Dateline: March 20, 2006
That’s no way to run a railroad, says the U.S. Congress’ Amtrak Working Group (AWG), in finding that mismanagement within Amtrak has led to a lack of confidence by the public and unpredictable funding from Congress.
After reviewing reports by the Government Accountability Office (GAO) and the Amtrak Inspector General, a majority of the AWG agreed that Amtrak could save $250 million a year without affecting its service in the Northeast Corridor.
The AWG has published its findings in "Amtrak in the 21st Century" (.pdf), a report to the House Committee on Transportation.
In a press release, U.S. Rep. Richard Baker (R-Louisiana, 6th), the Chairman of the AWG, stated, "This report is not about attacking Amtrak but about taking steps to halt the unacceptable financial bleeding it has experienced for far too long."
Accountability to taxpayers demanded
Baker goes on to suggest that before Amtrak can achieve financial success, it will need to get its financial books in order. In the post-Enron days of corporate accountability, states Baker, "Amtrak's finances should be at least if not more transparent to its stakeholders, the American taxpayer." Baker urged legislation that would hold Amtrak to the same financial reporting standards as private corporations.
Some of the ongoing questions raised in the AWG report that Amtrak management will be called on to answer include:
- Where is Amtrak’s comprehensive mission statement to guide the corporation?
- Why hasn’t Amtrak implemented a financial disclosure program to make its operations transparent to the Congress, its creditors, and the public?
- Why doesn’t Amtrak have a comprehensive cost control strategy considering it is losing over $1 billion annually?
- Why does Amtrak allow a bridge on the Northeast Corridor to fall into disrepair while wasting tens of millions of dollars on inefficient operations?
- Why hasn’t Amtrak adjusted its route system in over a decade to align it with market demands?
- Why does Amtrak’s in-house legal office consistently fail to follow its own billing guidelines?
Trouble ahead, trouble behind
In November 2005, a two-year investigation by the Government Accountability Office (GAO) into Amtrak’s management and spending practices concluded “while Amtrak has recently reduced costs, revenues are declining faster than costs, leading to operating losses exceeding $1 billion annually. These losses are projected to grow by 40 percent within four years; no effective corporatewide cost containment strategy exists to address them.”
Numerous procurement abuses, inadequate financial controls and questionable spending, uncovered by the GAO led them to predict that Amtrak’s current $1 billion annual operating loss will increase by $400 million a year by the year 2009.
