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for the management of a commuter service and to pay whatever is necessary, after the studies have been made, for the maintenance of that service.
Senator PASTORE. Without regard to the long haul?
Governor ROCK EFFELLER. Without regard to the long haul. But the long haul is not immediately related in terms of trackage or in terms of commuter car service in this picture.
Senator PASTORE. Well, the New Haven owns all of those tracks. It owns the right-of-way; does it not?
Governor ROCKEFELLER. That is right; 14 miles in New York, 11.8 miles of New York Central, and if they merge, these tracks would then become the property of the merged structure.
Senator PASTORE. Under what concept of law could they sell off that portion of the railroad at the sacrifice of the road that runs northward ?
Governor ROCKEFELLER. Well, I don't know whether the Penn-Central merged with the New Haven would then apply to the ICC for abandonment of one line or two lines. That, of course, would be something that was beyond our purview and would be a Federal decision. All we would be interested in is the ability to lease lines and to contract for commuter service from the new merged structure of the three railroads.
Senator PASTORE. This is something that is being worked out between Connecticut and New York. Do I understand that correctly?
Governor ROCKEFELLER. That is correct.
Senatore PASTORE. Have the trustees ever been brought into this conference ?
Governor ROCKEFELLER. Not as yet, because we just agreed between our two States, and we are waiting for our legislatures to give us the authority, to give us the money. Our legislature acted—was it yesterday or the day before, day before Connecticut acts tomorrow. We then can jointly formally apply for the $10 million of matching funds which exist in a $60 million appropriation here, HHFA. If we are granted that, we are in business in order to then talk with the trustees with our program financed. The financing includes, as you mentioned, the two station operation maintenance programs.
Senator PASTORE. But this proposal that you are advancing which will be submitted by application to the Housing and Home Finance Corporation, Governor Rockefeller, is this predicated upon the Edwards report that said that the deficit-operating deficít-for the commuter service west of New Haven, was only $400,000 ?
Governor ROCKEFELLER. No; it is not, sir. It is predicated on our willingness and good faith to negotiate with the trustees and the New York Central to manage for the account of the Connecticut commuter authority and what we hope will be the New York State Metropolitan Commuter Authority, and that those two authorities would then contract for whatever additional expense was involved after the study had been made.
Senator PASTORE. I don't mean to be impertinent about this, but if the deficit for the operation of the commuter service west of New Haven is $6 million as stated by Mr. Kirk, who is the financial trustee, this proposition of your putting up $5 million and Connecticut putting up $5 million and the Federal Government putting up $10 million, and then annually you are just paying one-half a million dollars apiece between you and Connecticut, aren't you giving yourself the best of it at the sacrifice of the rest of the line?
Governor ROCKEFELLER. If the assumption were correct, your statement would be correct. We have seriously doubted the assumption. This is why we would like to bring the New York Central into the management contract. They are managing trains in and out of New York Central and they manage the trains the last 10, 11 miles.
Our feeling is that New York Central coming in shortly into this merged picture, managing this whole New York Central station complex, running commuter services of their own, they have a good record.' We feel that they are working with the trustees in New Haven in studying the costs and bringing in modern equipment and, frankly, one of our additional thoughts, which I did not mention, is that we would do as we plan to do for the Long Island Railroad. We would plan to spend additional money through the authority for moderniz
ng this service, such as raising the platforms, and having the automatic doors, as they do on subways; such as having automatic ticket takers, and speeding up the service all along the line and having modern cars.
Our feeling is that with the number of people who are commuting on this line and the potential for additional commuters, if the service is what we hope it will be, that this thing can be made viable and we would hope ultimately under this arrangement at no cost to the States.
Senator PASTORE. When would you expect this agreement to be consummated or put in shape where you could talk about it as a possibility of reality?
Governor ROCKEFELLER. Well, we have taken it step by step. Westchester has already acted. This is a reversal of the board of supervisors from 6 or 8 months ago, so they have acted in good faith. The State legislatures have acted and appropriated money. Our legislature is acting tomorrow. Connecticut commuter authority has made a commitment. This leaves only the Federal Government to act or to consider our application. Then we have money in hand for the new equipment and for some of the major costs.
