It certainly would help if no specific language on the subject was written anywhere. And, if leeway was on the side of Amtrak, any "surplus" was treated with very closely monitored diligence and spent wisely. If the funds were, for example, spent on non-revenue things like new/refurbished business cars (that passengers never get to step foot in) or a new set of office furniture at 60 Mass., then you can be rest assured language to the contrary would have a much higher likelihood of surfacing later on that unused monies must be returned to the Fed. I would hope Boardman and Co. were not that stupid and, as Jis stated, pay for the Viewliners (and/or some exercised options on more Viewliners or Diesel Fleet replacements.)
House Passes 2015 THUD ... $1.4 billion for Amtrak
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This is a good question that I don't think anyone quite knows the answer to...there are losses on individual routes that could "account for" the whole amount and then some, profits on other routes...so a lot of it probably depends on the exact phrasing of the law(s) in question.
wolfspirit
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Legalese portions copied from the funding bill:
I think that says that they apply for money for cover operating losses on particular routes, which would mean pick a few LD routes and you have your $250 million operating loss.
IANAL, so I could be wrong on that interpretation.
(So that none of you have to try and find it in the bill)
I think that says that they apply for money for cover operating losses on particular routes, which would mean pick a few LD routes and you have your $250 million operating loss.
IANAL, so I could be wrong on that interpretation.
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Blackwolf:
I agree on all counts. It at least sounds like Amtrak should be able to get a block of the funding to cover seasonal losses in Jan/Feb while retaining some control over surpluses from peak season(s). It also does sound like, should Amtrak wish to do so, they could do what was suggested and tender a few reports on some LD trains and use that to bag most or all of the amount.
As to the Viewliners...oh, we can all wish for that. I have little doubt that Amtrak could somehow manage to exercise every option available to them and put those cars to good use.
I agree on all counts. It at least sounds like Amtrak should be able to get a block of the funding to cover seasonal losses in Jan/Feb while retaining some control over surpluses from peak season(s). It also does sound like, should Amtrak wish to do so, they could do what was suggested and tender a few reports on some LD trains and use that to bag most or all of the amount.
As to the Viewliners...oh, we can all wish for that. I have little doubt that Amtrak could somehow manage to exercise every option available to them and put those cars to good use.
Thanks for posting that because I was going to pull out the text myself. Yes, we could be wrong on the interpretation because there is a 2008 PRIIA act and many other overlapping federal laws guiding what Amtrak can do with its federal funding. As background, in the September 2014 monthly report Route Performance Table:1. The Acelas and NE Regionals generated a hefty fully allocated operating surplus of $482 million. (Acela $308M, Regionals $176M)
2. The state supported corridor trains had a fully allocated operating loss of $85 million (from shared overhead)
3. The LD trains had a fully allocated operating loss of $530 million.
So, when Amtrak states that its total operating loss was only $133 million, that is because of the surplus from the NEC. A lot of people on the railroad forums don't appear to really grasp that fact. The simple interpretation is that for FY14 Amtrak can apply the $340 million in operating subsidy to cover the total loss for the state corridor trains and part of the losses for each LD train up to the $340 million amount. The NEC surplus is used to cover the remaining LD losses with $207 million leftover. Then it can allocate the $207 million to pay for the ACS-64 lease payments, Viewliner IIs, equipment overhauls, maintenance, and capital improvement projects. That said, I expect that this is way too simplified interpretation of how they can handle the NEC surplus and operating subsidies.
The danger is if in FY16 Congress requires that most of the NEC surplus be plowed back into the NEC without increasing the federal operating subsidy enough to cover the LD train losses, the western LD trains will be left very exposed w/o enough subsidy to run them. In FY15, there will be only $250 million for operating losses, so more of the NEC surplus will have to be tapped. But Amtrak is getting more in capital grants, so it may even out in the end.
neroden
Engineer
The way it's written is interesting. Suppose, for instance:
Train "A" makes an operating profit of $30 million
Train "B" requires an operating subsidy of $60 million
Then Amtrak is allowed to apply $60 million of its Congressional "operating" funding to train B, while taking the profit from train "A" and reinvesting it in capital expenses. (Also, Amtrak is explicitly allowed to keep any unused operating subsidy around from one year to the next.)
