Amtrak may go off the rails following U.S. government shutdown

We are several days in, but what does the future hold for Amtrak if the houses of Congress fail to make a decision?

If the U.S. government shutdown is prolonged, the U.S. intercity passenger railroad Amtrak may find itself in financial trouble.

Amtrak, the Washington-based railroad, receives 12 percent of its operating budget -- in addition to capital and debt-service funding -- from funds supplied by the U.S. Transportation Department. While some amounts are paid quarterly, much of the money that Amtrak relies on takes the form of reimbursements -- and all of this has been cut off until the two houses of Congress make a decision concerning the fiscal budget.

Mortimer Downey, a former member of Amtrak's board said:

"At some point, I don't know whether it's weeks or months, they have a real problem. If there’s nobody at DOT, there’s nobody to pay them reimbursements."

While a month-long government shutdown seems like a long time, it is not outside the realm of possibility. If this comes to fruition, then as government workers are not traveling, the operator's cash flow may be impacted as ticket revenues decline, causing Amtrak further problems. Ross Capon, president of the National Association of Railroad Passengers said:

"I think three or four weeks is probably a non-event, but when it starts going beyond that, it gets to be serious. At some point, and I expect it's well beyond four weeks, I would think there's a question about whether the company survives."

Millions of passengers travel with Amtrak every year. The railroad recorded a record 31.2 million passengers in 2012, and said normal operations will continue during a "short term" government shutdown.

Via: Skift

Image credit: Amtrak

This post was originally published on Smartplanet.com

Newsletters

You have been successfully signed up. To sign up for more newsletters or to manage your account, visit the Newsletter Subscription Center.
Subscription failed.
See All
See All