTA revises the rating, either on their own (if the project finances change) or if Congress orders them to.)

But even if you believe that Congress should fund half of the new $13 billion tunnel, the CIG program is a poor fit because the program is only authorized at $2.3 billion per year, which has to cover the whole United States. A $6.7 billion funding commitment would dwarf any other commitment made from the CIG program. (Los Angeles had to break its Westside Purple Line extension, which needed $3.7 billion in CIG appropriations, into three separate projects in order to get CIG funding. If Congress had failed to fund either the second or third segment, the first segment would still have been viable. But you can’t stop a new tunnel one-third or two-thirds of the way under the river and get much use out of it.)

In a program where transit agencies are discouraged from submitting projects that need much more than $100 million per year in CIG appropriations, and when no project ever in history has received an annual installment payment of more than $250 million, a project that would need over $600 million per year for a decade is just gigantic.

(Ed. Note: There is one advantage to going with the CIG full funding grant agreement (FFGA) process. Read this epic New York Times report on how cost overruns on rail tunnels in the NYC area are the highest in the world. Then read this language from the FTA CIG grant agreement guidance document: “Additionally, the FFGA ‘locks’ the maximum Federal participation in the project, meaning that any cost increases that might occur subsequent to issuance of the agreement must be borne by the project sponsor.”)

It should also be mentioned that the new starts program is a competitive one, where USDOT is expected to judge all applicants fairly for entry into the program, which has scarce resources and can’t support everyone who wants a new subway or commuter rail project. Accordingly, even though the Secretary of Transportation is a member of the Amtrak Board of Directors by statute, her designee abstained from voting on the budget request, as it might be considered unfair for USDOT to vote to pre-judge the outcome of a discretionary grant process administered by USDOT. (This is also a reason cited by USDOT for withdrawing from the board of the Gateway Development Corporation last summer.)

Amtrak is also requesting appropriations report language forcing FTA to give “pre-award authority” to Gateway:

The FTA currently provides pre-award authority for activities ad- vanced during the project development and engineering phases, including design, engineering, property acquisition and environmental review. These eligible costs remain part of the project scope in an eventual FFGA and local funds expended are considered local committed funds. Due to the unique nature and complexity of certain major projects, including the sheer size of such projects, the myriad stakeholders, and various jurisdictional complexities due to multiple transportation modes being involved, it is even more critical that work be advanced on the projects while the FFGA is being developed and that any funds expended by a local entity on eligible project costs count towards the local match requirement. Therefore, the FTA is directed to extend pre-award authority for eligible construction costs for projects that exceed $1,000,000,000 in total project cost and which benefit both local transit and intercity passenger rail.

Other Rail Grant Programs. 

The FAST Act of 2015 established three new discretionary grant programs to be run by the Federal Railroad Administration (subject to annual appropriations). The Federal-State Partnership for State of Good Repair  grant program is authorized at up to $255 million in 2019, but Amtrak supports “at least” $500 million (the amount provided by the pending House 2018 appropriations bill as a way for chairman Rodney Frelinghuysen (R-NJ) to park money for the Gateway Program. The Consolidated Rail Infrastructure and Safety Improvements is authorized for $300 million, and Amtrak supports “at least” that much. And the Restoration and Enhancements grant program is authorized at $20 million, a level which Amtrak also supports.

That is at least $820 million in grants that Amtrak wants access to. By comparison, the Trump Administration wants to zero out all three programs in the 2019 budget. and the 2018 Senate appropriations bill only provided a total of $124 million collectively for the three grant programs.

Other Changes in Law.

The back of Amtrak’s grant request document, starting on page 42, contains a plethora of proposed changes in law and committee report language. Some of those include:

  • A new law to give Amtrak the right to sue freight railroads in federal court to enforce Amtrak’s access rights on other railroads.
  • A new law to synchronize Buy America requirements for projects that get funded with a combination of Amtrak money and either transit or highway money (or both), since the Buy America rules for projects funded with each type of money are different.
  • A new law giving Amtrak an exemption from the Freedom of Information Act similar to the exemption enjoyed by that other quasi-government entity, the Post Office.
  • A new law making it a felony to assault, intimidate, or interfere with the duties of an Amtrak crew member.
  • A new law exempting food and beverage sold on Amtrak trains from state and local sales taxes.
  • New appropriations report language encouraging President Trump to nominate members to the Surface Transportation Board.
  • New appropriations report language directing the Secretary of Transportation “to make any necessary changes to the department’s procedures so that it may delegate authority to Amtrak to act as an agency’s surrogate and undertake an EIS when a federal agency is considering approving or funding projects on or impacting the Northeast Corridor or Amtrak projects on the National Network.”

REMINDER: All transportation-related FY 2019 budget documents are permanently linked at www.enotrans.org/fy19 so bookmark that site if you think you might ever want to find Amtrak budget documents in the future.

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