Worthy of note: Amtrak is still allowed to transfer funds "between business lines" in unlimited amounts, as far as I can tell.
2016 is another year. We'll see whether the Republicans in Congress push lunatic, shoot-self-in-foot policies when they actually have a chance of being enacted; often they only push them when they have no chance of being enacted, and back off when it starts to seem possible. Then again, sometimes they do keep pushing their shoot-self-in-foot policies.
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FWIW, the long-distance trains had roughly $439.7 million in overhead loaded onto them as of 2012 (this may have changed, but it's unclear how or in what direction). So it's quite impossible for $250 million in operating subsidy to cover that overhead. It is obviously justifiable to transfer the entire "surplus" from the NEC ($482 million) to cover this overhead, since if the long-distance trains weren't running, most of the overhead would fall back on the NEC or the state-supported trains.
The overhead appears to be allocated in an arbitrary manner probably mostly based on train-miles, unrelated to actual sources of expense; loading overhead on the services which run further, more intensively, and more frequently, as opposed to the ones which sit in the yard a lot. So the long-distance and NEC services would be heavily loaded, while the state-supported services are probably getting a big break here.
If the NEC were a standalone business, it would lose money even before considering capital costs. It can't, by itself, cover the overhead which is arbitrarily allocated to the so-called "long-distance" and state-supported trains. The only solution is expansion, to leverage the same overhead over more services.
Fully allocated numbers are chimeras.
Of course if any one long-distance train were cancelled -- say, the Southwest Chief -- its allocated overhead ($38.8 million) would just end up being spread around the other trains, NEC, state-supported, and long-distance, and make all their financial performances look worse. Cancelling *all* the so-called long-distance trains would only have saved $151 million in 2012 unless overhead could be eliminated. And probably saved even less in 2014 (if overhead stayed constant, only $89.8 million). And that's without considering losses in connecting ticket revenue.
Compare this to Amtrak's net operating loss of $133 million and you see that cancelling trains does little good financially. The western trains are expensive to run (something like $100 million a year), but what's really expensive is the overhead of running a railroad (something like a billion a year).
The Auto Train, Silver Meteor, and Palmetto are already contributing profits to help cover overhead. My spreadsheet predicts that in 2016 the Star and LSL most likely will be too. But due to the kooky Congressional accounting, these five will need roughly $159 million dollars in "operating subsidy" to cover the overhead which has been arbitrarily ladled onto them.
Apparently most Congressmembers don't understand the simple concepts of overhead or fixed costs, so Boardman may find himself trying to explain the situation to them in 2015.
Train "A" makes an operating profit of $30 million
Train "B" requires an operating subsidy of $60 million
Then Amtrak is allowed to apply $60 million of its Congressional "operating" funding to train B, while taking the profit from train "A" and reinvesting it in capital expenses. (Also, Amtrak is explicitly allowed to keep any unused operating subsidy around from one year to the next.)
Worthy of note: Amtrak is still allowed to transfer funds "between business lines" in unlimited amounts, as far as I can tell.
2016 is another year. We'll see whether the Republicans in Congress push lunatic, shoot-self-in-foot policies when they actually have a chance of being enacted; often they only push them when they have no chance of being enacted, and back off when it starts to seem possible. Then again, sometimes they do keep pushing their shoot-self-in-foot policies.
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FWIW, the long-distance trains had roughly $439.7 million in overhead loaded onto them as of 2012 (this may have changed, but it's unclear how or in what direction). So it's quite impossible for $250 million in operating subsidy to cover that overhead. It is obviously justifiable to transfer the entire "surplus" from the NEC ($482 million) to cover this overhead, since if the long-distance trains weren't running, most of the overhead would fall back on the NEC or the state-supported trains.
