(Editor's Note: The following is a response to a citizen and a legislator from MDOT regarding the Mackinac Center piece, "Amtrak and the Michigan State Budget.")
Please find below a response to your constituent inquiry regarding the recent article published in the Mackinac Center.
MDOT has reviewed Mr. Farren’s Mackinac Center Viewpoint on Public Issues entitled “Amtrak and the Michigan State Budget”. MDOT has also analyzed the data presented in the article but has been unable to determine how Mr. Farren’s numbers were calculated. (Editor's note: For an explanation by the author please see "MDOT Subsidy Numbers Off Track.")
The federal Passenger Rail Investment and Improvement Act of 2008 (PRIIA) mandates that, beginning in fiscal year (FY) 2014, the cost of Amtrak service on routes less than 750 miles in length be shifted from the federal government to the states and be subject to a new standardized cost methodology. The biggest impact to Michigan was the need to pick up the cost of the Wolverine Service (Chicago-Detroit/Pontiac) or lose the service entirely.
In FY 2013, MDOT provided state funding for the Blue Water (Chicago-Port Huron) and Pere Marquette (Chicago-Grand Rapids) services under contract with Amtrak at a total cost of $8,000,000. Total ridership in FY 2013 for the two services was 295,597, leading to an operating subsidy of $27.06 per passenger.
In FY 2014, MDOT, under PRIIA, is required to pick up the cost of the Wolverine service. Total cost for all three services under contract with Amtrak is expected to be $25,178,000. Over the past ten years Michigan services have experienced an average annual ridership increase of 4.5%. Applying this annual increase to FY 2013 ridership figures yields an expected annual ridership of 840,908 for FY 2014 on all three services. That corresponds to an operating subsidy of $29.94 per passenger.
MDOT is developing a long range plan to increase ridership and revenue which helps reduce overall operating costs. Some of these initiatives include improving on time performance, reducing travel times, increasing the use of technology to purchase tickets, and adding amenities that rail customers want, such as Wi-Fi, bikes on trains, quiet cars, etc., to make the service more attractive to new and existing passengers. MDOT is committed to leveraging federal funding to improve infrastructure, which was seen in the FY 2012 budget allocation. In addition, there will be new passenger rail cars and engines put in service beginning in 2016. Every service experience where this has been done has seen increased ridership. MDOT's plan also calls for regular reviews of passenger ticket prices to determine when prices should be increased so that revenues from passengers will continue to grow and state funding support will decline.
As noted in the article, the total state appropriation for rail programs is $40.6 million, including $2 million from the self-sustaining Rail Freight Fund. After deducting the $25.2 million for operating support, the remaining $15.4 million will be invested to support a variety of passenger and freight rail efforts. Among other things, these investments will:
- Continue to enhance allowable train speeds on the Chicago-Detroit/Pontiac corridor, reducing travel times and encouraging higher ridership levels
- Provide for the maintenance of the Chicago-Detroit/Pontiac line that was recently acquired by MDOT (primarily using federal grant dollars) in an effort to preserve both passenger and freight rail service; and
- Support and enhance freight rail efficiency and access for businesses throughout the state.