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August 2012

Rail News: Amtrak

How Amtrak's government affairs officers have built - and need to continue building - better congressional relationships

By Angela Cotey, Associate Editor

During the past several years, Amtrak’s funding situation has become more stable, thanks in part to the Passenger Rail Investment and Improvement Act of 2008 and American Recovery and Reinvestment Act of 2009, as Progressive Railroading reported in its August cover story, "Amtrak's new strategic plan will help railroad become more efficient, customer focused, execs believe."

But Amtrak officials can take some of the credit. During the past decade, railroad financial and government affairs officers have gotten better at explaining to members of Congress how the railroad will spend its annual appropriation, says Vice President of Government Affairs and Corporate Communications Joe McHugh.

“Ten, 15 years ago, the Hill would refer to our budgets as ‘blah budgets.’ It was hard for them to pry it apart and really understand the pieces of it,” he says. “And then when we nearly went bankrupt in 2000, 2001, it really worked against us — our inability to be really clear and articulate with our budget. [Congress] would say, ‘If we gave you $50 million, what would you use it for?’ And we’d say, ‘Eh, we’ll get back to you.’”

Amtrak financial officers began working to improve the railroad’s transparency. When DJ Stadtler, now Amtrak’s VP of operations, took over as chief financial officer three years ago, he, too, improved the process, says McHugh. Now, an executive committee rates projects in terms of priority, so depending on how many capital dollars Amtrak receives, it knows which projects can be funded.

“Now, if Congress asks what we’d do if we had another $25 million or so, well, then we can give them four more projects,” says McHugh.

Spelling out spending plan details has improved the railroad’s standing with Congress, McHugh believes.

“I think there’s a feeling up there [on The Hill] that we’re doing well, we have pretty good plans, we’ve demonstrated results and we appear to be healthy,” he says.

Not that Amtrak officials will be able to please everyone. House Transportation and Infrastructure Committee Chairman John Mica (R-Fla.), for one, has long been one of Amtrak’s staunchest critics. His latest complaint: Amtrak is losing too much money on its food and beverage services.

“Over the last 10 years, these losses have amounted to a staggering $833.8 million,” Mica said in an Aug. 2 press release. “It costs passengers $9.50 to buy a cheeseburger on Amtrak, but the cost to taxpayers is $16.15.”

Talking points
Amtrak didn’t officially comment on Mica’s accusations. Instead, railroad officials will continue efforts to educate members of Congress on the goods and services Amtrak provides, the investments it makes in communities by purchasing goods, and infrastructure investments it makes in various states. They also point out that Amtrak has reduced operating costs, increased its recovery ratio, reduced debt from $4 billion in 2002 to $1.6 billion today and has not taken on any new debt.

“We try to send a message that we do a good job given what we’ve got, and show the improvement in ridership and revenue generation,” says McHugh. “We show that we are good stewards of the taxpayers’ money and that we try to squeeze every penny out of every nickel.”

It's election season, so government affairs officers will have their work cut out for them in the coming months — particularly when it comes to educating new House and Senate members. The outcome of the presidential election can impact Amtrak to some extent; for example, the Obama Administration’s support for rail transportation helped Amtrak secure stimulus funding. But the makeup of Congress — and the issues they’re dealing with — tend to have a far bigger effect.

More conservative members of Congress often will raise concerns about Amtrak routes losing money, and about Amtrak not making a profit, and question why the railroad can’t cut expenses without cutting routes, McHugh says.

“You gradually have to explain to them how Amtrak works and at the end of the day, you don’t persuade people all of a sudden — it’s not like someone comes in who is against Amtrak and all of a sudden we have convinced them otherwise — but you build a relationship with them,” he says.

So, in the coming months, Amtrak government affairs officials will ramp up their efforts to refine the message they want to send to new congressmen. Considering the pressure to cut federal spending, officials know they need to make a good case. And considering the progress Amtrak has made in recent years, McHugh believes they have a good shot at getting their point across.

“I think this election is going to be a lot about the size, scope and responsibility of what the government brings to citizens and if we’re part of that debate, we have to sharpen how we explain our worth to the federal taxpayer,” says McHugh. “It’s not going to be, ‘Gee, it’s not to have train service in such and such a town.’ We have to prove why that train service is valuable and why it’s worthy of continued investment, so we need to refine our message and make sure we’re sharp and smart when we go into meetings.”

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