WASHINGTON, D.C. — Amtrak President George D. Warrington will resign, possibly as early as today, just as Congress begins grappling with a national passenger-train system that is deteriorating physically and financially, according to Bush administration sources.
The Washington Post reports that Warrington, who took over as Amtrak president and chief executive in December 1997, is leaving to become executive director of New Jersey Transit, which handles 226 million rail and bus commuter trips per year and has 10,000 employees. Warrington was general manager of New Jersey Transit’s rail operations from 1988 to 1990.
Amtrak is facing a severe cash crunch that may soon get worse. Sources said Amtrak is in a dispute with its outside auditor, KPMG LLP, over whether it can be identified as a “going concern,” given its weakening financial condition. Until that dispute is resolved, Amtrak cannot access a line of credit it had arranged with a consortium of banks, sources said.
An Amtrak spokesman would not comment on Warrington and said the Amtrak chief was not available for comment. A source familiar with Warrington’s decision said he believed that a chance to head one of the country’s largest and most rapidly expanding commuter systems was “impossible to resist.”
Warrington began notifying Amtrak board members and administration officials earlier this week, the sources said. Warrington’s decision was a surprise, and the Amtrak board is gearing up to find an acting president. Warrington has told the board that he will remain on the job until an interim successor is found, sources said.
Warrington’s decision came just days after he began implementing deep cutbacks as part of an effort to survive through this fiscal year. Those reductions include a 60 percent cutback in station employees throughout the long-distance train system. Checked-baggage service was eliminated at all but the largest stations, and handicapped passengers have been told to notify Amtrak well in advance of boarding at some stations. Dozens of senior managers have quit, including the head of safety and most of the top engineers in the engineering and maintenance section.
Roughly $175 million in badly needed capital-improvement programs have been deferred, and all but the most essential maintenance on Amtrak passenger cars has been suspended. Employees on the trains have reported increasing breakdowns.
Amtrak has already mortgaged almost everything it owns, including New York’s Penn Station, to keep limping along. About 70 percent of Amtrak’s expenses are covered by its revenue, and although Warrington had pledged to lead the rail service to operational self-sufficiency, it still relies on federal payments and borrowing to pay its expenses. Although Amtrak’s revenue and ridership are growing, expenses have been rising at almost exactly the same pace.
Congress is grappling with a new five-year authorization to fund Amtrak beginning Oct. 1, the start of fiscal 2003. But sources in Congress, Amtrak and the Bush administration said it is doubtful that Amtrak can last even to the end of this fiscal year without a loan or an emergency infusion of cash. The sources said Amtrak will likely run out of cash before June.
Warrington has testified that unless Amtrak receives $1.2 billion next year, he will have to cut all long-distance trains. And Transportation Department’s inspector general, Kenneth M. Mead, has testified that Amtrak would have to shut down its entire system if it received only the $521 million in President Bush’s budget.
The congressional debate has rapidly become a forum on whether to restructure Amtrak, turn passenger-train operation over to other entities, including states, or continue to fund Amtrak under the current system. Members of Congress and administration spokesmen have expressed general agreement that the country needs passenger trains, particularly in crowded corridors. But there is widespread disagreement on how to fund them and who will run them.
At a hearing yesterday of the House Transportation and Infrastructure Committee’s subcommittee on railroads, members praised Amtrak employees for sticking with the corporation during a trying period, and assured them that Congress would come to their rescue.
“I don’t think they [employees] should be concerned because we will find a solution,” said Rep. John L. Mica (R-Fla.).
Federal Railroad Administrator Allan Rutter testified that the administration will create a set of principles soon for legislation to develop a strong passenger train system. “Waiting won’t make it better,” Rutter said.
Despite the growing criticism of his management performance and style, sources familiar with Warrington’s decision said the Amtrak chief believes he has accomplished a “cultural change” at Amtrak toward better customer service and has left a leaner, efficient and better-run company.