The overhead appears to be allocated in an arbitrary manner probably mostly based on train-miles, unrelated to actual sources of expense; loading overhead on the services which run further, more intensively, and more frequently, as opposed to the ones which sit in the yard a lot. So the long-distance and NEC services would be heavily loaded, while the state-supported services are probably getting a big break here.
If the NEC were a standalone business, it would lose money even before considering capital costs. It can't, by itself, cover the overhead which is arbitrarily allocated to the so-called "long-distance" and state-supported trains. The only solution is expansion, to leverage the same overhead over more services.
Fully allocated numbers are chimeras.
Of course if any one long-distance train were cancelled -- say, the Southwest Chief -- its allocated overhead ($38.8 million) would just end up being spread around the other trains, NEC, state-supported, and long-distance, and make all their financial performances look worse. Cancelling *all* the so-called long-distance trains would only have saved $151 million in 2012 unless overhead could be eliminated. And probably saved even less in 2014 (if overhead stayed constant, only $89.8 million). And that's without considering losses in connecting ticket revenue.
Compare this to Amtrak's net operating loss of $133 million and you see that cancelling trains does little good financially. The western trains are expensive to run (something like $100 million a year), but what's really expensive is the overhead of running a railroad (something like a billion a year).
The Auto Train, Silver Meteor, and Palmetto are already contributing profits to help cover overhead. My spreadsheet predicts that in 2016 the Star and LSL most likely will be too. But due to the kooky Congressional accounting, these five will need roughly $159 million dollars in "operating subsidy" to cover the overhead which has been arbitrarily ladled onto them.
Apparently most Congressmembers don't understand the simple concepts of overhead or fixed costs, so Boardman may find himself trying to explain the situation to them in 2015.
tommylicious
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it's all legacy pension costs.
Excellent point about most Congress Critters not understanding budget matters and economics, most Americans would be astounded to know how many really ignorant people get elected to Congress!!
All they have time for after spending most of the day raising money for the next election is reading talking points that their staff gives them! ( and these are provided by their owners, the billionaires and corporations that buy our politicians!)
Idea: Members of Congress can serve 2 terms ( just like the President) be paid the National Minimum Wage,( watch it go up to $100 an hour) a per diem and housing allowance of the same amount paid to our service members,and No Federal Pension, they can invest in 401Ks and pay into Social Security and Medicare and buy health insurance just like most working Americans!
And Pigs can fly!!!
All they have time for after spending most of the day raising money for the next election is reading talking points that their staff gives them! ( and these are provided by their owners, the billionaires and corporations that buy our politicians!)
Idea: Members of Congress can serve 2 terms ( just like the President) be paid the National Minimum Wage,( watch it go up to $100 an hour) a per diem and housing allowance of the same amount paid to our service members,and No Federal Pension, they can invest in 401Ks and pay into Social Security and Medicare and buy health insurance just like most working Americans!
And Pigs can fly!!!
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I fully expect Amtrak to start finding ways to migrate overhead to the NEC as a defensive measure. Overhead is fungible, and I suspect a good deal will work its way over to the NEC, particularly if any major capital projects start happening. Reallocating overhead should do the trick; after all, per Boardman's presentation, $250m/yr should cover the direct LD losses.
Likewise, I believe Amtrak might be able to find some workarounds to get capital funding into the LD columns (for example, "charging" LD trains for the use of their equipment and "paying" for the equipment use out of capital funding...which would in turn be offset by using free NEC funds to cover some of the physical plant stuff).
Likewise, I believe Amtrak might be able to find some workarounds to get capital funding into the LD columns (for example, "charging" LD trains for the use of their equipment and "paying" for the equipment use out of capital funding...which would in turn be offset by using free NEC funds to cover some of the physical plant stuff).
jis
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That would rise to the level of hanky-panky regularly practiced every year by the Garden State!
neroden
Engineer
Unfortunately a bunch of the overhead allocation rules are now carved in stone by the PRIIA agreements with the state governments. This limits Amtrak's ability to reallocate it.
If I'm right about the train-mile style of overhead allocation, then the best thing which could happen for the overhead would be for a whole lot more state-supported services to start up -- the new services would have overhead allocated to them, and away from the existing services. Running more trains on the NEC would have similar effects, transferring more overhead to the NEC.
