Amtrak, Bush administration tackle final disagreements

<br>WASHINGTON (AP) _ Close to a deal, Amtrak and Bush administration officials worked Friday to resolve a few disagreements still blocking a financial rescue that will keep the passenger trains running.

Friday, June 28th 2002, 12:00 am

By: News On 6

WASHINGTON (AP) _ Close to a deal, Amtrak and Bush administration officials worked Friday to resolve a few disagreements still blocking a financial rescue that will keep the passenger trains running.

One remaining obstacle, according to two people familiar with the discussions, was a proposed provision that would prevent Amtrak from entering into any new agreement that restricts its ability to contract with private firms.

The administration wants Amtrak to move toward a system where it uses outside companies to run its reservations, food service and equipment maintenance, and perhaps even some routes. Railroad labor unions oppose the move.

The two sides also were said to be at odds over the administration's demand that Amtrak set and meet a target date for achieving certain cost-cutting initiatives.

Despite the disagreements, Amtrak President David Gunn has said he was ``reasonably hopeful that we will be able to reach a deal.''

Gunn has warned that Amtrak could begin shutting down its entire nationwide system as early as next weekend if it does not get government help to close a $200 million budget gap.

Transportation Secretary Norman Y. Mineta and members of Amtrak's governing board reached a tentative agreement Wednesday night and have been working since then to finalize it.

Under the deal, the Transportation Department would arrange an immediate $100 million loan to Amtrak that will ensure its survival through the middle of August.

The Transportation Department also will join Amtrak in asking Congress to provide the other $100 million, though the form of that assistance is a matter of debate.

Some lawmakers say the congressional action should be a direct appropriation, which, unlike a loan, would not put Amtrak deeper in debt. The railway's debt was about $3.85 billion in March.

But Transportation Department officials are leaning toward making it a loan.

Mineta has made clear that, at some point, the administration will seek major changes in how Amtrak does business.

He has proposed ending federal operating subsidies to the intercity railroad, introducing competition and making states more responsible for paying for train service. His plan would also gradually remove Amtrak as owner of 366 miles of tracks in the Boston-Washington corridor.

Gunn, who became Amtrak's president May 15, has said he agrees the railway needs to make major improvements in its finances and operations.