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Amtrak Reforms Unveiled--in Case It Survives Another Week

June 21, 2002|From Associated Press

WASHINGTON — The Bush administration proposed long-term reforms for the nation's passenger rail system Thursday, but the long-awaited proposal was quickly upstaged by an impending cash crisis that could shut down all Amtrak service next week.

Amtrak President David L. Gunn said he will have to begin turning away passengers and moving trains to storage by the middle of next week unless the railroad gets government help to close a $200-million shortfall.

"The urgency of this is enormous," Gunn told the Senate Appropriations subcommittee on transportation. "We are very near the point of no return."

The crisis, caused in part by uncertainty over Amtrak's future, kept the spotlight on the railroad's immediate survival even as the Bush administration proposed ending its role as the nation's sole operator of intercity passenger trains.

"The last three decades have proved that Amtrak's model of a national network of passenger rail is just not sustainable without massive, continued federal support," Transportation Secretary Norman Y. Mineta said in a speech to the U.S. Chamber of Commerce.

The administration's proposal would stop annual federal operating subsidies for rail service, open the door to competition, give states more responsibility for train service and replace Amtrak as owner of the Boston-New York-Washington Northeast Corridor.

Some Amtrak jobs eventually could be assigned to outside companies by contract, and failing routes could be eliminated unless states want to pay for them.

"Prices and passengers, not politics, should direct the service," Mineta said.

Lawmakers from both parties urged the administration to focus on rescuing Amtrak from its predicament before looking ahead.

"We can heal a sick patient--and Amtrak is hurting right now--but we cannot revive a dead patient," said Rep. Jack Quinn (R-N.Y.), chairman of the House Transportation subcommittee on railroads.

The Federal Railroad Administration is reviewing Amtrak's request for a loan guarantee that would help it borrow the $200 million. Amtrak has had trouble tapping its existing line of credit because lenders are worried about how long it will remain in business.

At the Senate hearing, Federal Railroad Administrator Allan Rutter and Donna McLean, the Transportation Department's chief financial officer, said there is no contingency plan in the event the loan guarantee does not come through.

McLean said the administration would entertain the idea of an emergency government appropriation to Amtrak only in conjunction with the reforms Mineta spelled out in his speech.

"Do you understand the gravity of ceasing Amtrak operations?" asked Sen. Richard Durbin (D-Ill.).

"I certainly do," McLean replied.

Assuming it survives the next three months, Amtrak says it needs $1.2 billion from the government to get through the fiscal year beginning Oct. 1.

But Mineta said Amtrak should get no more than $521 million--the same amount it has received in recent years--unless it undergoes substantial reform.

The administration's ideas reflect several suggestions of the Amtrak Reform Council, formed by Congress in 1997 to monitor Amtrak's finances.

The council recommended breaking up the rail company and shifting many of its duties to states and private companies, effectively ending Amtrak's three-decade monopoly over intercity train service.

"I'm thrilled to death," said Gil Carmichael, a former federal railroad administrator who chaired the reform council. "The old Amtrak is coming to a close and the new Amtrak is about to be born."

Sen. John McCain (R-Ariz.), a leading critic of Amtrak, also praised the Bush plan.

"I fully agree that we cannot afford simply to throw billions of additional federal dollars at Amtrak and hope its problems will disappear," he wrote in a letter to Mineta.

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