A press release issued by Amtrak last week would, if it were published by publicly traded firm, be a violation of securities laws and regulations. The press release claimed that Amtrak’s FY 2019 annual financial report, which has yet to be published, would show that passenger revenues covered 99 percent of operating costs. Amtrak officials further projected that the company would show a profit for the first time in its history in 2020.
Neither of these claims are true because they grossly misrepresent what the annual report will say in two ways. Most important, the annual report will identify depreciation as one of Amtrak’s biggest costs, amounting to nearly 20 percent of its budget. Depreciation was $807 million in Amtrak’s 2018 annual report, and is projected to be around $50 million more in 2019.
Last week’s press release and other of Amtrak’s public statements pretend that depreciation doesn’t count. Yet depreciation is more than just a tax deduction: it is an actual measure of the wear‐and‐tear on infrastructure and equipment that must eventually be replaced.
The second problem is that Amtrak counts more than $225 million in tax subsidies from 18 states as “passenger revenues.” The vast majority of taxpayers who pay these subsidies never ride Amtrak trains, so they can hardly be considered passenger revenues.
Read more at https://www.cato.org/blog/amtrak-guilty-securities-fraud
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