Amtrak may start shutting down trains next week without government help

Friday, June 21st 2002, 12:00 am
By: News On 6

WASHINGTON (AP) _ Amtrak has only enough cash to operate for several more days before it will have to begin shutting down the nation's passenger rail system, its president warned Thursday.

David Gunn told Congress he will start 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.

Amtrak's next step after a shutdown would be to file for bankruptcy protection, he said.

``The urgency of this is enormous,'' Gunn told the Senate Appropriations transportation subcommittee. ``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.

Lawmakers from both parties urged the administration to focus on rescuing Amtrak from its current 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 railroads subcommittee.

The Federal Railroad Administration is reviewing Amtrak's request for a loan guarantee that would help it borrow the needed $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 works should the loan guarantee not come through.

McLean said the administration would entertain the idea of an emergency government appropriation to Amtrak only in conjunction with reforms outlined Thursday by Transportation Secretary Norman Y. Mineta.

``Do you understand the gravity of ceasing Amtrak operations?'' asked Sen. Dick Durbin, D-Ill.

``I certainly do,'' McLean replied.

The Bush administration's proposal would stop annual federal operating subsidies for rail, 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.

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, which Congress formed 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.

Others were less impressed.

Sonny Hall, president of the AFL-CIO's Transportation Trades Department, said the Bush plan ``opens the door to spinning off Amtrak's most desirable parts and leaving the rest to wither.''

Edward Hamberger, president of the Association of American Railroads, said freight railroads are concerned about franchising the operating authority currently vested solely in Amtrak.

Governors may not be excited either. While the White House plan would give them more authority over passenger train service, it also may force them to pick up more of the tab.

Sen. Patty Murray, D-Wash., said expecting states to pick up the cost of rail service is as realistic as thinking they ``can pick up the costs of Medicare.''