WASHINGTON — Amtrak and the Bush administration finalized a government bailout on Friday to keep the passenger railroad going through summer,
averting a shutdown that had been threatened to begin after July 4, according to a wire service.
“The good news is the trains don’t stop running,” Amtrak Chairman John Robert Smith told a news briefing at Washington’s Union Station where he and Transportation Secretary Norman Mineta announced the deal.
Under the two-stage agreement, the government would lend Amtrak $100 million to maintain operations into August.
Congress then would be asked in July to consider a loan guarantee or an appropriation for up to $170 million to preserve service until Oct. 1, the start of the next fiscal year.
The initial $100 million loan would be paid back by Nov. 15 and come out of Amtrak’s 2003 subsidy. That figure has yet to be negotiated but Amtrak has requested $1.2 billion.
The financing deal also requires Amtrak to meet several conditions to save money and get better control of its finances, management and book-keeping changes.
Amtrak must obtain new valuations for its assets, immediately freeze all management salaries and work with its 22,000 employees to find more savings. In all, the Bush administration wants Amtrak to come up with a plan to save $100 million by August.
The railroad must also stop plans to expand services, however, no route cuts are among the requirements laid out by the Bush administration.
NEW APPROACH
“This reflects a new approach to running this railroad in a more businesslike fashion,” Mineta said. “This crisis proves without real reform Amtrak will continue to lurch from one crisis to another.”
Amtrak had asked the Bush administration for at least $205 million in assistance, saying it would likely have to begin a shutdown shortly after the July Fourth holiday without it.
The railroad lost $1.1 billion last year and its banks have refused new financing because of its poor financial condition and an incomplete audit report for 2001.
The Transportation Department and Amtrak reached a tentative deal late on Wednesday, but talks to iron out details got bogged down on cost-cutting demands and the potential for outsourcing some work now done by union labor.
Some Democratic lawmakers have questioned the bailout terms, arguing that making Amtrak borrow more money could lead to more problems down the road. Amtrak’s debt is nearly $4 billion.
Sen. Patty Murray, a Washington Democrat and chair of the appropriations transportation subcommittee, said she would press for a direct appropriation for Amtrak’s urgent needs rather than facilitate more credit.
“It is my sincere hope that the administration will learn from this fire drill and come back to the Congress with a real proposal that will not guarantee another crisis three months from now,” Murray said in a statement.