At that point, we would be in a position to negotiate with the railroads for a firm contract, both to lease the trackage and to make a contract for operating the service.
At that point we would start to find out what the real costs would be for this service, unrelated to other services, on this line. We are going on the assumption that the tracks aren't going to be torn up and, therefore, there will always be some track there we can lease.
Now, there is one other interim proposition. We recognize that this will take some time, new cars to be built and so forth. So we have proposed this 18-month to 2-year interim program as an experimental, whatever you call it, demonstration project which is provided for under existing law to carry this service between the present moment and the time that we can consummate the long-term proposal which I have just outlined. That would involve $4.5 million, $3 million from the Federal and $1.5 million from the two States.
Senator PASTORE. Have you received any hopeful reaction from the Housing and Home Finance that they will grant you the $3 million?
Governor ROCKEFELLER. On the $10 million, we had discussions with them. Dr. Ronan, who is here with me, is chairman of the Tristate Transportation Committee. We have been working with the Federal Government and, if I may say, parenthetically, Mr. Chairman, I do not mean to imply that the Federal Government had done nothing in these areas. Quite the contrary, they have.
My only plea was for an overall Federal policy on transportation. This is not a political plea, this is one I have been making for the last 8 or 10 years.
Senator PASTORE. I quite agree with you on that, Governor. If this is a trend, realizing the great evolution that has taken place in our transportation in the United States of America, I think you will have to evolve a national policy. But thus far, the national policy that has been enunciated here is that the Federal Government does not propose at this time to subsidize passenger railroad service and it intends to remove all subsidy from all other media of transportation. That is the policy that we have and I believe that President Kennedy had enunciated it and it has been more or less reiterated here today. The policy of the United States of America at this juncture is that all subsidies with reference to transportation will be removed and we are starting with helicopters.
Governor ROCKEFELLER. Mr. Chairman, does that mean termination of interstate highway programs?
Senator PASTORE. Ño, because there, of course, you are collecting the money sepcifically for that purpose, as you well know. That is a trust fund. That comes out of gasoline taxes.
Governor ROCKEFELLER. It is subsidy.
Senator PASTORE. It isn't subsidy in a sense. We collect money from these people who buy gasoline and we put it in a pot and then we send it back where it came from.
Governor ROCKEFELLER. Of course, you collect all of the money.
Senator PASTORE. That is a lot different than the subsidy we are talking about. This is money that comes out of the pocket of the man who never rides a railroad.
Governor ROCKEFELLER. If I may, just to finish the phase of it, just to mention one illustration: The Long Island Railroad, which serves the Suffolk-Nassau-Queens on into New York City services an area which during the past 6 years, the Federal, State and local governments have spent $2.3 billion on highways, construction and maintenance and the State, local communities, have given $2 million of subsidies to the railroad. So that we do have a situation where we are building through subsidy competing services to these railroads and this is the area where I really was thinking of an overall policy as to how we subsidized highway transportation, airports, airlines, navigation, and then collected taxes from the railroads, so that this was the thought I had in the larger sense and not in any way to disparage the important individual projects which are undertaken vis-avis the railroads and our applications would only be strictly within the terms of the Federal legislation and the available funds which have been appropriated.
Senator PASTORE. Well, the thing that disturbs me, and I must affirm at this juncture that this is going to be a hard nut to crack, there is no question about it. There has been a disintegration that has been going on here for years.
As I said at the outset, of course, you can give a thousand different explanations of what is wrong, but there you are. We are confronted now with the immediate problem that the railroad has already applied for the discontinuance of the commuter service west of New Haven. I can realize how tragic and catastrophic that would be. Twenty-five to thirty thousand people a day would have to get to work in New York City, and what it would mean to your highway traffic in the event that ever came about, and all of us hope that it won't. But in the meantime something needs to be done. It needs to be done fast and it strikes me that while you may accept rather for purposes of argument the problem that confronts us here with reference to the commuter service west of the New Haven and the commuter service around the Boston area, I don't see how you can preserve the commuter service without taking into account the long haul as well, even though you may separate it for statistical reasons. And it was in that spirit that I was very, very anxious to determine from Mr. Kirk exactly what he thought the deficit was, the allocation of the deficit. Of course, he gave it in round figures. The thing that amazes me is that the Edwards report shows an operating deficit of only $400,000 for the commuter service west of New Haven and the men who have the toothache are saying that it is $6 million. There is a lot of difference between $400,000 and $6 million, which goes to prove how far off we are at this moment.
