Christie withholds Amtrak payments from NJT

[Carolina Special]

Actually, I do appreciate those efforts to show OTR. But having worked as an analyst in an accounting department for 11 years, I fail to see how you can exclude allocations from the process.

Allocations are a PITA to produce. I've worked with them a little bit. The metrics used to allocate expenses by Amtrak may or may not be the best ones, but they do count somewhere in the business. And it doesn't take a whole lot of allocated expenses added to the LD trains to show a loss in the aggregate. Some trains will be better than others, naturally: but to really see the train profitability the allocations specifically required to run/manage that train need to be broken out at the individual train level, not just look at OTR by train IMHO. Yeah, that is harder to do as an outsider to the Amtrak accounting department.

I would love to have been able to exclude the allocations from the income statements I produced at my last employer. We were nicely profitable before allocations, not so much afterwards. My company wouldn't have been forced to merge and I'd still have a job (absent current health issues). Allocation expenses do matter.

I will say that I don't agree with Amtrak not readily providing a reconciliation to GAAP when they tout that the company covered xx percent of operating costs in their press releases. I've been hunting fruitlessly for that recons for a couple of weeks on the Amtrak web site and web searches. If Amtrak were regulated by the SEC as a public company, the recons would be required with their press releases. As someone who has produced recons for EBITDA and other metrics for earnings releases and investor presentations, this is extremely annoying to me.

 

[jis]

Yet every transportation mode that claims any profitability is essentially profitable above the wheel, because all of the below the wheel stuff is publicly funded to a large extent. It is necessary to frame Amtrak service cost in the same framework to explain things to the Congresspeople.

This is in the same spirit that Neroden tries to tease out the actual OTR financial situation of the LD trains and finds many of them to be close to profitable or already so. Too bad Amtrak has not done so even though they are required to do so.

Unless the discussion can be framed with clear separation between over the rail and underlying infrastructure costs and revenues, we have no hope of moving the discussion forward in Congress and with the administration.

But I can see that some do not consider that important.

So when the discussion is about the long distance trains, should any payments made to the host railroads be excluded? After all, that represents the under the wheel costs.
jb

No. Trackage charge is not under the wheel cost. It is road toll which is part of the expense of running a service. On the NEC Amtrak is supposed to include a trackage charge for each class of service in their cost of operation. The NEC Commission has been tasked to regularize these so that the assessed trackage charges for all users substantially pay for maintenance of the tracks and facilities leaving the capital improvements as separate subsidizable items.
The commuter agencies are having conniptions about this because they know that they grossly underpay for the services they get. Which makes Christie's present bloviation particularly irritating.

Similarly airlines pay fees for the use of airport landing slots and ATC services. And I would also add that at present the fees do not fully cover the cost of operations of the ATC. OTOH the cost of installing the next gen ATC is a capital improvement which in such a scheme of things would be funded substantially from other sources, perhaps partly through outright grants and partly through bonds collateralized by future fees adjusted to pay off the bonds in thirty or forty years.

 

[A Voice]

Yet every transportation mode that claims any profitability is essentially profitable above the wheel, because all of the below the wheel stuff is publicly funded to a large extent. It is necessary to frame Amtrak service cost in the same framework to explain things to the Congresspeople.

I understand your point, but trying to frame Amtrak financial numbers in a similar context to bus or plane - and thus producing an 'above the rail' profit - also creates confusion. There are too many fundamental differences between privately owned railroad infrastructure, the freight railroads being profitable without public funding, and publicly owned roads and airports. The latter would still be funded and maintained even if the particular bus or airline service was shuttered. Amtrak, particularly in the Northeast Corridor, has enormous (and woefully underfunded) capital expenses which are unavoidable even if all of Amtrak itself were shut down tomorrow. This is of course the major part of the annual Amtrak budget from Congress; But if the trains are "profitable", it really does suggest you don't need much in the way of an operating subsidy - just for those evil and useless long-distance trains that nobody rides and exist only for political reasons.

We do, indeed, need a valid and reliable methodology for Short Term Avoidable Costs, particularly for off-corridor trains. However, that doesn't mean it is appropriate to claim a "profitable" operation based solely on 'above the rail' expenses. If you play fast and loose with the numbers enough, you can generally produce whatever financial result you want (three levels of lies: lies, bald faced lies, and statistics). But that doesn't help the cause.

Unless the discussion can be framed with clear separation between over the rail and underlying infrastructure costs and revenues, we have no hope of moving the discussion forward in Congress and with the administration.
But I can see that some do not consider that important.

Wait a minute - just because I may disagree on the details and methodology of financial reporting that means i don't consider the matter important in Congress? Seriously?

That said, and again, we do badly need a consensus over a valid and reliable means of accurately reporting passenger rail financial results in a manner which is neither misleading ('loss per passenger' numbers, etc.) nor which avoids reporting unavoidable and very real costs ('above the rail' profit, when you're directly paying for the 'below the rail' infrastructure).

Yet every transportation mode that claims any profitability is essentially profitable above the wheel, because all of the below the wheel stuff is publicly funded to a large extent. It is necessary to frame Amtrak service cost in the same framework to explain things to the Congresspeople.

This is in the same spirit that Neroden tries to tease out the actual OTR financial situation of the LD trains and finds many of them to be close to profitable or already so. Too bad Amtrak has not done so even though they are required to do so.

