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A Financial Analysis of H.R. 2329, the High-Speed Rail Investment Act of 2001 [i] (September 2001)

handle is hein.congrec/cbo0694 and id is 1 raw text is: A Financial Analysis of H.R. 2329, The High-Speed Rail Investment Act of 2001 SEPTEMBER 2001 The House Committee on Transportation and Infrastructure has asked the Congressional Budget Office (CBO) to analyze H.R. 2329, the High-Speed Rail Investment Act of 2001. The bill would provide assistance to the National Railroad Passenger Corporation (known as Amtrak) by permitting Amtrak to sell $1.2 billion in bonds each year for the next 10 years. The federal government would pay the interest on those bonds in the form of income tax credits to the bondholders. This analysis focuses on the proposal for tax-credit bonds and on how those bonds compare with alternative financing mechanisms. It does not address broader issues of federal policies toward passenger rail. The main conclusions of the analysis are as follows. The bond program authorized by H.R. 2329 would cost the federal government about $7.4 billion in present-value terms.W The matching contributions that states would be required to make would cost about $1.8 billion, bringing total government costs to $9.2 billion. However, the bond program would raise only about $8 billion (in present-value terms) for Amtrak, making that approach about 15 percent more costly than providing Amtrak with $8 billion through federal appropriations and state matches. In other words, the tax-credit funding mechanism would essentially be a new and more expensive way for the federal government to assist Amtrak. The bond program would cost the federal government substantially more than authorizing the same amount of funding through tax-exempt bonds issued by states. In that case, the states would bear the cost of paying interest on the bonds and repaying the principal, and the federal government's cost would be the forgone revenue associated with such tax-exempt debt. The bond program in H.R. 2329 would obscure the costs to the federal government of subsidizing Amtrak. What is fundamentally a new spending program would be reflected in the budget as reduced tax collections, and much of the federal cost would appear outside the 10- year budget window. PURPOSE AND SUMMARY OF THE LEGISLATION H.R. 2329 would help Amtrak raise funds for capital investment. The railroad has received some $25 billion from the federal government over its 30-year history--including an appropriation of $521 million for fiscal year 2001--and continues to require federal financial assistance to meet both its operating and its capital costs. (For a discussion of Amtrak's budgetary status, see Box 1.) AmtraJs revenues have risen in recent years, but its costs have risen more.

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