# PRIIA 2008 route funding responsibilities in 2008 vs. today



## Anthony V (Mar 11, 2016)

When I asked a question concerning whether states or the federal government would fund any possible new long distance route (Yes, I know it's a longshot for such a new route to happen), I was told that the PRIIA 2008 provision that established the 750 mile cutoff between long distance and corridor services, and thus their funding source, only applied to the network as it was in 2008, and that any new long distance route made today would have to be subsidized by the states, regardless of its length. Is this true?


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## neroden (Mar 11, 2016)

No. The rule is much squishier than that.

The fact is that Amtrak will not start any new route without guaranteed earmarked outside funding -- unless it's profitable-before-overhead like Lynchburg is -- because Amtrak has no reason to expect increased general-fund funding, and needs to preserve that funding for the existing service.

Amtrak is required to use the PRIIA rules for cost -- which include lots of overhead allocation -- for routes under 750 miles. For such a route, Amtrak will only start the route if the state covers the PRIIA-specified allocation.

For a route of more than 750 miles, Amtrak will start the route if the states cover the *net avoidable costs*. They made this quite clear with regard to the Gulf Coast situation. If the Federal government provided an earmark for the route (only usable for that route) which covered the net avoidable costs, I am sure Amtrak would also start the route. This is Amtrak policy, this is not the law, but it is a policy which makes sense given all the other demands Amtrak has on its limited general-fund money.

If a >750 mile route would actually provide profit before overhead, Amtrak might start it without subsidy. The only possibilities for that which I see in the near future are a daily Cardinal, and through cars from the Pennsylvanian to the Capitol Limited.


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## WoodyinNYC (Mar 11, 2016)

And iiuc, the _Lynchburger _was not guaranteed to be "profitable-before-overhead". So the Commonwealth of Virginia had signed up to cover the anticipated loss. Turned out to be wildly successful with twice the expected ridership and no operating loss. Virginia was off the hook. It was able to transfer the allotted subsidy funds to the next project , the _Norfolk _train, which may not be needing a subsidy either.

This is why I'm optimistic that Virginia will agree to cover any additional losses from a daily _Cardinal._ There won't be any losses, only a harmless guarantee. Now all we need is for Amtrak to get some cars to make up the third consist needed.

Yeah, I know, it's a helluva way to run a national system, passing the hat to small cities and towns in Indiana, in Kansas n Colorado, along the Gulf Coast, and to a handful of helpful states. But at least the national system is still running, and even poised to grow in this jerry-built way.


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## Philly Amtrak Fan (Mar 11, 2016)

WoodyinNYC said:


> This is why I'm optimistic that Virginia will agree to cover any additional losses from a daily _Cardinal._ There won't be any losses, only a harmless guarantee. Now all we need is for Amtrak to get some cars to make up the third consist needed.


And for Buckingham Branch and/or CSX to approve of a daily frequency and for the tracks to be upgraded. I thought I saw at the railroad.net forum that a portion of the route is going to be downgraded (30 mph?) The rate things are going, it would be cheaper to start a new train than to upgrade the Cardinal to daily status.


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## neroden (Mar 12, 2016)

A daily Cardinal should generate enough money to cover track maintenance. If one of the states has the sense to buy the tracks...


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## Anthony V (Mar 12, 2016)

neroden said:


> No. The rule is much squishier than that.
> 
> The fact is that Amtrak will not start any new route without guaranteed earmarked outside funding -- unless it's profitable-before-overhead like Lynchburg is -- because Amtrak has no reason to expect increased general-fund funding, and needs to preserve that funding for the existing service.
> 
> ...


What are some examples of costs labeled as "Net Avoidable Costs?"


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## neroden (Mar 12, 2016)

Oh. Well, cost of fuel, cost of paying the condutors and engineer, cost of maintaining the train cars and locomotive, payments to "host railroads", that's all avoidable costs. (By "net", I mean that ticket revenue is netted against those costs.)

Unavoidable fixed overhead costs include a percentage of the cost of running the reservations system, a percentage of the cost of Amtrak HQ, a percentage of the cost of operating New Orleans Union Station, Chicago Union Station, New York Penn Station, etc., a percentage of the cost of Amtrak's central backshops at Beech Grove, and so on.

One of the weird things about railroads -- which you might not realize until you look into the economics of it -- is that these overhead costs are HUGE. They're much larger than the avoidable costs.


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