Amtrak shutdown delayed, changes around the corner

In this game of Monopoly, Amtrak president David Gunn – broke and mortgaged to the hilt – is still hoping to play a little longer.

But the banker, Secretary of Transportation Norman Mineta, looks uninterested in granting Mr. Gunn a "Get out of jail free" deal. The Bush administration wants a controversial restructuring of the ailing rail service, including a handover of Amtrak's tracks and tunnels to a new agency, before committing more money.

Talks between Mr. Mineta and Amtrak board members ended Monday without a decision on a federal loan that would stave off a nationwide shutdown of passenger trains. Amtrak says it needs $200 million to continue operating until the new fiscal year, which starts October 1. Amtrak officials, while pushing back the timetable, warned that until new funding arrives, a shutdown still looms. The group will meet again later this week.

"I am confident that we will be able to avoid a shutdown of services," Mineta said after the meeting.

Amtrak finds itself at the mercy of the federal government after the recently installed Gunn discovered that his company lost $160 million more last year than previously thought. Commercial creditors, meanwhile, downgraded Amtrak's credit status, making it impossible for the ailing company to get a loan without federal backing.

Congress, a traditional defender of Amtrak, is taking steps to pass an emergency appropriation to cover the company during the busy summer travel season. However, the spending would have to be passed quickly to happen before Congress recesses for the July Fourth holiday. And presidential veto power gives the administration the upper hand in shaping the final solution worked out between the various players.

"The burden is not on the administration alone to save the rail system from bankruptcy nor should it be," Mineta said. "It will take all parties, including Congress, to show initiative and build a solution to Amtrak's fundamental problems."

Splitting up the monopoly

The latest gamesmanship reflects this year's struggle between advocates and reformers over the future of the long-ailing rail system.

Five years ago, Congress set this year as the deadline for Amtrak to achieve financial self-sufficiency. At that time, Congress also created a new oversight board, the Amtrak Reform Council (ARC), charged with developing a plan to restructure Amtrak if it failed to meet the deadline.

Not only did Amtrak fail to achieve profitability, the company posted a record loss for 2001 and notified Congress that it needed much greater subsidies to keep operating. Meanwhile, the ARC submitted a dramatic proposal calling for the split-up of Amtrak into separate agencies, and opening up operations to private competition.

Last Thursday, the White House threw its support behind ARC's proposed measures, and said it would oppose congressional moves to increase Amtrak's funding without structural changes.

"I'm tickled to death," said ARC chairman Gilbert Carmichael. "My committee spent three years studying and really analyzing the old Amtrak, and I just feel validated that the White House came out with almost identical recommendations."

Under the plan supported by the White House, Amtrak would be split up and remade into a company more along the lines of Greyhound or American Airlines. Like the airlines and bus operators, Amtrak would only be in the business of ticketing and transporting passengers, not expensive infrastructure upgrades. While airports and highways are financed and managed by government entities, Amtrak is currently responsible for much of the track in the busy Northeast corridor. The White House is proposing to move this job to a new federal-state organization.

Down the road, other operating companies could bid to provide service in various regions, thereby opening Amtrak up to private competition.

Amtrak has been critical of these reform proposals. Of the ARC proposal, Amtrak chairman John Robert Smith told the Monitor in April, "You're just creating more and more bureaucracy, not delivering better and better passenger rail service."

Unprofitable routes in danger

Ultimately, the level of next year's funding could affect passengers more than any restructuring plan.

The White House rejection of a spending increase above last year's $521 million for Amtrak, if followed by Congress, could result in the dismemberment of the national network. Former Amtrak president George Warrington had warned this spring that Amtrak would be forced to cut many routes connecting the heartland if funding wasn't increased to $1.2 billion.

"I don't know that we could, that we would, be running a system at all at a half a billion dollars," said Mr. Smith.

Amtrak spokeswoman Karina Van Veen expressed confidence Monday that a sympathetic Congress would give them the $1.2 billion despite White House opposition, citing especially strong support in the Senate.

Mr. Carmichael also believed Amtrak would get more funding as long as the administration gets the restructuring it wants.

"From my reading of the White House, the White House will recommend more money than the $521 million if the Amtrak board and president will restructure itself. But they won't continue to give Amtrak any more money if they don't restructure themselves."

Down the road, however, the administration wants states to play a bigger role funding passenger rail. Currently states chip in about one-fifth of what the federal government gives to Amtrak. The contributing states are mostly in the upper Midwest and on both coasts. The long routes that cross numerous rural states receive no state help.

Requiring more money from states may drain funding away from regional initiatives to develop high-speed corridors, touted by many as the real future for Amtrak. When laying out the administration's plan Thursday, Mineta urged lawmakers to consider the question of high-speed rail separately from the issues of Amtrak's current operational woes.

* Additional reporting by Steven Savides and Kirsten Conover.

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