WASHINGTON, D.C. — Amtrak President David Gunn said yesterday that he will begin shutting down rail passenger service nationwide “in the middle of next week” and put Amtrak into bankruptcy unless the Bush administration approves a $200 million loan guarantee or Congress nears passage of a direct appropriation or loan guarantee, the Washington Post reports.
However, Federal Railroad Administrator Alan Rutter said the FRA will be unable to give Gunn an answer on his loan guarantee request before early next week. And the Transportation Department’s chief financial officer, Donna McLean, said that even if Congress appropriates the $200 million, the administration would insist that the legislation include “reforms” consistent with principles laid out yesterday by Transportation Secretary Norman Y. Mineta.
The Amtrak saga was played out before the Senate Appropriations subcommittee on surface transportation, whose Democratic and Republican members excoriated Rutter and McLean for failing to take action sooner.
Although not all the details have been worked out, Amtrak officials indicated that no trains would be stopped immediately and no passengers stranded. All long-distance trains would be allowed to finish their runs, and a date would be set for shutting down the Northeast Corridor service between Washington and Boston.
“The urgency of this is enormous,” Gunn said. “We are near the point of no return.”
Despite Amtrak’s many years of losses and realizations that it could never become self-sufficient, the suddenness of the shutdown threat surprised subcommittee members, who had thought they might have until the end of the month. One possible reason, disclosed by Gunn in answer to a question from subcommittee chairman Patty Murray (D-Wash.), is that Amtrak lost $200 million more than previously believed in fiscal 2001 — $1.19 billion instead of $990 million. That widened loss, recently discovered by Amtrak’s auditors, apparently is one of the key reasons that outside auditor KPMG has refused so far to declare Amtrak a “going concern,” making a bank loan all but impossible to obtain.
There was no explanation for the large discrepancy, but in only five weeks on the job, Gunn has been highly critical of Amtrak’s bookkeeping and is instituting a new budgeting system.
“Clearly there’s a problem if we have that big a swing,” Gunn said.
Gunn said Amtrak must have time — perhaps a week — to shut down the system in an orderly way so that passengers can have sufficient notice and Amtrak cars and locomotives can be moved to secure storage areas.
Gunn said it would cost about $50 million to shut down the system and have enough money left over to pay employees to guard the equipment. Other small expenses would continue, such as keeping the overhead wires powered up in the Northeast Corridor so that thieves would not steal them.
In some ways, the Amtrak crisis appeared to be changing into a “who-blinks-first” showdown between Congress and the Bush administration, with Gunn caught in the middle.
Murray said that if a shutdown occurs,”the administration can explain why it would allow intercity rail passenger service to die when many of us in Congress are ready and willing to fund it.”
Rutter and McLean repeatedly sidestepped pointed questions on whether they would take whatever action is needed to prevent a shutdown. They said that they were “working furiously” to determine whether they could legally grant Amtrak’s request for a loan guarantee under the Railroad Rehabilitation and Improvement Financing Program.
Kenneth Mead, the Transportation Department’s inspector general, expressed doubts about whether Amtrak could legally get a loan under the program, which is supposed to cover long-term capital needs, not operating costs.
In the speech that McLean alluded to yesterday, Mineta told the U.S. Chamber of Commerce that the states should pay a larger share of passenger train costs, that Amtrak’s Northeast Corridor operation should be spun off to a “partnership” of states and corridor users, and that some Amtrak routes and services should be contracted out.
Murray shot back that there is “no way” those proposals will be included in the supplemental appropriations bill. “I want to make one thing clear,” she said. “The administration has not submitted any reform legislation to this committee or any other committee. All they have done is make a speech. The proposals in the speech are controversial. . . . If the administration wants reforms, they can propose them in legislation to the authorizing committees.”
The Mineta principles drew almost universal bipartisan opposition in Congress, with two major exceptions: Sen. John McCain (R-Ariz.), who commended Mineta and said the first step to reform should be to fire the entire Amtrak board of directors, and Rep. Don Young (R-Alaska), chairman of the House Transportation and Infrastructure Committee, who said that many of Mineta’s recommendations can be accomplished without new legislation.
The Amtrak Reform Council, which previously made similar recommendations, praised the Mineta principles but said it is also important to keep Amtrak running now.
But numerous members of Congress, union leaders and passenger advocacy groups criticized Mineta’s proposal.
“Finally, after months of delay, we have the administration’s model for the future of rail passenger service in America,” said Rep. James L. Oberstar (D-Minn.), his voice dripping with sarcasm. “It was not worth the wait.”