Unless the discussion can be framed with clear separation between over the rail and underlying infrastructure costs and revenues, we have no hope of moving the discussion forward in Congress and with the administration.

But I can see that some do not consider that important.

So when the discussion is about the long distance trains, should any payments made to the host railroads be excluded? After all, that represents the under the wheel costs.

jb

If - and I emphasize a great big IF - you remove absolutely all overhead and then pretend a few of the operating expenses (track usage, etc.) are really capital costs, then you can certainly produce a financial number which shows the long-distance trains are profitable, or something close to it. But when those same trains still cannot exist without an operating subsidy, you're just creating confusion and actually undermining the case in support of nationwide passenger rail.

 

[jis]

Train operation can be profitable while the railroad on which it operates breaks even with subsidy. This is why it is essential that the accounts be cleanly separated. Without that it is all smoke and mirrors. Unfortunately many, for whatever reason prefer to not know the facts, or even if they know them, not share them with other stake holders.

The issue is what is the subsidy for. Would that subsidy be necessary if that particular train ceased to operate, while others continued to operate? If it is then it is not part of that trains operating cost. It is a very simple concept. The fact that some have difficulty understanding it is unfortunate.

 

[A Voice]

Train operation can be profitable while the railroad on which it operates breaks even with subsidy. This is why it is essential that the accounts be cleanly separated. Without that it is all smoke and mirrors. Unfortunately many, for whatever reason prefer to not know the facts, or even if they know them, not share them with other stake holders.

No. What is essential is providing transparent, complete, and accurate financial and other facts to Congress and other relevant or interested parties in an impartial manner. Trying to argue the train is profitable just so long as no costs are considered for the railroad it runs on is spin, a half-truth, or an 'alternative fact'. Spin and half-truths have the nasty habit of coming back to haunt you for not telling the whole story when someone calls you on it. The little white lie about a profitable Northeast Corridor has already done considerable damage to advocacy for passenger rail in America.

The fact that some have difficulty understanding it is unfortunate.

Again, just because someone disagrees with you doesn't mean they aren't well aware of the facts or that they aren't smart enough to understand them. You're selling people short when you think you can pull something over on them because it paints the position you are advocating for in a better light. Such a strategy is counter productive (to put it mildly) and won't work, even with politicians in Congress or idealogues such as the Heritage Foundation. Don't try to spin a story; Let the (impartial) facts speak for themselves.

 

[jis]

Actually we are trying to look at the same phenomenon from two different frameworks (coordinate systems) if you will. That does not make one more right than the other. It is just my humble attempt with a bunch of others to communicate with our representatives in a language they understand as we have come to understand having talked to them for a while. I was just explaining the way that the framework is structured and how long term cost are separated out from short term avoidable costs associated with specific revenue streams. Sorry if I offended anyone.

And no. Facts really don't speak for themselves in the real world specially when they are murky. But I guess we can agree to disagree and go on with life.

 

[Green Maned Lion]

My experience is that BS tends to speak a lot louder than facts. Thats a general comment, by the way, not referring to any specific member, or any specific subject, actually.

 

[Thirdrail7]

It looks like everyone is playing nice...but for how long? Please allow a few quotes from:

NJ Transit settles back payments with Amtrak for $182M

http://nj1015.com/penn-station-upgrades-planned-after-nj-transit-repays-amtrak-182m/

NEW YORK – NJ Transit has repaid Amtrak nearly $182 million that had been withheld over a 16-month period, and the two agencies have agreed how the monthly payments will be used on improvements related to the Northeast Corridor line, including at New York Penn Station.

The payments began to be withheld in March 2017, when then-Gov. Chris Christie cited a pair of train derailments as evidence Amtrak didn’t care about the safety of NJ Transit, its tenant on the Northeast Corridor. They didn’t pick up again until last summer.

The money could be used as part of Amtrak’s match for the $600 million New Jersey has offered to contribute toward rebuilding the Portal Bridge, a project crucial to the Gateway Tunnel project for upgrading and repairing train service under the Hudson River.

It will also be used to update the ticket and waiting room at New York Penn Station, which should get underway soon and be completed by 2021, and improving platform access and street-level entrances. The agencies will also work on a complete redesign of the station’s 8th Avenue concourse, targeted for after Amtrak shifts much of its traffic to Moynihan Train Hall in 2021.

Nearly 50 million NJ Transit passenger trips come through New York Penn Station each year.

“These are long overdue improvements needed to alleviate overcrowding on the concourse,” Murphy said. “They will make commuting to and from New York Penn easier and hopefully more comfortable.”

NJ Transit and Amtrak are also working together to build a new $70 million train station in Elizabeth that may open next year, as well as a $370 million project for a yard near New Brunswick and North Brunswick on a 14-acre parcel now owned by Amtrak. That will be used for enhanced maintenance and inspection facilities for NJ Transit.

Going forward, NJ Transit will pay Amtrak about $10 million a month,  approximately $3 million for operating expenses and $7 million in capital expenses.

 

[Anderson]

I'd be very curious to see how this and the latest appropriations bill(s) affect Amtrak's cash balance.  It would seem that Amtrak has a lot of receivables coming in...

 

[jis]

Looks like they will be able to actually start building Portal North beyond the few approach pieces that they are building now.