Summary: The elimination of federal operating support for Amtrak depends on the railroad's ability to boost revenues, control costs, and provide customers with high-quality service. GAO testified that Amtrak's financial condition is still very perilous and heavily dependent on federal capital and operating funds. Although Amtrak has developed a plan to increase revenues and reduce cost growth, passenger revenues have been declining and the gap between deficits and federal operating subsidies has begun to grow. At the end of fiscal year 1996, the gap between the operating deficit and federal operating subsidies totaled $82 million. Capital investment is critical if Amtrak's business plans are to succeed. Amtrak will need billions of dollars to bring its equipment and facilities systemwide and its tracks in the Northeast Corridor into a state of good repair and to introduce high-speed rail service between Washington and Boston. It will be difficult for Amtrak to achieve operating self-sufficiency by 2002 because of the environment in which it operates. First, Amtrak is depending on capital investment to support its business plans--specifically, an increase in capital funding support, possibly from a dedicated funding sources like the Highway Trust Fund. GAO cautions that the current budget environment may limit the amount of money actually made available to Amtrak. Second, Amtrak is relying greatly on revenue growth and cost containment to replace federal operating support. The economic and competitive environment in which Amtrak operates may limit revenue growth, however, and Amtrak will find it hard to take those steps necessary--such as route and service adjustments--to cut costs.