If I'm right about the train-mile style of overhead allocation, then the best thing which could happen for the overhead would be for a whole lot more state-supported services to start up -- the new services would have overhead allocated to them, and away from the existing services. Running more trains on the NEC would have similar effects, transferring more overhead to the NEC.
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Shocking! Just shocking!That would rise to the level of hanky-panky regularly practiced every year by the Garden State!
Nathanael: Yes, there are carved-in-stone agreements with the states (though by contrast, in most cases Amtrak is also getting significant payments in exchange for this); however, the main issue is NEC/LD reallocation...and there is a lot of room to move things around there (there's already been some obvious shuffling within the NEC as far as I can tell....if you look at the 09-2013 and 09-2014 MPRs for FY13's numbers:
(1) Non-OPEB costs charged to the NEC increased by $2m.
(2) A bit over $11m was transferred from the Regionals to the Acela.
(3) OPEB/IG costs went up as well, though this seems to have been due to the added inclusion of the IG's office in the calculation.
One point of data is not a pattern, but I would be more surprised than not if I did not see a similar pattern of loading additional overhead onto the Acela over time.
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jis
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I suspect that you perhaps wanted to say that you would not be more surprised than not? In other words if the pattern of loading additional costs onto Acelas came to pass, you would not be surprised, right?
Rather than looking at the monthly reports and guessing on cost shuffling between the NEC and the other business lines, I suggest that one should read the combined FY14 budget FY15 Budget justification and FY13-18 Five Year Financial Plan. The FY14 budget specifies the budgeted allocation of direct and shared costs in detail for the NEC (table Exhibit 4-2), State supported corridors (Exhibit 5-2), and the LD trains (Exhibit 6-2). The following x-3 exhibit tables allocate the projected capital investments for each business line. There is a lot of information in that document.
After a day of considerable political drama, the House by a narrow margin has passed the FY15 appropriations which now goes to the Senate. So the FY15 operating subsidy will be $250 million. With that development, I would think that the plan to end the "cross-subsization of operating losses" in FY15 gets postponed until FY16. If Amtrak can do that. From page 38 of the FY14 budget document:
The FY15 budget should be posted sometime in later January or February; we'll see what it says then.
Does anyone know what Amtrak's obligations are to Metro-North or the MBTA? IIRC, those are the only two other "owners" unless station owners are counted (and even then, I think Amtrak owns, entirely or in large part, all of the major stations along the line).
The NEC Commission's charter is to develop a cost allocation formula for the NEC besides coordinating plans for the NEC. Amtrak's obligations and shared costs outlays presumably would be defined in a report from the Commission whenever the cost allocation formulas are agreed to.
For the major stations, South Station is owned by the MBTA. DC Union Station is owned by US DOT and operated by the Union Station Redevelopment Authority. NJ Transit owns the Newark NJ station. Amtrak owns the BAL, WIL, PHL, NYP, and Providence stations. So like the NEC tracks ROW, ownership of the major station assets is complicated.
jis
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All stations on the NEC in NJ except Newark Airport, are owned by NJT. Newark Airport is owned by PANYNJ. So in addition to Newark Penn Station, other stations served by Amtrak in NJ such as Trenton, Metropark, New Brunswick and Princeton Jct., are owned by NJT, and Newark Airport by PANYNJ.
New Rochelle is owned by MNRR and City of New Rochelle. Stamford and New Haven are owned by the State of Connecticut.
New London station building is owned by New London Station LLC, and platform by Amtrak.
So yeah. It is all over the place.
But for stations to be used by the proposed Super-Express in the NEC Future proposal(WAS, PHL, NYP, BOS), except for BOS, they are all directly or indirectly Amtrak operated at present. Once you get to the next tier of service you start hitting stations that are not Amtrak operated at least at present.
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jis
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I believe it does. PRR60 knows the details. That's why I counted WAS as pretty much Amtrak.
