Sunday, November 23, 2008

Something Big

Since the inception of Amtrak, the model for Passenger Rail in this country has been - with few exceptions - one of subsidize and recover. This means subsidize as much of the train operations budget as is politically possible, and recover as much as possible of the costs of train operations from the farebox. The few exceptions are excursion trains, since even commuter rail is handled in the "subsidize and recover" model.

Perhaps we are ready for a new model. A big idea.

Looking at some photographs of New York Central varnish from the 1930s and 1940s got me thinking: We could look at this the same way banks are required to look at deposit insurance. Banks take a percentage of every dollar and put it into the FDIC.

Think about this: Instead of taking money out of transportation taxes and out of other general taxes to fund Passenger Rail, why don't we just require every railroad to pay a percentage of their profits towards passenger service.

You may say that was how railroads got in trouble with passengers to begin with. And I would say you are right. But railroad of the time were trying to serve every community on most routes and were doing it with lots and lots of equipment and heavy schedules. I think that if the current Amtrak route structure were imposed on the host railroads, a percentage of freight revenues would be enough, in our day, to operate most, if not all of Amtrak, maybe even double the routes currently available. I believe that it would not cramp the style of the profitable railroads.

You may also say this is a bad time to start imposing an effective tax on profitable businesses, as the times are telling us that profitable businesses are going to be few. But what better time than when railroads are flush with cash? Should we wait until the whole economy is in shambles?

If it worked, this would be a way to ease railroads back into the habit of operating and funding passenger service, not just grudgingly allowing passenger trains to operate on tracks built in the public interest.

Yes, there are consequences. Shippers would effectively be paying for passenger rail in rates that might be higher. Congress would have to resist the temptation to allow (or worse, mandate) that all costs thus incurred be passed on to the shippers. And initally, reduced service would result on already crowded lines. Benefits would be forthcoming with patience. Business would benefit from increased availability of travel and lower cost. Removing automobiles from roadways would relieve environmental pressures on all businesses. Fuel savings would be great, and all businesses would benefit from a reduced dependence on foreign oil.

I'm sure I haven't thought of all the positives and negatives here. Anyone want to jump in and enlighten me if you think this is a bad idea? Otherwise, maybe we can write some letters to the new Congress and the new president. Maybe there are other new and better ideas out there. But the old model isn't working, hasn't for a long time. Let's start something big.

© 2008 - C. A. Turek - mistertrains@gmail.com

5 comments:

Ray said...

Mr. Trains - Like your thinking - I have a few other ideas...

The FAA collects nearly 11 billion per year for the Airport and Airway Trust Fund (AATF). This is for capital.

The USDOT's highway trust fund takes in 23 billion. Also for capital.

Both these funds are specifically designed to facility capital spending for intercity/interstate transport.

A big idea would be to BLEND these two funds with the existing Amtrak capital budget to create a national transportation infrastructure fund.

Next, require state DOTs to maintain rails (as we do with highways and runways) to a Federally determined grade. They would do this from their own gasoline tax.

Finally, provide tax subsidies or make it a federal licensing requirement for AIRLINES to get into the intercity rail passenger business. Condition licensing on a percentage of air passengers - 5% of total carriage. These enterprises are best equipped to get into this business. They know how to market, operate. They have all the existing corporate infrastructure and knowledge.

Just a few thoughts.

Ray said...

We could conditionally relax airline ownership rules to permit more foreign investment - as long as the airline agreed to operate passenger trains.

Anonymous said...

As much as I support the idea of a 'pax tax' on freight rail, I believe the time for such a proposal has come and gone.

I'm not too familiar with the unprofitable 1960's and 1970's of U.S. railroading, but it seems the last thing congress would want to do in their creation of Amtrak was place another burden on the re-organizing and dysfunctional rail carriers such as Southern Pacific and PennCentral.

It seems a 'pax tax' would only be fair since the government (or the people) did take over unprofitable passenger service in order to keep the railroads chugging along AND continue our nation's only passenger rail service. Now, with railroad giants such as BNSF and UP's influence over Washington, I can't see this happening today.

Your idea is very bright and I hope the new power in Washington can cook up a dedicated funding source such as this one. This benefits of such a scheme are endless. Along with your proposals, a 'pax tax' could also fund improvements along passenger routes and linking commuter services, therefore increasing the timeliness and profitability of freight carriers.

Anonymous said...

The idea of taxing the railroads for passenger service goes against the formation of the National Railroad Passenger Corporation as a means for removing the obligation and burden of passenger service from the railroads. As it is, railroads suffer various inequities in taxing compared to other modes simply because they are private and operate under closed access.
A transportation trust fund from an increased fuel tax would need to be sufficiently broad meet needs for maintenance and expansion for highways, railroads, and aviation and allow discretionary improvements in transit and intercity rail as strategies for congestion mitigation and for auto independence. Railroad improvements would include grade crossing elimination, grade separation, and relocation to enhance service and mitigate environmental or community impacts.

mistertrains said...

Just had to add to the last one. Amtrak didn't lift a burden, it was a political package to make train-offs less offensive. History shows that simple de-regulation might have just kept more passenger trains running. There always would have been that temptation for private equity to cut loose the costliest parts of the operation, but who's to say how the economy itself might have developed if the US hadn't put all it's transportation eggs into trucks (for freight) and air transport (for mass intercity transit).