At any rate, this petition has been filed to discontinue the commuter service. Massachusetts has already made provision to assume the responsibility of its commuter service around the Boston area.
The combine, that is the New York Central and the Pennsylvania, have already agreed to take in the freight service, provided, of course, that we either discontinue the passenger service or that we free them from that responsibility.
Now, we have four bills before us. Each one does a different thing and approaches the problem in a different way. I would like to call your attention to each bill separately.
You keep saying that the long haul is a Federal responsibility. Do I understand you to mean, then, if there is any operational deficit that is entirely up to the Federal Government to pick it up?
Governor ROCKEFELLER. On the long haul.
I might just say, first, I would like to ask, with your permission, Mr. Chairman, for Dr. Ronan to speak just a word on two things: One, as you said the application for termination of all commuter service, and two, the $6 million cost, because he has been following both of those. Would you permit that?
Senator PASTORE. Yes, I would appreciate that.
Dr. RONAN. Mr. Chairman, with respect to first the matter of the annual deficit of the commuter operations, the State of New York has always challenged the figure of $6 million, and the $6 million in our judgment is arrived at by including items in the deficit that do not belong there.
Senator PASTORE. Like what, for instance ?
Dr. Ronan. For example, in the $6 million figure is included a return on investment of 4 percent or 8 percent before taxes. This is $2,403,422. In includes an item for normalized maintenance and the railroad is not providing normalized maintenance of $1,242,769. We have a very grave difference also with the trustees, as did Edwards in his report, the $400,000-plus figure to which you refer includes an application of the Grand Central ground rents, which are transportation related return from Grand Central property income to the New Haven Railroad. The Grand Central ground rents, at the time of the Edwards' study, were about $1,476,000, allocable to the commuter service. There is another sum allocable to the long-distance passenger. Those ground rents, as the Governor said, have
increased significantly since the Edwards' study.
Senator PASTORE. May I ask a question at that point? This 4 percent before net profit
Dr. RONAN. After taxes.
Senator PASTORE. In the long haul, in the bookkeeping process, don't they do the same thing there?
Dr. Ronan. No, they don't. I imagine not. Not in that $9 million figure. This is a very complex area, the question of what is the deficit, because there are different ways of approaching that.
The $9 million figure that we used was Dr. Edwards' figure used on the same basis as the cost approach which he used. If you wish, we would be glad to put in evidence, for your committee, or make available for the record, the Edwards' study.
Senator PASTORE. We will include it by reference, if you don't mind. so it won't take up too much printing. We are trying to save money, if we possibly can.
Governor ROCKEFELLER. Hear, hear.
Dr. Ronan. With respect to the second item which the Governor requested I speak to, the request for discontinuation of service, the New York, New Haven & Hartford has not yet made a request for discontinuance of all commuter service. It has indicated that it will do so, but it has not done so. It has requested the elimination of certain trains, most of them serving the county of Westchester and the city of New York. That case is pending and the State of New York has entered its opposition to that proceeding and is challenging the claims of loss on that service.
Senator PASTORE. Governor Rockefeller, do I understand you, then, that you do not subscribe to the Pell bill?
Governor ROCKEFELLER. Well, I think the simple answer is yes, I do not subscribe to it. The feeling in our legislature, Mr. Chairman, is one of some reluctance to even proceed in picking up localized commuter costs. They have gone along because they recognize the importance to New York and to Westchester. However, there is no enthusiasm for supporting through traffic which is very indirectly related to their sense of responsibility to their constituents and, therefore, I think I reflect a little of the feeling of the reality of what might happen if an interstate compact was up for ratification which involved a blank check payment on losses which were undetermined in advance, and which were picked up on the basis of mileage of passenger traffic within our State.