On the Great American Station website, Washington Terminal Company is listed as owning the DC Union Station platforms and tracks. I figure that is the holding company owned or mostly by Amtrak. US DOT owns the station and parking garage.
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That makes sense.
Sliding around to the report...well, I looked at the financial/business plan numbers for FY15-18 and I think I want to scream. The $145m or so that is deducted for infrastructure responsibilities, etc. is all well and good...I'm not going to dispute that. The "capital contribution" charge-off, however, seems to be yet another piece for the exhibit "Amtrak Accounting and Modern Art: A History". It frankly comes off as an "excuse charge", and while I have no doubt that Amtrak can come up with valid and deserving projects for it to go towards, absent a clear use it comes off as something of an accounting slush fund to make sure that nothing is crossing between lines...
...even though it stands that, seeing as Corporate Development is also expected to kick in $80m/yr, something is going to end up crossing lines somehow.
Particularly considering that Amtrak has had better luck getting money for capital projects than operating funds, this seems to be complete and utter stupidity on a spectacular order if it was not done as a result of some forced mandate.
Edit: There's one possible saving grace: The LD trains still have a lot of capital expenditures listed (totaling about $250-300m/yr). Other than the Viewliner IIs (which won't eat up that much), does anyone know what's going on here?
Sliding around to the report...well, I looked at the financial/business plan numbers for FY15-18 and I think I want to scream. The $145m or so that is deducted for infrastructure responsibilities, etc. is all well and good...I'm not going to dispute that. The "capital contribution" charge-off, however, seems to be yet another piece for the exhibit "Amtrak Accounting and Modern Art: A History". It frankly comes off as an "excuse charge", and while I have no doubt that Amtrak can come up with valid and deserving projects for it to go towards, absent a clear use it comes off as something of an accounting slush fund to make sure that nothing is crossing between lines...
...even though it stands that, seeing as Corporate Development is also expected to kick in $80m/yr, something is going to end up crossing lines somehow.
Particularly considering that Amtrak has had better luck getting money for capital projects than operating funds, this seems to be complete and utter stupidity on a spectacular order if it was not done as a result of some forced mandate.
Edit: There's one possible saving grace: The LD trains still have a lot of capital expenditures listed (totaling about $250-300m/yr). Other than the Viewliner IIs (which won't eat up that much), does anyone know what's going on here?
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neroden
Engineer
(Emphasis mine)
This vague phrase does allow for fairly massive reallocation of overhead. I'm quite sure that the central reservations system is used primarily by NEC and state corridor passengers, for example, and I'll bet it has been overallocated to the long-distance trains in the past. Same with the Quik-Trak machines, the staff at staffed stations which are shared between "long-distance" and "corridor" routes, the cost of the central maintenance shops, and so on.
The PRIIA 212 requirement is frankly absolute *gibberish* for stuff internal to Amtrak, because when you have shared overhead, it's completely impossible to avoid "cross subsidization". Every service is subsidizing every other service by virtue of sharing the overhead.
However, one effect of the "no cross subsidization" requirement, if it's actually implemented, should be to charge freight tenants a *LOT* more. The freight beats up the tracks and incurs a huge proportion of the track maintenance costs. Amtrak's current accounting system shows that Amtrak is losing a lot of money on hosting freight trains, which is visible every year in the numbers. (And that Amtrak is cross-subsidizing the commuter trains by a large amount too.) I'm not sure how Amtrak is going to be able to raise the prices for those non-Amtrak tenants, though, since there are probably easements and contracts which run for years into the future. This provision is likely to end up being a dead letter.
If you went strictly by ridership numbers, the LD trains would get about 1/6-1/7 of the reservation system. If you go by share of revenue for something, it's about 1/4. If you go by passenger miles, I don't recall but I think it would put a bit more towards the LD system...and I don't recall where train miles (or car miles) puts you. And on the other end, if you went by train frequencies I think LD would get about 10% of the overhead.
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T
twa904
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Shouldn't the allocation of cost for the res system be based on the number of passenger bookings for each type of train, LD, NEC, and State supported. Therefore, most of the cost would be against the NEC.
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